Long way ahead for local broadband providers
Loh Chyi Jen
NST: Business Computing-05/12/01
In the midst of the local broadband commotion, several issues have been identified and therefore must be addressed before there can be mass adoption of this much anticipated service.
In the midst of the local broadband commotion, several issues have been identified and therefore must be addressed before there can be mass adoption of this much anticipated service. Presently, telecommunication companies (telcos) that have rolled out broadband services either throughout the nation sporadically or on targeted areas are Telekom Malaysia (TMNet Streamyx), Timedotcom (Time Broadband), Mimos (J-Band) and Maxis Communications Berhad (i-Link).
Frost & Sullivan’s director of technology practice group Manoj Menon estimates that broadband subcribers will grow from 11 million in 2001 to over 33 million by 2005 in the Asia-Pacific, thus, accounting for more than 10 per cent of the total Internet subcribers. Manoj notes that DSL infrastructure leads over 57 per cent of broadband subcribers currently as compared to 47 per cent of cable infrastructure. This trend is expected to continue in the Asia-Pacific in the years to come.
According to Cheng Heng Jiang, Asia-Pacific account manager for Ovum, competition is a good stimulus to roll out broadband in Malaysia. Currently, it is almost a monopoly for the incumbent operators mainly because of the last mile issue that is hindering competitors.
However, Cheng cautions that although Telekom Malaysia is the dominant player in this area, it should not be pressured in rolling out its broadband facilities for fear that it might stop providing broadband services all together, since it is not likely to make money from broadband services in the near future.
“Telekom Malaysia is most likely offering broadband services because of political reasons rather than for profitability reasons since it has to adhere to the Government policies to speed up broadband providence,” says Cheng.
“The uptake of broadband in Malaysia is still slow and one of the reasons is the lack of overall general infrastructure,” says Shane Hodge chief operating officer of IT network oursourcing company Cordoda Corporation.
There is also the issue of the last mile link (copper lines) in Malaysia. Due to the fact that about 95 per cent of the last mile link is owned by Telekom Malaysia has hindered potential broadband providers to penetrate the mass market. Up till now, telcos that have built infrastructure to facilitate last mile links are Telekom Malaysia Berhad, Maxis Communications Berhad, and Time dotCom Berhad.
While Time dotCom Berhad has rolled out broadband services in Mont Kiara this year, Nick Kitson, head of Maxis’ Fixed Network Division informs that Maxis’ two gigabit per second (Gbps) asynchronous transfer mode (ATM) and Internet protocol (IP) core network enables high-speed Internet access for Maxis’ customers. The company has been providing dedicated leased line-based service for over a year.
“More recently, Maxis has offered xDSL services to selected customers. Now, we are making our services more widely available, targeting medium to large business customers in selected locations in the Klang Valley,” says Kitson, adding that Maxis will not fully roll out the services until the company is convinced that it can offer the quality and reliability customers have come to expect from it. XDSL allows the network to be shared and it is particularly effective for business customers with Web and e-mail applications who want high performance but cannot justify the expense of a dedicated connection.
Where does Malaysia stand in broadband?
In Pyramid Research’s ranking for broadband in Asia, Malaysia ranked seventh after South Korea, Japan, Hong Kong, Singapore, Taiwan and the Philippines. The top five countries are considered Tier 1 with high potential for broadband, while the Philippines, Malaysia and Thailand are rated Tier 2 with moderate potential. Tier 3 or low potential countries for broadband market are India, China and Indonesia.
The report notes that despite Malaysia’s efforts to become a hi-tech hub within Asia, the Philippines was rated higher although only by 0.5 point.
The decisive factor was regulations governing broadband services. The Philippines has a very progressive regulatory environment that is promoting early market maturation. Operators are using multiple technologies to deliver services, a market characteristic typical of top-tier countries such as Korea. Poor infrastructure has relegated both the Philippines and Malaysia to the second tier.
“Many operators do not realise the importance of putting the right price for broadband services in order for them to achieve a workable business model,” says Hodge from Cordoda.
Manoj from Frost & Sullivan also informs that broadband service providers should concentrate on enticing services rather than how great the technology is.
Meanwhile, Cheng from Ovum explains that the predicament of local telcos charging users by the minute instead of the amount of downloads or on a flat rate, is a way of averting exploitation of usage with regards to the log-on duration. He notes that local telcos will only begin to charge a flat rate when the market becomes more competitive.
Content delivery
Ovum also warns of the economic uncertainty and outstanding political and regulatory issues are affecting broadband infrastructure investment, and the gap between developed and less developed countries across the region is widening.
Cultural and language differences in Asia-Pacific mean that the cross-border content delivery model will be less relevant here than in other parts of the world. To generate the highest returns, infrastructure providers need to balance in-country broadband content delivery against cross-border broadband service provision, and should scale their investments accordingly.
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