Playing Cyber Catch-up

June 2008

In a bid to increase broadband penetration and bridge the urban-rural digital divide, Malaysia has announced a high speed broadband project (HSBB).

Under a controversial arrangement, the country's dominant telecommunications incumbent Telekom Malaysia Bhd will invest RM8.9bn (US$2.74bn) while the government will invest another RM2.4bn (US$0.74bn) over a period of three years to implement the first phase of the HSBB. The HSBB infrastructure will offer speeds of between 10 Mbps and 1 Gbps and will be developed at an estimated cost of RM15.2bn (US$4.68bn) in three phases over 10 years with the government putting in an initial investment of RM4.8bn (US$1.48bn).

The government rationalised that Telekom Malaysia was the best choice to upgrade the existing network for the HSBB roll-out as it already owned 95% of the existing fixed line infrastructure, which will minimize duplication.

Although the government has made assurances that the regulatory framework will be developed on an open network concept to ensure equal opportunity access and a level playing field, uneasy industry players have indicated that they would prefer an independent HSBB network. For transparency and their protection, telcos want the government to disclose pricing, access terms and even last mile connectivity details before signing the HSBB deal with Telekom Malaysia, to ensure fair competition since the incumbent would have a monopoly on the HSBB network, reported The Star.

It is estimated that Malaysia's gross domestic product (GDP) would grow by another 1% or an estimated RM6.68 (USD2.06) billion and create 135,000 new jobs if the targeted 50% broadband penetration rate could be achieved by 2010. Currently, Malaysia's broadband penetration rate remains very low at 18% compared with Singapore (78%), Hong Kong (80%) and South Korea (93%), reported The Edge Daily.