Telco Deep Dive: Industry & regulator need to join hands, keep Malaysia on fast track to developed nation
By Karamjit Singh January 15, 2019
- Celcom suggests spectrum not utilised well to be re-allocated to operators with strong track record
- Digi sees innovations in new tech & industry resources pooled to maximise rollout speed & investments
THE latest industry stats from regulator, Malaysian Communications & Multimedia Commission (MCMC) shows that for the vast majority of Malaysians, access to mobile services and the internet is taken for granted with a 135.5% penetration rate for mobile subscriptions (crossing the 100% threshold about six years ago) and 118.6% broadband penetration of which more than 90% are via mobile broadband.
Mind you most of the nation is now covered in high speed mobile connectivity as well with Celcom Axiata Bhd covering more than 90% of the population with LTE and over 74% with the even speedier LTE-Advanced and already moving towards LTE Advanced Pro (4.5G) and eventually 5G.
And as an aside, Celcom claims bragging rights as the first major operator in the country to carry out 5G trials with network vendor Ericsson back in 2017.
Consumers, for the most part, have choices as well because if they are not happy with Celcom’s services they can look to Digi Telecommunications Sdn Bhd which has close to 90% of the population covered with its 4G Plus network.
And then there is Maxis Communications Bhd which has 92% of the population covered with its 4G LTE network.
Taken together, what this shows is that the mobile industry has built a solid foundation for mobile connectivity as a critical access point to the internet.
Perhaps even more impressive is that this was done while being, essentially hobbled, suggests Idham Nawawi, Celcom’s CEO who rates his network a 7 out of 10. But he feels it could be better and could have evolved faster – with better spectrum allocation. Idham notes that, compared to countries like Singapore and Australia, the Big Three operators (Celco, Digi, Maxis) in Malaysia have less than half of spectrum holdings compared to their overseas peers.
In the immediate term though, Idham has 5G and specifically the 700MHz spectrum on his radar declaring,”specifically, having early access to 700MHz spectrum could potentially save over RM500 million (US$122 million) in future costs which can be used to deliver more value to our customers.”
That claim will surely prick the ears of the MCMC and its minister, Gobind Singh Deo, Minister of Communications and Multimedia in Malaysia.
Meanwhile, with minimum fuss, Digi’s Chief Corporate Affairs Officer says it has spent the last few years building a solid engine to fuel adoption of affordable and quality internet usage among Malaysians. Among its pioneering moves have been the introduction of RM1 per day and bite size internet have paved the way for affordable connections resulting in its smartphone adoption rising to 77.4% with customers now using 9.1GB on average per month in Q3 2018.
But nobody is resting on their laurels. As Joachim says, “the task ahead for operators is to meet the fast growing demand for both capacity and quality while providing on-demand personalised services for customers.”
As part of DNA’s continuing series on the Malaysian telco scene, we posed some wide ranging questions around 5G, spectrum, political will and investor expectations to the Big Three listed celcos in Malaysia. We carry here the responses of Celcom and Digi. Maxis had to withdraw their replies as the publication of this article coincides with their quiet period before the release of their quarterly results on Feb 15.
For the first time in the telco sector in Malaysia, the political will is there to drive forward changes that will result in lower prices, better speeds and wider coverage as the immediate priorities. Higher quality will be a focus later. How does this reality factor into your business strategy for 2019?
Idham Nawawi, CEO, Celcom Axiata Bhd: In the mobile market, unlike fixed, effective within the core business, there is industry-wide prepaid market contraction but some growth in the postpaid segment. Prepaid to postpaid conversion is taking place as postpaid plans offer a higher relative value and have become much more affordable due to competition and price decline.
Furthermore, pricing for mobile data in Malaysia is very competitive. According to the International Telecommunications Union (ITU) in 2017 Malaysia were at 0.81% of GNI/capita for a 500Mbps prepaid line. ITU’s threshold for ‘affordability’ is <2% of GNI/capita – so Malaysia is doing well.
The quality of mobile broadband networks varies between telcos, based on a recent report from OpenSignal, Malaysia ranked quite low in the video experience and download speed metrics. This result, however, was not fully representative because it was dragged down by smaller operators. If looking at the ‘big three’ (Celcom, Digi and Maxis), the situation is comparatively better, with an average score of ‘Good’. Celcom, for example, scored higher than > 3 average in video experience and download speed.
To continue improving mobile speed and experience, efficient spectrum utilisation and access to the right band is critical to maximise broadband coverage and speed. Currently, some of the spectrum allocations are not utilised effectively and would benefit from being re-allocated to operators with a strong track record of nationwide implementation. Moving forward, Celcom will continuously focus on delivering a great network experience, and build on our position as the operator with the widest 4G coverage in Malaysia.
