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RM200 Smartphone Rebate would Burden the Lower Income Group [Comment]

In Budget 2013 last September, the Malaysia Government announced that a RM200 one-off rebate for a 3G smartphone will be given to eligible. Some RM300 million tax payers money were allocated for this.

Many people got excited about the announcement until the Malaysian Communications and Multimedia Commission (MCMC) further revealed the term & condition of smartphone rebate two days ago:

  • Applicable for Malaysians between the ages of 21 and 30;
  • Gross monthly income Rs 3000 and below;
  • Selected 3G smartphones that cost no more than RM500
  • Exiting mobile broadband/data user or new user;
  • One unit per person

“The idea is to spread the incentive across to those who do not yet use smartphones. We really want to help those who cannot afford to change phones to upgrade from their old 2G phones to a basic 3G smartphone. Those who can afford phones priced above RM500 are really not in the intended category or target market. Some of those phones can reach prices of over RM2,500 without contract. A RM200 rebate does not even make a dent but if the phone is priced at RM500, a RM200 rebate goes a long way. Again, the target is the lower income group and the youths,” said MCMC Chairman, Dato’ Mohamed Sharil Tarmizi, in refuting speculations that the RM500 price limit was low.

The list of smartphones that will be offered as part of the rebate are as follows:

  1. Alcatel 993D
  2. Alcatel OneTouch Glory
  3. Alcatel OneTouch Inspire 2
  4. The Buzz Phone
  5. HTC Wildfire
  6. Huawei Ideos X3
  7. LG Optimus L3
  8. Ninetology Black Pearl II
  9. Ninetology Palette
  10. Nokia 2730
  11. Nokia 7230
  12. Nokia Asha 305
  13. Nokia Asha 308
  14. Nokia Asha 311
  15. Nokia C2-03
  16. Nokia Lumia 610
  17. Samsung Galaxy Chat
  18. Samsung Galaxy Mini
  19. Samsung Galaxy Pocket
  20. Samsung Galaxy Y
  21. Sony Xperia Tipo
  22. ZTE Acqua
  23. ZTE V790

MCMC appears to have good intention here but its a poor decision, in my opinion. What good is a smartphone without a data plan when existing data packages are expensive.

It is a good thing that MCMC requires those applying for the rebate to be an existing data user, but then if I can afford those expensive data plans, why wouldn’t I afford a 3G smartphone.

Or put it the other way round, if I can’t afford a RM500 3G smartphone, how would I afford a monthly prepaid data plan?

Just look at some of the prepaid data plans out there, take DiGi as an example, the cheapest monthly data plan cost RM30/month or RM360 a year. Its so called the “Best Prepaid Plan” in the market with the worst 3G service in the country. Not to forget that RM360/year does not include usage for voice & SMS.

The fact is, prepaid users in Malaysia spent almost RM40/month in Quarter Two this year, their ARPU per Telco- Maxis/Hotlink- RM37, Celcom/Xpax-RM37, DiGi- RM41.

If  these prepaid users(all age group) could spend some RM500 a year on voice and SMS or data, don’t you think that they can afford a RM300-RM500 3G smartphone?

Malaysians between the ages of 21 and 30, so called the Generation Y, are people born in the digital age. You don’t need to tell them to get a 3G smartphone, they would find a way to get it.

MCMC may be targeting those living in non-urban areas in the states like Kelantan, Terengganu, Sabah, Sarawak and others. This brings up to another issue related to the quality of 3G service and coverage.

Using a 3G smartphones requires 3G data service.  The low income group need cheap data service which is currently expensive. Generally, 3G coverage is poor in the non-urban areas.

This move by MCMC just don’t make sense, how would a RM300 smartphone alone help “youths especially those in rural areas to enjoy the nation’s broadband facilities” ?

Talking about bridging the digital divide, in my opinion, these are what MCMC should be doing.

  • In Singapore, a 150Mbps Fibre plan cost about RM125 a month, why Malaysians are paying a higher price of RM149(UniFi) for a slow 5MBps? MCMC should  play the most important role in the industry to bring down broadband cost for consumers.
  • 3G was launched in Malaysia in 2005. However there are many non-urban areas where there’s still no good Maxis 3G and Celcom 3G coverage. In urban areas, most 3G base stations are congested for data and it even affects voice services as per the recent road test revealed by MCMC them self. Even DiGi 3G is not available at major shopping malls and other important areas. MCMC must ensure that user expectation on 3G services are met, if not, firm action must be taken on the Telcos. If a Telco failed to comply, their spectrum should be given to another Telco that qualifies.
  • Up to speeds promised by the Telcos are just fantasies. What is MCMC doing about Telcos that failed to deliver data speeds promised to their customers? Telcos that failed to deliver what they have promised must be fined, customers must be refunded with no question asked.
  • The current method used by MCMC to resolve a broadband complaint appears useless. There are no firm action or decision, and all complaints to MCMC are forwarded back to the Telcos. Nothing happens if the Telco chooses not to resolve the complaint. The process it self takes forever and requires frequent follow up from consumers. MCMC must make this process as transparent as possible. Number of complaints and un-resolved complaints per Telco must be made available to the public. Its an embarrassment for the Telcos if these data are made public, let’s not forget that MCMC must prioritise the interest of the public first.
  • Work closely with the Telcos, make smart decision. Why can’t MCMC bundle the 1Malaysia Broadband Affordable packages with this smartphone rebate? The RM25 monthly 1GB data package is one the lowest in the market but only made available in 5 states.

Now if all the above are made possible, perhaps then we can truly bridge the digital divide, step-by-step.

MCMC could put the RM300 million into better use to build “Internet Education Centres” or improve the MCMC complaint center/system. This would be beneficial to all age groups, all Malaysians.

We already got lots of people being cheated on Facebook(due to lack of Internet education), and new 3G smartphone users would be addicted to mobile Internet resulting in bill shocks. I don’t see how does a RM200 3G smartphone rebate make things better for this group of people. Considering that they are the low income group, helping them buy a RM500 smartphone would most probably burden them further.

However, it is certain that the Telcos and some 10 phone distributors would profit out of this. Its RM300 million, tax payer money gone just like that.

This should not be about making smartphones affordable, instead it should be about what people are going to do with the smartphone. That’s far more important.

After all, its normal for poor decisions like this coming from MCMC, this is Malaysia.

About Kugan

Kugan is the founder of MalaysianWireless. He has been observing the mobile industry since 2003. Connect with him on Twitter: @scamboy