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NTT gets Malaysian Internet service licence

September 11, 2000

The Japanese giant is the first foreign telco to secure a local licence for Internet services and is set to launch in November.

KUALA LUMPUR - Nippon Telegraph and Telephone Corporation (NTT) has been given a licence to offer Internet access in Malaysia - the first foreign telco to enter the previously closed local Internet Service Provider (ISP) market.

The giant Japanese telco received the "class licence" on August 17 from Malaysian regulator Communications and Multimedia Commission (CMC).

NTT MSC Sdn Bhd president and chief executive Hotta Akio told ZDNet Asia the company will be providing Internet access under the brand name Arcnet from mid-September with an official launch set for November.

NTT MSC, is a subsidiary of the NTT's long-distance and global carrier group NTT Communications Corp.

Class licences which came into force on August 4 effectively opens the market to foreign players, encouraging more competition and providing consumers with more choices.

Malaysia previously allowed ISP licences to only five local telcos, namely, Telekom Malaysia, Maxis, DiGi, TimedotCom and TRI, and one state-funded research house Mimos Bhd.

The CMC distinguishes "class licences" from those earlier licences as a "light-handed regulation, striking the balance between free market forces and tight regulation."

Potential service providers now only need to register with the CMC for RM2500 (US$658) for the one-year licence which is renewable.

Akio said Arcnet will be targeted at densely-populated and industrial-concentrated areas. "Our first target markets are corporate customers in industrial-concentrated areas but if the public wants high quality Internet services they can also apply," he said.

Akio said the Arcnet service will not just be about Internet access but will incorporate datawarehousing, electronic payment infrastructure systems, and a portal with, among other things, a multilingual machine translation engine and live baseball updates from Japan.

NTT MSC is targeting 5,000 to 10,000 customers by year-end. "We're being modest because we don't want to take on too many users and compromise our quality of services. Right now our resources are ready to support 10,000 users but if the response is great we will scale up proportionately," said NTT MSC product development manager Victor San.

Akio said its datawarehousing service is targeted at dot-coms and new start-ups coming up in the Southeast Asian region. "We've already signed on several US multinationals and regional players and we hope to expand the numbers," he said.

NTT MSC was first incorporated in July 1997 to spearhead the telco's research activities for Malaysia's Multimedia Super Corridor project, a 750 sq km high-tech zone south of Kuala Lumpur, which has already drawn some of the biggest IT and telco players in the world. The research center is NTT's second-largest overseas R&D facility following NTT America.

Akio said the company has already grown from an initial 30 to 100 staff and plans to invest up to RM100 million (US$26 million) on its operations by 2002. "If we are successful, we will definitely expand on staff and resources."

NTT MSC conducted a free trial of its new Internet service in July which will end by mid-September.

The Arcnet service will be headquartered at NTT MSC research center in Cyberjaya with nodes in Kuala Lumpur, Penang, Johore and Shah Alam.

NTT MSC already serves many Japanese firms operating in the Kuala Lumpur and Penang, providing them with local area network and Intranet site construction, system maintenance and systems integration services.

It also offers managed frame relay, managed ATM, virtual private networks and IP backbone services under the brand name Arcstar.

NTT Communications recently announced it was spurned by Malaysia's largest carrier Telekom Malaysia for a stake in the state-controlled telco because "agreement on certain key strategic issues could not be reached".

Julian Matthews is ZDNet Asia's correspondent in Malaysia.