Leveling the broadband playing field
As the backbone of the digital economy, internet connectivity – or high speed internet connectivity in particular – is vital to ensure a nation’s continued digital growth at optimum speed.
For the nation to develop its digital economy, high speed internet connectivity needs to be easily accessible by the mass market.
However, even as internet infrastructures continue to be upgraded and expanded across the nation both rural and urban over the past few years, Malaysian consumers have been offered only a handful of choices in terms of high-speed internet services.
These choices also usually carry a premium price tag which most middle-income Malaysian households are unwilling to invest on.
According to World Bank’s Economic Monitor report published earlier this year, highspeed broadband access rates are much higher in Malaysia, relative to other countries as it ranks 74th out of 167 countries for fixed broadband services and 64th out of 117 countries for fibre broadband services.
“Ensuring that Malaysia’s digital infrastructure provides ubiquitous, reliable, and ultrafast broadband internet service is key to unlocking the potential of the digital economy. Nearly 80 per cent of the population is online, primarily through mobile networks.
“But the country lags in the coverage and adoption of fixed broadband services, especially compared to its level of economic development.
“There were only nine fixed broadband subscriptions per 100 inhabitants in 2016, less than income per capita would predict and only a fraction of Malaysia’s 92 active mobile broadband subscriptions per 100 inhabitants.
“Malaysia also has slower download speeds and higher prices than most advanced economies. And it appears that Malaysia will become less competitive in the near future,” said the World Bank in its ‘ Malaysia’s Digital Economy: A New Driver of Development’ report.
It pointed out that most advanced economies are actively rolling out ultrafast broadband internet connections, which operate at speeds over 100 megabits per second ( Mbps), and provide the foundation innovations such as artificial intelligence, the Internet of Things, and Industry 4.0.
“In contrast, Malaysia’s broadband initiatives call for a maximum download speed of only 100Mbps, and even that is restricted to state capitals, major towns, and high-growth areas. The maximum speed in the suburbs and rural areas are not planned to exceed 20Mbps and 4Mbps, respectively,” it added.
It further saw that high prices, low coverage, and limited ambitions for fixed broadband in Malaysia are driven by a lack of market competition in the industry.
With high prices and low coverage, it is no surprise that it has been reported that only 18 per cent of households in Malaysia have access to highspeed broadband services while World Bank had also pointed out that only 62 per cent of businesses in Malaysia are connected to the internet, with only 46 per cent having access to fixed broadband services.
Aware of this, the Federal government had recently announced measures to encourage competition in the broadband industry in the hopes that this could bring down broadband prices.
It had also stressed on the Mandatory Standard on Access Pricing ( MASP) that was first issued by the Malaysian Communications and Multimedia Commission ( MCMC) late last year and implemented this year.
The Federal government had also introduced the National Fiberisation and Connectivity Plan ( NFCP) which is now being developed by the Communications and Multimedia Ministry through MCMC.
Under the NFCP, the government has set three key priorities which include speed, affordability, and coverage.
“While the mobile broadband space has a very high penetration rate, we need more high-speed fixed broadband infrastructure to support the growth of the digital economy,” said Communications and Multimedia Minister Gobind Singh Deo when announcing details on the NFCP.
In response to the government’s agenda to cut broadband prices by 25 per cent by year- end following the review of the Mandatory Standard of Access Pricing, all the fixed broadband service providers have reduced their respective broadband package prices.
As the fixed broadband segment begins to see more competitive prices, the research team at Kenanga Investment Bank Bhd ( Kenanga Research) said: “Despite escalating competition in the fixed broadband segment, we believe the current package prices are competitive enough and able to achieve the government’s agenda.”
With that, BizHive Weekly checks in on several major telecommunication companies and their progress to offer better internet services to consumers and businesses.