Joachim Rajaram, Chief Corporate Affairs Officer, Digi Telecommunications: The mobile telecommunications sector continues to demonstrate healthy competition, with affordable, widespread connectivity being instrumental in accelerating internet adoption in Malaysia. Services such as RM1 per day and bite size internet have paved the way for affordable connections in the mobile space for a long time now. We see these uptake trends similarly reflected in our business, where smartphone adoption has increased to 77.4%, and customers now use 9.1GB on average per month in Q3 2018.
The task ahead for operators is to meet the fast growing demand for both capacity and quality while providing on-demand personalised services.
We have spent the last few years building a solid engine to fuel adoption of affordable and quality internet usage among Malaysians. Our 4G Plus network now covers close to 90% of the population nationwide, and serves 11.8 million customers with a consistent internet experience.
We have a sharpened focus to continue on this trajectory, supporting rising data demand by strengthening our network capacity and quality; focusing our investments on densifying our network, fiberisation to our sites, and maximising our spectrum portfolio. Doing this and delivering innovations from our core connectivity services and solutions beyond the core.
Do you feel Malaysia has a World Class telco infrastructure in the mobile space? Where do you think your own network stands today based on a rating of 1 to 10?
Idham: 7 out of 10 but could be better and have evolved faster with better spectrum allocation. Comparing with countries like Singapore and Australia, Tier 1 operators in Malaysia have less than half of spectrum holdings compared to overseas peers. We have already covered more than 90% of the population with LTE and over 74% population with LTE-Advanced. From here onwards, we need to evolve towards LTE Advanced Pro (4.5G) and finally 5G, subject to spectrum availability and maximised fibre coverage. Specifically having early access to 700MHz spectrum could potentially save over RM500 million (US$122 million) in future costs which can be used to deliver more value to our customers.
Joachim: Malaysia is well penetrated, with recent MCMC reports showing 118.6% broadband penetration; more than 90% of which are mobile broadband subscriptions. And with mobile subscriptions at 135.5% penetration, it shows that the industry has built a good foundation for mobile connectivity as critical access point to the internet and key to driving adoption.
We all accept that improvements are a status quo for all operators everywhere, and that the telco sector in every country has its own set of challenges – even customers in most advanced markets demand continuous improvement.
What needs to be done for you to get to a 9 and besides the obvious increase in capex on your part, what more needs to be done on an industry basis and from the regulatory point to help you?
Idham: Technology advancements are growing rapidly, and other developed economies are evolving quickly towards 4.5G and 5G. Industry and regulator should join hands to keep Malaysia on a fast track in terms of technology evolution, and to keep pace with other developed nations. Some of the key suggestions are listed below:
To strengthen transport network:
Telcos & all other fibre entities should open-up their fibre infra/duct for leasing at reasonable commercials. This would help to reduce operator cost of building the right infrastructure for 5G.
Mandatory fibre sharing to avoid duplicate investment.
National Fiberisation and Connectivity Plan (NFCP) is an excellent initiative and should be driven until fruition.
Enable ease of permit approval by local authorities for fibre laying to reduce time to market at the earliest.
To strengthen radio network:
Re-allocation of spectrum from dormant licensee to active ones across all bands. This scarce resource will enable quick evolution to LTE Advance Pro (4.5G & later 5G).
Issuance of low band (sub 1Ghz, e.g. 700 Mhz) spectrum for maximising coverage and improving in-building experience.
Review 2.3 Ghz, 2.5Ghz & 2.6 Ghz bands current allocation, reallocate under-utilised in favour of 4G/5G use.
Free up globally standardised C-band spectrum for 5G coverage use.
Allocation of 26-28 Ghz band spectrum for 5G capacity use.
Facilitate one common wholesale and shareable network for 2G & 3G (Netco) so that the resources are freed up in favour of 4.5G & 5G.
To strengthen core network:
Enable restriction-free use of public cloud technologies, e.g. Amazon, Microsoft, Google, etc, apart from leveraging private clouds being deployed by operators on premise/in-country.
Joachim: As an industry, this mindset for continuous improvements and pledge to connect more Malaysians is a healthy outlook to have. Digi has spent the past few years driving data adoption widely across the country; continuously engaging MCMC to support the nation’s broadband agenda and make certain we serve even the most remote areas of Malaysia.
And to do this well, it is important that the industry has continuous availability of optimal spectrum supported by an enabling and competitive environment to focus on better, efficient and faster infrastructure rollout nationwide. This is important especially when mobile will still be the first point of access to the internet. These changes will have the potential to address capacity and data demand, and provide better quality of services for customers.