PETALING JAYA: The Universal Service Provision (USP) fund will be tapped by the government to pay for the bulk of its RM21.6bil National Fiberisation and Connectivity Plan (NFCP) that seeks to narrow the digital divide in the country between urban and rural areas.
With between 50% and 60% of the money coming from the fund, which is said to contain around RM8bil, the remaining money will be sourced from various parties, including telecoms players that will invest for the deployment of infrastructure, particularly to new areas in urban, semi-urban and rural places using fibre and alternative technologies such as cellular, wireless and satellite.
“It will be a series of projects to close the gaps in the entire connectivity chain, some of these will be funded using the USP fund, while others will be privately funded, ie, by telcos, etc.
“What we are looking at is an equal or near-equal split at this stage, ’’ Malaysian Communications and Multimedia Commission chairman Al-Ishsal Ishak said when contacted yesterday.
Communications and Multimedia Minister Gobind Singh Deo announced yesterday that the Cabinet had approved the five-year (2019-2023) NFCP, which will spearhead the development of digital infrastructure and increase competitiveness. The cost of the implementation is a whopping RM21.6bil.
“The NFCP will ensure that all the industrial zones are 5G ready. This is a new business model and is big from an economic standpoint, as it will give the economy the much-needed boost with its multiplier effect in a digital era, ” said an industry source.
He added that tenders would be open to all players to roll out infrastructure.
“By so doing, we are getting the players to go outside of the main city areas and they will be partially funded to roll out services. This time around, the government will fund a lot more because it wants the country to be connected.
The NFCP is about opening new markets for all, so everyone has a chance to roll out services and for users, they can finally get broadband services that they have been waiting for, ’’ the source said.
Some telecoms players are excited by the prospect that the government will finally use the USP fund to help them roll out infrastructure to new areas.
Telecoms service providers contribute 6% of their weighted net revenue that exceeds the RM2mil threshold towards the USP fund every year. This works out to about a RM1.5bil to RM2bil contribution towards the fund each year. For now, the fund size is said to be about RM8bil, though some portion has been committed for some projects.
The fund is meant for rolling out infrastructure to rural areas, but there were times the USP fund was used to buy computers.
Telekom Malaysia Bhd (TM) has a huge fibre network and its newly appointed group CEO, Datuk Noor Kamarul Anuar Nuruddin, said “we see opportunities for more revenue growth because there are areas which were not covered before and we will soon be covering.’’
Gobind has also managed to convince Tenaga Nasional Bhd to enter the fixed broadband space since it has the longest track of fibre in the country, which could be used to speed up broadband connectivity.
He also managed to push for lower wholesale broadband rates that had somewhat helped bring down retail broadband pricing, something which was impossible in the past.
“All that has spurred demand for broadband and that is why the NFCP is critical for the future in view of 5G and digitalisation, ’’ said the industry source.
It is not only the telecoms players that would benefit from the NFCP by rolling out services to new areas, equally excited are the cable makers, equipment suppliers, handset makers and distributors.
Shares in TM rose 13 sen to RM4.08 a share, but the company also released its results yesterday. Digi.com Bhd was marginally up by one sen to RM5.03 sen, while Maxis Bhd was down six sen to RM5.41. Axiata Group Bhd dipped two sen to RM5.