MCMC’s Jendela Internet programme on schedule

PETALING JAYA: Closing the gap in Internet connectivity across the remaining pockets of the population is challenging and requires fit-for-purpose technological approaches.

The technologies would include fibre broadband, broadband/satellite wireless access, fixed wireless access and 5G.

The fit-for-purpose approach is what the industry regulator, Malaysian Communication and Multimedia Commission (MCMC) believes can address the remaining Internet connectivity gap.

This will be done from 2023 to 2025 as part of its Jendela phase two programme.

As it is, 4G coverage and fibre connectivity targets are being met in most places as Phase 1 of the Jendela programme comes to completion by the end of this year.

Kenanga Research said the details of its roll-out plan for phase two will be addressed by MCMC later this year.

Kenanga believes the undertaking to plug the remaining 1.1% coverage gap (96.9% target by the end of 2022) to be the most challenging, given the remote site locations and accessibility issues.

The overall cost to implement phase one was previously estimated at RM28bil. Of this, 60% was funded by the industry/telcos and the remaining 40% from the Universal Service Provisioning (USP) fund.

It is not clear how much phase two will cost, but most experts believe it will be underwritten by the USP fund.

CGS-CIMB Research adds that MCMC is now targetting 100% Internet (instead of 4G) coverage in populated areas by the end of 2025, under phase two of Jendela.

It added that while this may seem like a slight change in wording, it is nonetheless meaningful.

It also clearly reflects MCMC’s approach towards the use of various suitable connectivity technologies (e.g. satellite, TV white space, 5G) to cover the remaining 3.1% of the population, said CGS-CIMB Research.

This will avoid over-burdening mobile network operators, when there are more cost-efficient methods.

Kenanga Research said at the current run-rate, the industry is still well on track to meet the year-end target of 7.5 million premises passed (7.2 million as of second quarter 2022).

The industry has exceeded the mobile broadband speed target of 35Mbps by the end of 2022 with a 47.04Mbps mean speed (29.89 median) achieved in 2Q22 (Ookla) on additional capacity from the 3G shutdown.

It added that while 5G coverage reached 27% in 2Q22, red tape may hinder network rollout at state levels.

CGS-CIMB Research has an “overweight” rating, while Kenanga Research a “neutral’’ on the sector.

CGS-CIMB Research said its top telco pick was Telekom Malaysia Bhd, but cited industry downside risks being delays in final 5G resolution.

Kenanga’s downside risks include competition, regulatory setbacks and further delays in the 5G process.