1. Malaysia and the road to the Networked Society

Malaysia and the road to the Networked Society

Kuala Lumpur

As part of this series, I have discussed key enablers being considered by the Malaysian Economic Transformation Program (ETP) team as it attempts to transform the nation’s ICT sector. In my previous posts I presented thoughts on the policy and technology enablers while in this final post, I will go into more detail about business model and ethics enablers.

Business model enablers

It goes without saying that commercial viability is absolutely vital to ensuring sustainability. As mentioned in my previous posts, it is a delicate balancing act for service providers to provide quality broadband services that are affordable to all.

Cost Concerns. Emerging markets tend to have higher connectivity charges due to poorer infrastructure and the fact that service providers pay significantly higher IP Transit rates compared to other advanced markets. IP Transit is associated with the infrastructure required to connect a country to the rest of the world and typically comprises investments in submarine cable consortiums and to an extent, the amount of traffic imported into a country. As Malaysia tends to import more internet traffic than it exports, service providers pay on average four times more than advanced nations that generate more content or have mature infrastructure to host such traffic.

Furthermore, network planning is always tricky for countries with concrete-laden cities and hilly and mountainous countryside covered in tropical rainforest. Service providers in these places need to deploy additional infrastructure and must deal with site rental rates that are amongst the highest in the world. Data traffic is also growing exponentially, requiring more sites and equipment when existing cells are not coping with the capacity (cellular coverage typically reduces with higher traffic volume).

Revenue Concerns. Most would agree that Over-The-Top (OTT) applications are key drivers of smart device and broadband adoption. As this adoption grows, service providers are experiencing OTT cannibalization with lower utilization in traditional cash-cow, voice and text messaging services resulting in a decline of Average Revenue Per User (ARPU). When deploying broadband appears to be a double-edged sword, the balancing act just gets trickier.

Business Innovation and Collaboration. Various innovations were discussed and explored to address this, and the general conclusion by the ETP team was that the industry would need to collaborate even more and work together in new ways. Models such as wholesale network consortiums, Mobile Virtual Network Enablers (MVNE), spectrum pooling and village operators were explored. Such initiatives are being executed by the industry today under the Extending Reach, Smart Network and Regional Networks programs. This included network and spectrum sharing agreements as well as the development of consortiums to jointly invest in IP Transit capacity. New bite-sized broadband packages and innovative content-based and zero-tariff OTT services are being introduced to address late adopters and low-income users.

Ethics Enablers

As broadband and connectivity enables economic growth and job creation, an ethics and policy framework is also required to ensure the sustainability of the industry. Various concerns were addressed: fair competition, consumer protection and responsible internet utilization as well as the creation of local content and the development and promotion of socio-economic empowerment initiatives. This was incorporated into various projects of the ETP and government agencies whose aim is to ensure that the welfare of the people is considered. Up until recently, service providers were advertising peak rates to attract subscribers, leading to unsustainable competition and a lot of unhappy customers. Personal data of subscribers were also sold leading to a volley of unsuspecting telemarketing calls and messages from content providers. The government quickly acted and the Personal Data Protection Act was introduced in 2010 as well as a series of ministerial directives that included among other things meeting advertised broadband speeds.

I believe the government of Malaysia is well on its way to transforming its ICT industry while still ensuring its sustainability. Ambitious targets combined with key enabling factors are coming together nicely. With mobile penetration at around 150% and household broadband penetration fast approaching 70%, the industry is thriving. I have no doubt the National Broadband Initiative and the ETP initiatives will make the Networked Society a reality sooner rather than later.

This post was the final installment of a three-part series. If you would like to go back and read Steven’s previous contributions on the subject, you can find them here here, and here.

Written by Steven Tai

Vice President, Strategy and Marketing at Ericsson Malaysia and Networked Society Evangelist. Steven is interested in a clean, peaceful and prosperous world and is confident that the Networked Society will be the main enabler for this.

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