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Malaysia Broadband Overview

The Malaysian telecom industry was liberalised in the mid 1980’s, following a period during which it faced a number of restrictions. The telecommunications sector was seriously affected by the economic crisis of the late 1990s but recovered strongly in 2002.

The Malaysian telecommunications market has all the characteristics of a developing communications industry in Southeast Asia. The fixed-line sector is dominated by the incumbent operator while the domestic mobile market is fast reaching saturation with local operators looking abroad for future growth. Broadband usage is exploding into life but the infrastructure is insufficient to deal with the demand and the increase in popularity of non-voice services is significant. Supporting all of this is the thirst for next-generation mobile telephony and the increasing integration of IT technology into telecoms networks.

With a low broadband penetration in comparison with its South East Asian neighbours, the Malaysian government has been making important steps towards improving connectivity, allocating RM 12.9 billion for the Ninth Malaysian Plan (2006-2010), intent on turning Malaysia into an international hub for IT. However, Internet take-up has been restrained and broadband growth has been disappointing. While over the last two years, the broadband market finally experienced a major surge with close to 200 per cent expansion during 2006-2007, the slow roll-out of broadband services in recent years had forced the government to lower its household broadband penetration target from 75 per cent to 50 per cent by 2010.

At the end of 2007 only 11.7 per cent or 643,500 of Malaysia’s 5.5 million homes had broadband. In addition, these users have had endure poor service quality and slow speeds because the country’s existing copper telephone lines cannot support the increase in subscriber volume and bandwidth demands. WiFi services are soon to be introduced, with service providers starting to rollout their ‘hotspot’ services, and now that the government has issued some WiMAX licences, this is something that will be watched with interest.

Malaysia has two major telecom operators – Telekom Malaysia and Maxis Communication Berhad. Telekom Malaysia is the Malaysian incumbent which began operations in 1984. It offers DSL services to residential and business customers through its two ISPs: TM net and Celcom. In May 2007, TM Net signed up its one-millionth broadband customer, showing its continued dominance of the telecommunications sector. Introduced in 2001, TM Net recently launched its Streamyx 4.0 Mbps package, as well as extending the areas of coverage for Streamyx 2.0 Mbps, making it the fastest broadband service in Malaysia.

An important smaller player is Jaring, owned by Malaysian Institute of Microelectronic Systems (MIMOS). Jaring was the first ISP in Malaysia in 1992, and the first to offer Broadband services using optical fibre in 2000. However, Jaring did not receive a formal network licence until mid 2004, and as a result it was never able to compete effectively with the incumbent. Now that this limitation has been removed, Jaring’s FWA broadband services are expected to give it added leverage in competing with TM Net.

The mobile telephony market has also seen numerous developments since 2000. After an initial phase of immature overcrowding and fierce competition, three main players emerged. They are Celcom, Maxis and DiGi. Coming into 2008, just over 90 per cent of the 27 million people in Malaysia had a mobile phone service. This gave Malaysia the second highest mobile penetration in South East Asia after Singapore. The 25 millionth mobile subscriber is set to be passed by the end of 2008, up from only two million in 1998.

In 2005, the Malaysian regulator awarded two 3G licences – one to TM net operating under the Celcom brand and the second to Maxis. Telekom Malaysia, in addition to leading the broadband sector, also leads 3G deployment and provides 3G mobile services through its subsidiary Celcom. In February 2006, Celcom had 52,000 3G subscribers.

MiTV Corporation (MiTV), one of the companies to have won a Malaysian 3G licence alongside Maxis Communications, Celcom and TT dotCom has taken its first steps to offering a 3G service. The operator signed a collaboration agreement to launch a mobile broadcast TV service in Malaysia during the second half of 2007, and is planning to use the 3G network to deliver multimedia content and wireless broadband access, as well as providing voice telephony and VoIP services.

HSDPA (High Speed Downlink Packet Access) was recently launched by mobile carriers such as Celcom Bhd. HSDPA is a 3G overlay technology capable of up to 8 - 10Mbps download speeds. 3G license holder TimeDotCom was running trials of its HSDPA services in 2007. DiGi could be launching 3G and WiMAX wireless broadband services soon. In 2007 the operator outlined 2008 as a possible launch date of its 3G services. However, in early 2008 the government ruled that DIGi and TIME dotcom’s partnership for the provision of next generation services is not legal. Further, there remain concerns that with the government eager to reclaim capacity over the coming five years on the 2.5Ghz and 3Ghz bandwidths, it may prohibit DiGi’s launch indefinitely.