April 15, 2021

A monopoly to open up competition

4 min read

MOST people do not realise that fibre optic cables are required for wireless broadband services such as 4G and 5G. The analogy is like water sprinklers: they can only work when there is a water pipe at the base. It would be a big mistake if we don’t have a concrete fibreisation plan to improve existing 4G services and to prepare the nation for 5G, as well as to improve the coverage and quality of high speed fixed broadband to premises.

The government announced the National Fibreisation and Connectively Plan (NFCP) in October last year. It was followed by the launching of 5G pilot projects. Communications and Multimedia Minister Gobind Singh Deo has said he wants to make Internet access a utility service, which is laudable.

A budget of RM21.6bil was also announced for the NFCP. It was a collection of plans by a few major service providers amounting to about 50% of the budget. The balance is expected to be allocated from the Universal Service Provision fund which is collected from telecommunication service providers every year. Recently, a new exercise (called NFCP2) was initiated to build 500 telecommunication towers for mobile services in underserved areas.

However, when I look into the details, I don’t see a specific fibreisation plan. NFCP1 was a broadband plan similar to HSBB1 and HSBB2 (High Speed Broadband, which was first initiated about a decade ago) albeit with higher speed and expanded geographical coverage. The focus is still on high-impact areas – industrial and commercial areas, towns and

cities. The vision to make broadband a utility service is unlikely to be achieved with this. The gap between developed and underserved areas would be prolonged. The big question is why do we have NFCP (1 and 2) without any concrete fibreisation plan, not even for the towers? The term “national fibreisation” seems to be a misnomer.

In my view, we have been facing two major issues over the last three decades since the corporatisation of Jabatan Telekom Malaysia.

First is the duplication of fibre infrastructure in developed areas where major providers are competing to improve their services for high-speed broadband.

Second is the lack of infrastructure in underserved areas where services are provided by an incumbent player. Other players would be reluctant to invest due to commercial reasons. This has led to the perception that the services are monopolised by one provider, that users have no choice and have to endure poor services.

As I have written in my previous letter (“Single entity to manage fibre optic infrastructure”, The Star, May 8; online at bit.ly/star_single) we need to solve these two issues at the same time.

The laying of fibre optic cable requires right-of-way through government land. Why should government land be monopolised by an exclusive few (or just one, in many geographical areas), thus depriving other providers of competing on a level playing field – and worse, depriving consumers of more choices?

One can argue that others can also build their own fibre infrastructure. But there isn’t enough space on roads for 200-odd licensees. Besides, if allowed, roads would be badly damaged and there would be very high maintenance costs incurred. And, eventually, the end-users will have to pay.

Some of the big players may work together to share their infrastructure. However, this will potentially create an informal cartel, unless open access is made mandatory and pricing is controlled and services are strictly on a first come, first served basis. Whatever it is, conflicts of interest would still exist.

Hence, we have only one solution for these two issues, which is to establish a neutral entity to build, operate and maintain shared fibre optic infrastructure with open access to all licensees. There will be no conflict of interests.

It should be controlled by the government, heavily regulated, and run on a not-for-profit (cost-plus) basis. It can initially focus on new areas. If need be, it can acquire existing infrastructure on a willing buyer/willing seller basis. Existing fibre infrastructure owners can still continue to use their own infrastructure while at the same time expanding their services into new areas using the purpose- built and shared infrastructure at a much lower cost than building their own.

Are we creating a new monopoly? Well, not all monopolies are bad. We have been living with a few of them already – for water, electricity and sewerage. Why should telecommunications be an exception? We are talking about a monopoly for passive infrastructure only, for which nothing much can be value-added. It is transparent to the end-users. It is a necessary monopoly to open up competition for the benefit of consumers – by reducing cost, offering better quality, and expanding coverage.

This is the way to make broadband a basic utility, similar to water and electricity. Consumers must have choices to drive down prices and improve services. All towers and poles will have fibre, ready for 4G and 5G services. For fixed broadband, service providers can then offer affordable 1Gbps in all populated areas, much higher than the current plan of 30Mbps (presumably using 4G service). And it would cost much less than RM21.6bil.


Former CEO of Jaring, Malaysia’s first

Internet provider

Kuala Lumpur