Telco Deep Dive: Two sides to Malaysia’s digital TV story

On May 26, Digital News Asia (DNA) released its first Deep Dive report, which looked at the telecommunications space in Malaysia. Over these next two weeks, we will be publishing the articles from the PDF report on our portal, plus other stories. To download the Telco Deep Dive, click here. In this article, Goh Thean Eu looks at how Malaysia intends to roll out digital TV, and why mobile telcos are eyeing the freed up spectrum. Note: This article does NOT appear on the Deep Dive PDF.

  • Puncak Semangat focuses on delivering its promise, tenders out in June
  • Telco industry eyeing how freed up 700MHz spectrum to be allocated 
Telco Deep Dive: Two sides to Malaysia’s digital TV story

FOR any project to be successful, it is vital to have all parties involved on the same page. In the case of a country’s transition to digital television however, there are two sides to the transition.
This is mainly because moving from analogue TV to digital TV involves broadcast companies vacating the lower spectrum bands they currently use, usually in the 700MHz or 800MHz bands, and going to another band.
In Malaysia, the 470MHz-694MHz band will be used for digital TV, as opposed to the 700MHz band the analogue channels are running on currently.
One of the main reasons to switch to digital is to allow better spectrum utilisation. This is because digital TV transmission needs less spectrum than analogue. In fact, using new digital compression technology available today, the same amount of spectrum used to transmit one analogue TV channel can be used to transmit eight digital TV channels.
Looking on with great interest at this transition are the mobile telecommunications players, because over the past five years, the world has witnessed a trend where data traffic has become more popular than voice traffic. This has taxed mobile networks which were geared to deliver mainly voice.
And while mobile operators are now making the transition to meeting this data traffic demand, there is a cost involved.
However, the properties of the lower spectrum bands, such as those in the 700MHz and 800MHz bands, make them very cost-efficient in terms of delivering data traffic, and that is why telcos are coveting this spectrum – and also why the telcos in Malaysia, especially the big three of Celcom Axiata Bhd, Bhd and Maxis Bhd, have their eyes on how the spectrum will be allocated after the transition to digital TV has been completed.
Spicing up the situation in Malaysia is the fact that the company awarded the job in January 2014 to build, operate and manage the infrastructure for Digital Terrestrial Television Broadcast (DTTB) service, Puncak Semangat Sdn Bhd, also has a telecommunications interest, thus making the established players very nervous.
The man in the middle though, Nik Abdul Aziz Nik Yaacob, chief executive officer (CEO) of Altel Sdn Bhd (the telecommunications unit of Puncak Semangat), is just focusing on meeting the DTTB promise.
“There have been extensive engagements with the stakeholders, including free-to-air broadcasters, regulators, Sirim (a wholly-owned company of the Malaysian Government in charge of technology development, amongst other duties), and others, on the plans to move forward,” Nik Abdul Aziz tells Digital News Asia (DNA) via email.
While it was initially leaning towards hiring a CEO just to focus on DTTB, Nik Abdul Aziz, the former head of Internet service provider Jaring Communications Sdn Bhd, is now responsible for DTTB at Altel.

UPDATED: The entire project is expected to cost up to US$771 million (RM2.5 billion) over the 15-year period of the contract, with the capital expenditure for the first seven years expected to hit US$493 million (RM1.6 billion).
The Malaysian Government has a strong interest in the rollout as there is a social element involved too. Digital TV helps to eliminate coverage blackspots in rural areas.
In the United Kingdom and Australia, the implementation of DTTB has resulted in giving more households access to free-to-air TV. For example, the switchover has boosted the digital terrestrial TV coverage to an extra 10 million viewers in reception blackspots across the United Kingdom.
Telco Deep Dive: Two sides to Malaysia’s digital TV storyCan the poor afford it?
Besides ensuring that broadcasters understand the rollout plan, Puncak Semangat, a company controlled by Malaysian tycoon Syed Mokhtar al-Bukhary, also needs to address another major issue – affordability of the set-top boxes.
“We have undertaken to ‘give away’ two million full-featured set-top boxes to the needy poor. We have ensured that the price will not be expensive as this was part of the strategy in our detailed business plan submission,” says Nik Abdul Aziz (pic).
“For the free-to-air service, viewers need only purchase the set-top boxes without any monthly subscriptions,” he adds.
He reveals that tenders for the various packages are expected to be out this month (June). “Bidders will be given ample time to submit, with the awards taking place soon after.”
Puncak Semangat will have to monitor the progress closely to ensure it hits its goal of 85% of the population to receive DTTB service by the end of June 2015.
“The whole country is expected to receive the DTTB service in the third quarter of 2016. The analogue switch-off date will be confirmed by the Malaysian Communications and Multimedia Commission (MCMC),” Nik Abdul Aziz says.
A goldmine
That is when it will get very interesting in Malaysia, where the game plan is to use the vacant 700MHz band to roll out more high-speed mobile broadband services.
Malaysia’s plan to use the 700MHz for wireless broadband is not uncommon. The million-dollar question is on how it will approach the allocation of this precious asset. In the United Kingdom and Australia, the auction route has been used to enable their governments to derive maximum economic value from the spectrum.
In the United Kingdom, where analogue transmission runs on the 800MHz band (790MHz-862Mhz), the regulator allocated the freed-up spectrum to Everything Everywhere Ltd (a 50:50 joint venture between Deutsche Telekom and Orange SA), Telefonica UK Ltd, Vodafone Ltd and Hutchison 3G UK Ltd via an auction exercise.
It was also the case in Australia, where the 700MHz band, previously used for analogue TV before the digital TV switchover, was allocated for the rollout of 4G services. Via an auction exercise, Telstra picked up 2x 20MHz and Optus picked up 2x10Mhz, with no takers for the remaining 2x15MHz block. The Australian Government plans to sell it in the next few years.
While Malaysia has never used this auction route before, the sooner the Government gives some clarity on how it will approach allocating the 700MHz spectrum, the better for the industry.
While this side of the DTTB story gets hotter, for Nik Abdul Aziz, the heat is on to meet Puncak Semangat’s deadline to move Malaysia to a digital TV experience.
Related Stories:

For Puncak Semangat, success lies beyond TV
Syed Mokhtar company wins digital terrestrial TV tender
Week in Review: What’s driving Syed Mokthar’s telco interest?
Digital terrestrial TV tender: So what’s up, really?
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