MCMC Chairman: ‘No more Ali-Baba business’

  • Spectrum Assignment replaces Apparatus Assignment, comes with tight conditions
  • Ministrial Orders not issued willy-nilly, governance with MCMC recommendations

MCMC Chairman: ‘No more Ali-Baba business’

MCMC Chairman: ‘No more Ali-Baba business’I was wrong. The expected phone call did not come. After what was a refreshingly candid and informative spectrum briefing session by Dr Fadhlullah Suhaimi (pic), chairman of the Malaysian Communications and Multimedia Commission on Wednesday – describing the world leading EBIDTA margins of Malaysian telcos as “sinful margins” – I had expected his comms team to call, urging me to tamper my reporting of some of the comments made by Fadhlullah.

The timing of the briefing on spectrum could not have been a coincidence, coming 10 days after a series of Ministrial Orders (MO) around spectrum assignment with the specific awarding of a new allocation of 2x5Mhz at the higher bracket of the 900 MHz band to Altel Communications Sdn Bhd, raising eyebrows and eliciting a collective “here we go again” eye-roll from industry leaders and concerns about governance from market analysts. No surprise that the MO also resparked talks of a backroom deal involving Telekom Malaysia Bhd acquiring Altel in a deal that will benefit Altel’s main shareholder, Syed Mokhtar Al-Bukhary, one of Malaysia’s most influential tycoons.

Hence the briefing, to only English medium journalists, started out with Fadhlullah concisely laying out the seven steps that have to be taken before the issuance of the spectrum at the final, ninth step. The first step is the existence of the national spectrum plan.

The key reveal here was his emphasis that no MO can be issued willy-nilly by any Minister of Communications without it first being recommended by the MCMC and that the recommendation itself comes after a proper analysis of the current market and players. There are instruments of law that govern this process he explains. But he acknowledges that the MCMC has been poor in communicating this to the ecosystem, hence giving rise to all manner of conjecture.

When pressed on whether any MO issued had ever been done unilaterally by any minister in the past, Fadhlullah referred to a senior officer who has served under various ministers. The officer said no MO has ever been issued unilaterally.

 

‘There will always be facts and hallucinations’

Fadhlullah did not back away from my question around how this MO has led to such conjecture as to almost becoming an accepted inevitability. “Look, in our assesments [in determining spectrum] there will always be facts and hallucinations. And we do hear the noise of a possible merger or whatever not,” he says. But he emphasized that it is not for the regulator to address who TM chooses to buy or not.

Intriguingly, he offered his own opinion if he were TM, noting that the board and its CEO have changed in the past year and they could have different views now. A former senior executive at TM himself, he says, “If I were in TM, I would question why would I need to buy Altel? Is there real value?” he poses, noting that TM has now offered greater clarity to the market in its direction of being a strong fibre player. “TM has now moved away a mobile narrative to fixed and the market has reacted positively and with less user complaints as well.”

Recalling his time at TM, he used to get stressed out over the many customer complaints of its then ADSL copper-based service under the brand Streamyx. “My life then was all about dealing with Streamyx issues, to the extent that I knew Pg11 in the New Straits Time daily paper was the Letters to the Editor page!”

 

A key factor in spectrum decisions and no more “Ali-Baba” business

A key factor the MCMC looks at is subscribers. “This is more tangible and our objective is to ensure that subscribers get the best service possible because they all want better service.” Fadhlullah didn’t budge when it was pointed out that Altel had not done enough to earn its current spectrum, much less receive additional capacity. After all these years and past boasts of partnering with the likes of Samsung and Huawei, MCMC data shows that Altel only has 29,000 paying subscribers. And, to the chagrin of the industry is using Celcom Axiata’s infrastructure to operate its spectrum.

This is where Fadhlullah shared that there are new rules to play by for the operators seeking spectrum and that those who do not abide by them “may get zero spectrum”.

“Rest assured we are very well aware of the problems of the past where  spectrum holders do not build out their infrastructure but, let’s be very open about it, Ali Baba it (to allow a third party to use the spectrum).”

Acknowledging that it is bad for country and is not how a finite resource such as spectrum is to be used optimally, he shared that the new approach to allocating spectrum via Spectrum Assignment and not the previous Apparatus Assignment, will come with clear conditions that specify active network rollout with towers and equipment to be constructed and using one’s spectrum.

“This was not clearly specified in the past when spectrum was assigned,” he admits, thus leading to irresponsible behavior. “I will be first to apologise for the regulator if we have been less than solid in our previous spectrum awards as did not forsee there could be loopholes,” he said.

But henceforth the new conditions come into play. Elaborating further Fadhlullah explains, “We will assess their business plan and if it does not commensurate with the resource given to them, we will reject the plan,” says, promising that the MCMC will go through all business plans with a fine tooth comb and will reject those that are inadequate versus the spectrum resource given to them.

He also points out that they are at the halfway mark in terms of meeting all the steps mapped out before Altel can formally receive the spectrum, so, “they have not been issued the spectrum yet” he stresses.

Another principle used in determining the current MO was that of achieving symmetry and factoring in market size. Fadhlullah points out that aside from Altel, Redtone Engineering & Network Services Sdn Bhd and Asiaspace Sdn Bhd sit as the smallest players in the market. Looking at Redtone, which only has 600 customers yet has 50 MHz of spectrum, the additional 2x5Mhz that Altel receives will put them on level with Redtone as it already has 40Mhz.

Hence Fadhlullah describing Altel as a beneficiary of “Preferential Rights in this tougher brownfield market” while emphasizing that it has to agree to the conditions of the spectrum award.

Whether industry players accept this logic or not, what is clear is the days of sitting on spectrum or lessing it off to other parties is at an end as the Spectrum Assignment gradually replaces Apparatus Assignment as the primary means by which the Malaysian government assigns spectrum to the market.


Tomorrow: How does the Celcom-Digi merger play out in an open market while ensuring healthy competition.

 
 
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