Here the latest interview with Datuk Zam Isa, group CEO of TM by TheStar.
StarBizWeek: It’s a long standing issue – that TM is not providing the quality (speed) of broadband services it has promised customers.
Zam: It’s important for customers to understand how Streamyx works. TM has always maintained that Streamyx subscribers should receive at least 70% of the subscribed speed most of the time.
This is in accordance with the standards set by the Malaysian Communications and Multimedia Commission (MCMC) in its Determination No.5 of 2003 under the Standard on Network Performance.
This means a user should experience 70% of the subscribed speed for accessing local sites; 4Mbps (megabits per second – a measure of bandwidth) represents approximately 4,000 Kbps (kilobits per second) and 70% equals 2,800 Kbps. This speed allows for a good quality surfing experience.
One must understand that Streamyx download and upload speed varies and depends on several factors such as location of website, capacity of visited web server, network congestion and running other applications simultaneously. It is a fact that over 80% of sites which our users access are located overseas.
In terms of the behavior pattern of today’s users, they are now very much into peer-to-peer applications. They are constantly sending and receiving videos and other types of very large files throughout the day. These activities use a lot of bandwidth and can significantly reduce the connection speed of other users. TM continues to put in a lot of effort to improve Streamyx service on all fronts – network and systems, international capacity, staff skills and knowledge, and product and services offering.
Can you explain why we lag behind countries like Singapore in broadband quality?
Zam: It’s rather unfair to compare Malaysia and Singapore on the same platform. One glaring point is that Singapore is a city-state with most of the population residing in high rise dwellings. On the other hand, Malaysia has its valleys and highlands, with the population geographically dispersed around the country. Naturally, our network development and deployment are also different. However, we should not take this as an excuse. We are now in the process of developing major quality improvement initiatives that will increase in intensity especially in 2010.
A global study by University of Oxford revealed that Malaysia fares dismally in broadband leadership – it was ranked 48 out of 66 countries, coming in below Argentina, Chile, Mexico and Poland. Malaysia also got a low rating for download speeds, below Philippines, Mexico and even Colombia, falling short of “today’s application threshold” category. Doesn’t that mean TM has failed?
Zam: Let’s first put the findings into perspective. It is important to understand the parameters set, or used for the study. Firstly, the study covers both fixed and wireless broadband.
The Broadband Quality Study (BQS) is a combination of broadband penetration with quality experience. The report uses three measurements to ascertain the quality experience: Average download (DL) – 4.75Mbps; Average upload (UL) – 1.3Mbps; and Latency – 170msec. Malaysia only meets the latency measurement.
At the moment, TM offers 4Mbps which is slightly lower than the expected average DL at 4.75Mbps. However, we are confident with HSBB coming on board by the end of the first quarter next year, we will be able to offer 10Mbps and above to consumers and will likely meet the 4.75Mbps DL speed. The same would apply to the UL speed.
TM’s move into ‘value added services’ (VAS) is commendable. Does TM prefer to develop its own VAS or lease it from third parties on profit share basis?
Zam: VAS has been part of our offerings to all our customer segments. For our consumer segment, we have VAS such as voicemail, hypp.tv and call waiting, while for the enterprise segment we are offering more after the realignment of VADS Berhad and TM Enterprise.
Internet protocol (IP), virtual private network will be our core offering with VAS built around it such as data centres, business process outsourcing and managed voice services.
With HSBB, we can enhance our VAS and offer a triple play proposition to customers. Part of this triple play will be IPTV. TM will work with content providers; we will provide the platform while they provide content. We will aggregate the content to be provided via our IPTV service.
It is a business arrangement where service providers do not have to compete and increase the price of the content. We are talking to partners to host their servers here so that the traffic does not have to leave the country.
Is TM interested to rent some Barclays Premier League content (from Astro/ESPN Star Sports) to make its content offering attractive? What is the content strategy as you will compete with Astro and the free-to-air channels of Media Prima?
Zam: TM’s IPTV service is part of a bundled triple play offering that TM plans to market to consumers upon availability of HSBB infrastructure.
It will complement Astro and not compete with it head-on. IPTV’s strength is its ability to offer services with high availability, quality and interactivity.
We will also have some other initiatives which we will not disclose yet. TM is always in discussion with good and high quality content providers. This is an on-going process.
Home users will get a taste of IPTV once TM begins extending its HSBB service to residential areas in the first quarter of 2010. We hope to have more than 300,000 covered by then, which will be the target for IPTV services initially.
Industry analysts point out that TM is facing pressure on net adds and ARPU (average revenue per user) in broadband business largely due to rising competition. Can you comment?
Zam: Yes, we are seeing an aggressive push from wireless broadband players in the market. When there are alternative service providers, customer churn is inevitable.
We have seen competitors slashing prices and offering value for money packages, and pushing their brands to the market.
Nevertheless, we are confident that TM will be able to maintain its leading broadband position. There are clear advantages in our fixed broadband service. It’s more reliable and scalable to speeds even beyond 2Mbps. We view wired and wireless broadband as complementary.
When customers are at home or in their offices, wired broadband is the best choice. We have rolled out various packages with value added features for customers.
We are continuously upgrading our network. Our network started off as a pure voice carrier. Our average access distance of a user to a node was about 5km and for voice that is perfect.
But when you start providing broadband, the closer the user is to the node, the better the quality. Today, the average distance is less than 3km and this is due to our ongoing network upgrading.
When TM is ready to roll out, will it adopt an aggressive marketing strategy to fend off competition, like what Packet One (P1) is doing?
