Media & Events

Heart of Convergence

20 May 2002, The Edge - Special Focus on Telecommunications, Karamjit Singh
Malaysia's mobile telecommunications industry is a vibrant one. Fierce competition between the five mobile players is probably the best example of an open and thriving market in this country. At the heart of this open and still liberalising market is the Malaysian Communications and Multimedia Commission (MCMC), which plays the unique dual role of industry regulator and also helps promote and develop the industry. Which industry are we talking about? Communications, broadcasting or information technology? It's all three and it is called the convergence industry. The fact that our mobile phones will one day be able to receive and send video is but one example. Amidst a technology frontier that is changing all the time, Malaysians will find it comforting to know that we have in place a unique piece of legislation called the Communications and Multimedia Act 1998 (CMA '98, which some industry players like to call the Convergence Act). It is future proof of any technological changes because the Act is technology-neutral. In other words, it looks beyond the technology you plan to use (yes, we are sure it is as revolutionary as you hail it to be) and at the service you plan to deliver to consumers with the said technology. Licensing will eventually be given out on these criteria. Why not right away? Because convergence is new, the Act is new and the converged market is still forming. Right now, everyone is on a learning curve, especially the MCMC which has to oversee this dynamic market. At its helm is the commission's chairman Tan Sri Nuraizah Abdul Hamid. She is known as a tough lady who is driving the industry within the ambit of the CMA '98 - and also drives her staff. One of her senior executives, who once held a senior position in a multinational corporation, says he has never had to work this hard before in his life. Even weekends can be no time for rest. She has on occasion asked for reports to be delivered over the weekend - which she would go through and respond to by Sunday! netv@alue2.0 sat down with Nuraizah recently for a two-hour discussion about the work the MCMC is doing (but did not speak about 3G. "Let's save that for another day," she says). Not just telecommunications The Edge: There is a lot of focus on the telco part of your work. But there is more the MCMC, right? Nuraizah: You are right. Everybody seems to focus on the telco aspect of our job but we have a much wider area of responsibility. Besides the CM, we are also responsible for implementing the Postal Services (Amended) Act 91 and the Digital Signature Act 1997. You must also realise that there is one aspect of our work that makes us different from the typical regulator. This is the fact that we have been given a very important task not normally given to regulators, which is to spur promotional and development of the industry. We can bring changes to the industry by making policy recommendations to the minister [Datuk Amar Leo Moggie, the Minister of Energy, Communications and Multimedia], which can have a developmental impact on the industry. This gives us a good balance between our regulatory scope and providing enabling ways to bring further development to the industry and nation. The Universal Service Operator (USO) Fund that we launched last month with RM30 million from our own coffers is a prime example. Compelling telcos to focus on customers and quality service While attention is focused on the quarterly Customer Satisfaction Index (CSI) surveys released by the MCMC, you recently quietly released some interesting results from another survey focusing on the telco's network quality. Why the need for another survey? This survey, called the Extensive Endpoints Service Availability Testing (EESAT), was aimed at assessing the actual state of the network service quality offered by cellular providers to their users. EESAT is based on generally accepted benchmarks and the measurement standards practised internationally. This survey serves as a balance to the CSI, which focuses primarily on customer feedback. To the MCMC, the EESAT is a very important survey, since it gives an indication of which service providers meet the requirements in terms of implementing adequate network infrastructure and capacity. Unfortunately, the media response to the survey had fallen far short in terms of conveying the comprehensive picture of the performances of the various service providers. Conducting EESAT gave us a good insight into the issues and challenges in the area of assessing cellular service quality. It provides us a good opportunity to plan for future EESAT surveys - the resources required to undertake such surveys in terms of technical expertise, system equipment and processes and procedures as well as the frequency of conducting such surveys. This will help us in our decisions as to whether to continue engaging the services of external consultants or set up and mobilise our own team. We plan to do this survey twice a year. The main message we are sending to cellular service providers with EESAT is that we are watching them - all the time. They should not slip up. We also realised that because of the CSI surveys, there has been a shift in telcos to pay more attention on the customers. In fact, some telco chief executive officers actually came and discussed the CSI results with us as they wanted to know their weaknesses. At least one telco went away and improved its billing system. This year's World Telecommunication Day theme is on bridging the digital divide. How does the (Universal Service Operator) USO fit in? Many countries have talked about the USO but the launch of the fund last month makes us the first country in the world to actually implement it. We view the USO as absolutely critical to providing communication access to the rakyat, especially with the dawn of the k-economy. When the CMA was being drafted, we decided certain processes would have to take place for the systemic and proper implementation of the fund. We have set up a special department to manage this. Every year, in September, we will come out with a list of districts that we will focus on for the coming year. All licensees are required to contribute to the fund. This is based on a weighted revenue formula with 6.0 per cent contribution. However, those who earn below RM500,000 and all CASPs individual licensees are exempted from contributing. While we have launched the fund, the contribution from all the licensees will only be collected at the end of this year. But we are starting the process of providing universal service because it is urgent and fits with national aspirations of a connected and knowledgeable people. For instance, during a recent trip to Sarawak, we came across a village where a youth was sent to pass the word of a death in the family. It was a two-day walk before he reached a phone. This is what we are up against. To me, part of fulfilling our development role is when this youth will no longer need to walk for two days to get to a phone. The industry also needs to realise that it plays a very important role in this process of change. Last mile access for broadband Internet users are crying out for competition in the broadband space and want it to be affordable. What are you doing to make this come true? This is the other end of the USO spectrum. While we talk about bridging the digital divide, we also need to take care of