- Price arbitrage between Singapore, Malaysia offers up opportunities
- Goal to maximize investment, get largest footprint fast as possible
IN Malaysia today, companies pay around US$20 per mega bit (Mb) of international bandwidth. Across the 1km long causeway, in Singapore, the cost of capacity for that same 1 Mb is US$5 – and that’s on the high side.
It is a price arbitrage that has been screaming out to be seized upon for over a decade and a half, and now Vignesa Moorthy (pic), founder and CEO of boutique Singapore internet service provider (ISP), ViewQwest Pte Ltd, has done so, and in the most practical manner.
Instead of forming a wholly owned subsidiary, he has partnered with Malaysian telecoms engineering services company, Televenture Sdn Bhd, to form ViewQwest Sdn Bhd to offer high speed broadband and other services. It owns 30% of the JV due mainly to the fact that current regulations cap the ownership of ISPs by foreign companies to this level. Televenture is a leading vendor for Telekom Malaysia Bhd.
Vignesa is hopeful of a larger stake however. “We hope the market deregulates further and we can increase our stake.”
The price arbitrage of international bandwidth between Malaysia and Singapore is also why Vignesa says ViewQwest can make the enticing offer to companies in Malaysia “to double your bandwidth while charging the same or lower price you are paying today.”
Delivering on the promise, and the ripple effect it will have on competitors in the market could mean that complaints from corporates over the high price of connectivity in Malaysia could eventually be a thing of the past.
This changes everything
This changes everything, with companies in the Golden Triangle region of Kuala Lumpur, Bangsar South and Cyberjaya, the three areas covered by ViewQwest initially, enjoying the disruptive pricing and services first.
“We are offering 1Giga bit of connectivity to companies in Singapore for the ridiculously low price of S$500 a month but then in Malaysia, the high cost of connectivity is a big drag on companies,” says Vignesa sharing the example of one corporate player in Bangsar South with 1,000 staff but with all sharing one 10MB dedicated line.
“That means companies here can’t adopt cloud services or increase productivity by using software as a service or Amazon and Google’s cloud platforms when the connectivity is so slow. “We saw this as an opportunity,” he says.
Which is why ViewQwest is offering enterprise networking and managed services. These include the Direct Cloud Connect Service which helps corporations in Malaysia access cloud services such as Amazon Web Services, Microsoft Azure and Google Cloud which are regionally hosted in Singapore.
Apart from those corporate services, ViewQwest will also be rolling out related services for consumers with Vignesa hoping to launch a 1Gbps fibre broadband service for select residential areas in the vicinity of the enterprise coverage zone, by end Dec.
The services include its Freedom DNS service which helps consumers access geographically-blocked content, such as Amazon Prime, Hulu, HBO Now and BBC iPlayer. Its Android-based ViewQwest TV media player will also be bundled together with its broadband service.
The 1GB home services will make ViewQwest’s offering the fastest residential broadband Internet service in Malaysia, which currently tops out at 500Mb per second.
Not surprisingly, with the pricing advantage he has, Vignesa is hoping to roll out coverage as fast as he can. “We will continue to build out and, depending on the commercial viability, will lease or build.”
“For example, if a partner has existing infrastructure that they can lease to us at price point that makes sense, we will lease. If not available, we will build our own network,” he says. The goal is to maximize the investment put in to get the largest footprint as quickly as possible.
Revenue from its Malaysian business, mainly telcos such as Maxis, Telekom Malaysia, ISPs and other fibre operators such as TIME dotCom, Fibre Rail and Fibercom, forms 20% of ViewQwest’s annual revenues with those companies using a portion of its 1 Terabit of international bandwidth.
That ratio is expected to increase now that ViewQwest can offer customers in Malaysia its services directly.