ASO heralds new dawn for digital TV broadcasting

There are calls for MCMC to offer 45MHz instead of 40MHz of the 700MHz band

AS the government inches closer to switching off the analogue television system, telecommunications operators are increasingly excited about the move.

This is because the “analogue switch off” (ASO), where the same data will move into a digital network freeing up certain airwaves, enables the government to refarm out the important swathe of the 700MHz spectrum.

However, operators hoping to get their hands on this spectrum may have to wait a while – it would take about six to nine months before any player can gain access to it.

ASO marks a new dawn for digital television broadcasting, which promises more channels so that more players can enter the market place. The digital network will also lead to better quality pictures and superior sound, and more data to be broadcast such as electronic programme guides and multi-language subtitles.

Malaysia will join the ranks of countries which have gone through their own ASO and scaled up to the digital band such as the United States, Canada, South Korea, Japan and Singapore.

For the longest time the mobile players have been waiting for the freeing up of the 700MHz band. They like this band as it is more cost effective for them to roll out services.

It was therefore no surprise that some years ago one telecoms operator had lobbied to get the entire 700MHz block. Fortunately or unfortunately its plan leaked and fell apart.

That is the kind of lobbying one can expect for 700MHz.

Following that, in October 2017 a tender bid was launched by the industry regulator, Malaysian Communications and Multimedia Commission (MCMC) for the band.

In a document titled “marketing plan No. 1 of 2017” the regulator said the cost of each of the 2x5MHz block – a total of eight blocks of 5MHz were up for grabs – was RM215.4mil based on a lump sum payment, but doubled to RM417.12mil if payment was made via installments.

The move then had surprised the marketplace. And while players did put in their bids, the winners were never announced.

But it has been long believed that one mobile player had been given access to at least 2x5MHz of the 700MHz band.

In July, the regulator had put up a public inquiry seeking feedback from the public on spectrum allocation for 700MHz, 2300MHz and 2600MHz bands.

Anyone can give their feedback before Aug 30. The idea is to collate views as to the best way to dish out spectrum, some of which will be re-farmed.

After it receives the feed, the regulator will start a process to allocate the 700MHz spectrum.

It has the choice of conducting a beauty parade – where players submit their own proposals and the best one wins or a straight forward bidding process which results in the highest bidder getting the spectrum.

What is interesting is that the PI states four blocks of 2x10MHz of the 700MHz band are being offered. This means that only four players will get it. In comparison in 2017, the offer was for eight blocks of 2x5MHz.

“Smaller bandwidth simply means that more players can bid for it. This is seen in the case of 2300MHz and 2600MHz bands where four and eight players got the spectrum. Several did not roll out services for various reasons and in the end some had become rent seekers by leasing the bandwidth.

“That is something the regulator should not encourage for future spectrum bids and it should do away with political patronage in spectrum awards. Such moves in the past deprives the real players who want more spectrum. It is indeed good that the regulator is now working towards refarming of spectrum,’’ says an industry source.

The other question raised by some industry experts is why only 2X40MHz of the 700MHz spectrum is offered and not the 2x45MHz.

“It is likely that some players will raise this issue when they submit their feedback before end-August. Malaysia should standardise it just like what Singapore has done by offering 2X45MHz,’’ says an industry source.

Any access to the spectrum after the tender bid will likely be in the middle of next year, he adds.

In terms of costings, it is between RM400mil and RM500mil for a 2X10MHz block and that will raise about RM2bil for the government.

Unlike some countries that have made big bucks from the auction of spectrum, MCMC chairman Al-Ishsal Ishak has recently said that the government does not intend to “profit from any exercise’’ which is a major shift from the past. Players had been paying a paltry sum for spectrum but things changed in 2016. The past government raised RM3bil in refarming 900MHz and 1800MHz bandwidths.

“Whatever the move, the awarding of spectrum has to be done in a very transparent manner, and spectrum awards based on needs rather than focus on creating a market for rent seekers,’’ says an industry source.