Published September 12, 2008

Telekom Malaysia rival wants broadband licence

Firm planning own privately funded, RM18b high-speed network

By S JAYASANKARAN
IN KUALA LUMPUR
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THE government's award of an RM11.31 billion (S$4.7 billion) nationwide, high-speed broadband (HSBB) network to state-owned Telekom Malaysia (TM) has not deterred a rival company that wants a licence to run a private network.

Easily accessible: Telekom Malaysia has 88 per cent of the broadband market while mobile phone operators Maxis and Celcom have a 6 per cent share each. TM's strong balance sheet also means that it can easily finance the rollout of a nationwide, high-speed broadband network

High Speed Broadband Technology (HSBT), which has links to the state government of Pahang, yesterday unveiled a concept plan for an RM18 billion high-speed network that would be privately funded and would not involve any government money.

In an announcement to Bursa Malaysia on Tuesday, TM said that it has received a letter of award from the Malaysian government for the HSBB project, with funding to be split between Kuala Lumpur (RM2.4 billion) and TM (RM8.91 billion).

The Pahang-based company is not deterred. Its spokesman, Shukor Ahmad, said yesterday that it would 'appeal' to the federal government for a licence so that households and companies can choose between the competition.

Net neutrality - the principle that broadband networks should be open to all Internet service providers (ISPs) without discrimination - is a big issue in developed nations and has clearly spread to Malaysia.

Although they have not voiced their discontent aloud, Malaysia's ISPs privately feel that an independent third party such as the government should own the HSBB network so every provider can compete on an equal footing.

Going by history, their fears could be justified. Back in the 1990s, telecommunications plans called for 'equal access' under which TM's monopoly of fixed lines would be gradually dismantled in favour of all telco firms. That has never happened, with TM still having 96 per cent of the fixed-line business. Operators are worried that TM will have the right to restrict access to its HSBB network. But nothing is cast in stone yet, HSBT stressed yesterday. Indeed, TM's deal has previously been put off twice. The formal agreement is supposed to be signed next Tuesday but that is not a firm date.

Even so, analysts believe that TM will eventually win out. They say that it would be difficult for the government to deny state-owned TM, which has 88 per cent of the broadband market, while mobile phone operators Maxis and Celcom have a 6 per cent share each. Moreover, TM's strong balance sheet means that it can easily finance the rollout.

In addition, TM needs new growth drivers. A restructuring exercise last year split the utility into two - Telekom Malaysia International with the international and wireless business, and TM with the drying-up fixed-line business and broadband.

With voice revenue fading, analysts believe revenue from data services is vital to TM. They say the trick is how the government manages the competition.