the needs of high-end users. Broadband is a key issue today. The five incumbent telcos are not focuses on the last mile rollout because of the high costs involved and their concern over equal access. They are worried about building a network and then having to allow others to ride on it. Because of this, they have been playing a waiting game and things don't get done. As a result, what we have done is to issue four network facilities provider (NFP) licenses for last-mile wireless broadband services. We have given them a year to launch, otherwise we will take action. We have gone with last-mile wireless access because we believe wireless is the future technology for communications. It is also cheaper and faster to launch. We have also provided fixed-wireless access spectrum to the five telcos which will need it to provide new technology in their last-mile rollouts. A point that will interest your readers is that the telcos will have to open up their networks by the end of the year because by then we will have our Access Code ready. This is where commercial agreements are spelt out between the access giver and access seeker. Personally, I am quite anxious to see this come out. We have appointed a consultant from Australia to help us come up with the Access Code which we will soon release for public feedback. This is actually a fallback Code because the industry itself has to come up with its own Access Code through the Access Forum (which is in the process of being set up). However, should it fail to come to some agreement within a certain time frame, we will use the Code drawn by the consultant as the benchmark in the interim. Complaints over too many licences There have been grouses from individual ASP licence holders that too many licences are being issued. What is your opinion? Before they got licences, we heart complaints that we were not opening the market enough and now that they have them, it is the other way around! To us, the more licences we issue, the more we help create a healthy competitive environment in which consumers have choices, can expect a variety of services and lower prices. This is the direction we are moving in and it is in accordance with the principle of the CMA. Also in accordance with the open nature of the CMA, by 2005 all our licences bar the NFP will migrate from individual to class where you only have to convey what you plan to do and you can then go ahead. The NFP will remain an individual licence as building infrastructure is costly and we want to keep a close eye on this. Something to scare the telcos What is your next assignment? It is to come up with a schedule for implementing roaming between the telcos. This is one way of rationalising network infrastructure investments. We are also working on number portability, which will be very significant when we are ready. Basically, what we have discovered during our CSI surveys is that Malaysians don't like to change their handphone numbers, even if they don't like the service provider. But with number portability, all you have to do is switch the first three digits, which are the telco access number. This has just been implemented in Australia and everybody is watching closely. One of the MCMC's stated goals is to build capacity. What do you mean? We have received many comments that the industry lacks the skills set to improve its quality. So we will be sitting down with representatives from the industry (telco, broadcast and information technology) next month to discuss a framework for industry development. We are looking at training, re-training people, attachments and working with private education institutions on the type of skills set needed and how they can help address demand. To provide the industry with a strong push, we are coming out with a programme whereby if you create your own content, offer staff development, conduct research and development or invest in small and medium-scale enterprise, we will offer you a rebate on the licence fees you pay yearly. We hope this will make them realise that these are activities they should be doing to improve their competitiveness and contribute to the development of the industry. Does who you know help one getting licences from the MCMC? We don't go on the basis of who you know, but what you can do. There are four factors for getting licences: Financial capability; Technical capability; Technology you plan to use; and Experience and management capability. Helping bridge the digital divide Last month saw the launch of the universal service operator (USO, which refers to the obligation to provide services to less profitable areas, such as rural or suburban areas) fund with RM30 million contributed by the MCMC. Telcos and other licence holders will contribute their portions at the end of the year and the MCMC estimates it would have collected between RM300 million and RM350 million. In this first stage, the money will be used to fund the rollout of network infrastructure. The MCMC is in the process of working out how to reimburse service providers for the services they launch. For practical reasons, bids will be entertained from those who have existing networks closest to the district identified. Obviously, this means that Telekom will be doing the bulk of the work to roll out access to underserved areas, especially in Sabah and Sarawak. The first two areas it will start with are Julau in Sarawak and Kinabatangan in Sabah. While bid documents have been released to invite applications from the telcos to serve these areas, it will be a major shock if anyone but Telekom submits a bid. A third district which will likely see some bidding is in Yan, Kedah. According to the MCMC, Telekom, Maxis Communications and Celcom are likely to put in bids. The formula for deciding which districts are targeted is any district whose telco penetration (both fixed and mobile) stands at 20 per cent below the national average. With national average at 20 per cent (MCMC figures), this means any district with penetration of 17 per cent and below. But in many places, the rate is much lower, In Julau, for instance, it is less than 1.0 per cent. The services to be provided are community phone, individual phones and Internet access (likely to begin with community access). The MCMC has identified 89 areas, but this will be revised from time to time. Background to the USO fund There was no provision for any universal service under the old licensing structure that would have compelled telcos to pay attention to rolling out services in rural and underserved areas. However, there was a provision in Telekom's licence that says it is expected to provide universal service. But much was still needed in defining the actual scope of universal service, the way to roll out this service, the kind of services to be expected and the compensatory measures for the incumbent Telekom Malaysia. Basically, Telekom did what it wanted to, after all it was using its own money. But then, this changed when the industry was opened up and five new players came into the picture. Telekom started making noises about getting others to share its burden of providing universal access. A formula was then worked out where everybody contributed with Telekom still in control of the rollout. It was felt comprehensive planning was needed. The opportunity for this came when the government introduced the new licensing structure with the CMA. From thereon, greater planning went into the implementation and focus of USO.
Share this article