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World Bank says Malaysia Broadband Market Improved, Praises MCMC

A recent World Bank report published in June 2019 recognises the efforts of the new Malaysian Government (MCMC) in uplifting the country’s telecommunications sector.

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The World Bank report, titled “Malaysia Economic Monitor: Re-energising the Public Service” acknowledges regulatory reforms undertaken by Malaysian Communications and Multimedia Commission (MCMC) in Malaysia’s telecommunications sector in 2018 which have had a significant positive impact.

Part of the World Bank Report- Malaysia’s Need For Speed: How Regulatory Action is unleashing Ultrafast Internet (page 42) mentions the following:

Most visibly, a series of regulatory actions have caused the prices of fixed broadband services to drop and triggered a shift in consumer demand towards faster internet connections. In 2018, the Government introduced an important measure known as the Mandatory Standard on Access Pricing (MSAP), which was implemented by the Telecommunications Regulator.

The quality of fixed broadband connections, including cable and fiber internet services, rapidly responded to these regulatory changes. Within three months, multiple service providers, including TM, announced new broadband subscription plans that included faster speeds at lower prices. The impact was especially evident for what is globally becoming the norm for basic broadband services (30 Mbps services), with average prices for those plans falling by 30 percent over 2018. Notably, the average price of plans for speeds in excess of 1 Gbps (the emerging speed target for advanced economies) fell by over 40 percent. Price drops were seen across all plan types.

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As faster speed broadband plans have become more affordable, Malaysian subscribers have switched to these plans. Data from the telecommunications regulator MCMC shows that the number of fixed broadband subscriptions with download speeds of more than 100 Mbps grew by a factor of eight to 1.2 million subscribers in 2018. These increased speeds are reflected in the online tests conducted by subscribers.

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Malaysia is now starting to close the gap with leading countries with respect to internet speed. In December 2017, the average speed of fixed broadband services in the five countries in the world with the fastest connections was more than six times faster than the average speed in Malaysia. By March 2019,this had narrowed to just over two times. Put another way, Malaysia’s average fixed broadband speeds have accelerated by more than 300 percent in just over a year. The already-competitive mobile broadband market has seen a smaller improvement, reflecting the fact that it was already performing relatively well. However, it is now facing increased pressure to grow, with consumers demanding faster connections to feed their digital ambitions.

Recent events show the impact of policy reform on market outcomes. The implementation of regulations that boost competition have been shown to have positive effects on subscription and affordability in many contexts. Malaysia’s experience shows the potential gain, demonstrating the demand for highquality, affordable internet services and indicating that the digital transformation is yet to be fully realized. It also indicates that this is a first, even if critical, step in a longer journey to provide all Malaysians with access to ultrafast, affordable broadband services, that will position them and their businesses and the economy for growth in an increasingly digital world.

According to MCMC, the implementation of Mandatory Standard on Access Pricing (MSAP) in October 2018 produced an average of 49% reduction in the prices of high-speed broadband services.  Prior to the price reduction, prices of entry level packages ranged from RM119 to RM129 for 10Mbps. With MSAP, the prices of entry level packages ranged from RM79 to RM89 for 30Mbps. In addition, the number of fixed broadband subscriptions with download speeds of more than 100Mbps grew by a factor of eight to 1.2 million subscribers in 2018, from 150,000 in 2017.

Under the National Fiberisation and Connectivity Plan (NFCP), MCMC plans to improve affordability, quality and accessibility of digital connectivity as a pathway for the country to usher the “Fourth Industrial Revolution (IR 4.0)” that brings with it “disruptive technologies” such as artificial intelligence, robotics, big data, and virtual engineering.

MCMC Chairman Al-Ishsal Ishak said: “The World Bank report is a testament of the effectiveness of initiatives, policies, and actions implemented by MCMC. As a regulator of the communications and multimedia industry, our aim is to ensure that the standard of connectivity nationwide can unlock added-value to the people as well as catalyse strong and sustainable economic growth for the country.”

In June last year, the similar report said that Malaysian consumers are paying a “considerably” high price for fixed broadband service, compared to other countries with similar level of economic development. World Bank pointed out that Telekom Malaysia (TM) charges a high fee for point-of-access connection outside its cable landing station, resulting in costly broadband rollout for other ISPs in Malaysia.

Apart from these, the HSBB and SUBB project were given to TM exclusively without contest, “eventually eliminates the possibility of attracting private investment,” it said.

As of December 2017, TM held a 90 percent market share in the Malaysia Fixed Broadband market.

[Download PDF]– World Bank Report: Malaysia Economic Monitor: Re-energising the Public Service

About Kugan

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