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News from Asia-Pacific

Telekom Malaysia, UMTS to Roll Out 3G

Telekom Malaysia and UMTS Sdn Bhd, a subsidiary of Maxis Communications Bhd, plan to spend an estimated RM8 billion (US$2.1 billion) over the next 15 years to introduce high speed mobile Internet (3G) services in Malaysia.

Pilots will begin this month with Telekom Malaysia testing out the service in the vicinity of the Multimedia Super Corridor (MSC), while UMTS has scheduled trials in Kuala Lumpur city center and selected suburbs early next year. Although the two operators will compete head-on in the capital, they will share coverage across the country to lower operating costs.

Both companies won the lucrative bid for 3G spectrum blocks put up
for grabs by the Malaysian Communications and Multimedia Commission (MCMC) last year, beating Celcom (Malaysia) Bhd, Time dotCom Bhd subsidiary TimeSat Sdn Bhd and E-Touch Sdn Bhd.

Malaysia opted for a "contest" in handing out the licenses rather than a costly auction, reasoning that the latter may unduly burden bidders, as seen with some 3G auctions in Europe.

According to MCMC, limiting the number of operators will minimize unnecessary duplication of large-scale infrastructure while maintaining competition at the network facilities level. The two companies paid a fee of RM50 million each for 2 x 15MHz block of 3G spectrum.

The failure of Wireless Application Protocol (WAP) service and poor demand for General Packet Radio Service (GPRS) also had the commission demand potential bidders outline detailed business plans to the MCMC for approval before the spectrum blocks were officially assigned.

"The assignment holders must keep their promises and meet datelines set in the business plans," said Tan Sri Nuraizah Abdul Hamid, MCMC chairman, adding that the commission will monitor the operators' progress.

Limiting Operators

Analysts are cautious on the take up rate of 3G in a nation with just over 8 million mobile phone users. Usage is expected to reach 12 million by 2006. Maxis is the number one cellular carrier while Telekom recently boosted its customer base to 40% through a merger with another cellular provider.

According to Telekom chief executive Datuk Dr Md Khir Abdul Rahman, the RM100 million 3G pilot at the MSC coupled with impact of similar services implementation in other countries will determine the commercial rollout rate at four targeted districts in the central, northern, southern and eastern regions.

He said that expenditure to build the network infrastructure would depend largely on consumer uptake, although the company expects to spend less on equipment as prices drop over time. "The service would cost between what telecommunication companies can offer and what customers would like to pay," he noted.

Maxis CEO Jamaludin Ibrahim concurred. "There are many ways of sharing electronic and civil infrastructure," he said, adding that the project will be financed by loans and internal reserves.

Telekom and UMTS are optimistic of reaching 80% of the population through its new range of services by 2010 and 2014 respectively.

by Anita Devasahayam

(July 2003 Issue, Nikkei Electronics Asia)

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Nikkei Business Publications, Inc. All Rights Reserved.