Zam: We will do it in our own way. Perhaps we will not stoop as low but we will continue to be more aggressive. Just watch the ad space. (Note: TM recently launched an ad campaign perceived as retaliation to its wireless counterparts, namely P1. In the ad, a man, fed up with his wireless connectivity, contemplates throwing his modem and laptop out of the window).
We are also moving towards a lifestyle offering. HSBB will enable us to provide triple play – broadband, IPTV and voice calls. That’s our value proposition. The plan is to roll out by the end of first quarter next year in the Klang Valley.
Give us an update on HSBB and how much has been spent so far. How will the Government grant of RM2.4bil be utilised?
Zam: We are on track to commercially launch HSBB retail service in four initial areas – Taman Tun Dr Ismail, Bangsar, Subang Jaya and Shah Alam – by end first quarter 2010.
To date, TM has completed physical work in four exchanges. Work is currently progressing at 44 out of 95 exchanges nationwide covered by the initial rollout of HSBB services.
The RM2.4bil co-investment by the Government will be utilised over three years to roll out last mile access network to homes and businesses to facilitate HSBB services using three main technologies: fibre-to-the home, ethernet-to-the-home and very high speed digital subscriber line.
TM will also roll out its next-generation network core backbone based on an all IP platform and grow the nation’s global capacities by building new international gateways for enhanced connectivity and network efficiency.
As at end second quarter of 2009, the Government has reimbursed TM a total of RM665mil for work completed.
The reimbursements covered expenditure for work on the HSBB access infrastructure and HSBB IP core deployment as well as international links capacity expansion covered under the public-private partnership agreement signed with the Government in September last year. The Government, through the Information, Communications, Culture and Arts Ministry and the MCMC, has put in place a stringent review process for HSBB project claims.
Claims submitted by TM are first to be audited and verified by an independent consultant appointed by the ministry. The independent consultant would then recommend the reimbursement amount, upon which the ministry would then proceed with payment of the claims.
TM already has ADSL (a standard broadband technology) running in areas where it is going to roll out HSBB. Does this mean TM wont upgrade the copper in these areas?
Zam: Broadband for the general population is nationwide and includes the high economic impact areas. So that is on-going. The continuous improvement on Streamyx focuses on 27 exchanges within the Klang Valley alone.
What used to be TM’s mainstay voice business is on the slide. What is the strategy?
Zam: The traditional voice business is declining. This is not unique to Malaysia. The challenge is not so much to try to grow the voice business but to mitigate the decline. The growth is in broadband, so we will drive growth in that area. This is what all fixed line operators are doing. It is not rocket science.
What are the changes you’ve put in place since you took over the helm in April last year?
Zam: TM’s new board of directors was put into place after I became CEO. There have also been changes to top management which were announced between February and April, in line with our new business model. This whole change is to get closer to the customer.
The philosophy is to start from the marketplace. So, we looked at our existing structure and placed the customer at the top. From there, we worked our way back into the organisation to see how to give our customers the best value.
In addition, we didn’t have a strong focus on small and medium enterprises (SMEs). But that too is changing. SMEs are a very important business segment and today, we have over 400,000 SMEs as our customers.
How does TM measure and track the quality of service?
Zam: We look at four areas – operational measures, regulatory compliance, customer service charter and customer feedback. In terms of operational measures, that will mean the number of complaints, fault resolution, how fast we can resolve faults, how many of our customers have had their complaint needs met. We have to meet the mandatory service quality.
Because customer centricity is part of our core pillar, we have to move away from solely focusing on network quality measures to include customer experience measures. We are looking at a new service charter that will include all customers.
What are your views regarding the USP fund and how should it be used in wiring up the country?
Zam: The USP fund is not just about wiring up the country. The USP fund was set up to bridge the digital divide as well. As such, the investment needs to be viewed not just from an infrastructure aspect but also in terms of take up of the services. Though infrastructure is still required for remote areas in the country, there are also other ways to channel the investment. For example, assisting in getting affordable personal computers or other customer devices to enable rural folks to get affordable access to the Internet.
What are your views on the state of telecommunications spectrum management in the country? Do you think there’s room for improvement?
Zam: The old method of spectrum management is currently faced with the challenges of a more liberalised sector. Moving forward, since spectrum is a scarce and national resource, we need to ensure that it is awarded to providers which can ensure the spectrum is utilised expeditiously. To ensure no bandwidth hogging and hoarding, the regulator could impose timelines and checks for spectrum use. By allowing the spectrum to be used by the appropriate providers, the country will benefit in terms of service availability.
What are your expectations of Tan Sri Khalid Ramli, the new chairman of the Malaysian Communications and Multimedia Commission (MCMC)?
Zam: The new chairman, with his wealth of experience in the Implementation Coordination Unit of the Prime Minister’s Department, will appreciate the value of broadband to the macro-economy.
We are certain he will provide the right leadership to ensure this new economic tool will be widely available. With his vast experience, we are certain he will provide valuable insights in driving the MCMC to provide transparent regulatory processes and facilitate fair competition and efficiency in the industry.
We look forward to do our part to ensure that customers receive the best possible service in terms of quality, choice and value for money. We at TM will certainly be more than happy to work closely with him to enrich the nation towards becoming a high income nation.
There have been some comments by industry players about a former regulator coming to sit on the board of TM. Does this happen in other countries? (In July, TM appointed Datuk Halim Shafie as its chairman. Halim had served as chairman of MCMC for four years.)
Zam: I can quote you one – PCCW in Hong Kong. But in any case, I do not see a conflict. We are all professionals. We go by the guidelines and framework that have been laid out. In transforming TM, we try to get the best talents.