Screenshots

• Positive 1: The awarding of the spectrum is aimed to help Malaysia realise its 15% broadband penetration target by 2010, as envisaged in MyICMS 886 Strategy.

  The Malaysian Information,Communications and Multimedia Services 886 (MyICMS 886) Strategy is a blueprint that identifies 8 Services, 8 Infrastructures, and 6 Growth Areas targeted to propel Malaysia in the delivery of advanced information, communications and multimedia services towards improving the quality of life of Malaysians and at boosting Malaysia’s global competitiveness. See the MyICMS 886 targets here.

  The broadband market is Malaysia has been sluggish due to deficiency in the execution of government policy. Despite the on-paper directive to unbundle the local loop, Telekom Malaysia (TM) still sustain its geographical monopoly over the national grid of nationwide network while Maxis is allowed to cherry-pick to operate in only the major market centres. Both were neither incentivised nor penalised for tactically stalling broadband penetration in the country.

• Positive 2: The tender exercise, at least theoretically, is a showcase of level playing field market place. The tender was open only players registered with MCMC under the Communications and Multimedia Act 1998, namely existing licensees for Network Facilities Providers (NFP) and Network Service Providers (NSP).

  A total of 17 companies, including the three Tier-1 incumbents namely Telekom Malaysia Bhd, Maxis Communications Bhd and DiGi.Com Bhd, had submitted bids for the WiMAX license. Two major incumbents -- Maxis, TM and their subsidiaries who have earlier been assigned 2.5Ghz spectra -- have been excluded from getting additional spectra to make way for Tier-2 telecoms companies to enter the market, and to potentially provide competition that is currently sorely missed in the broadband market. DiGi, incidentally, was not favoured as a recipient for the 3G/IMT-200 UMTS spectrum assignment covering the 1965-1980 MHz, 2155-2170 MHz and 2010-2015 MHz frequency bands when tender results were announced in March 2006.

  So, all the big boys are out.

  Incidentally, Jaring, the GLC which is the pioneer ISP in the country, was rejected in the WiMAX spectrym tender exercise.

  Earlier, the Minister of Energy, Water and Communications Dr Lim Keng Yaik disclosed that there were a total of 17 applications -- 15 existing licensees and two latecomers -- for the 2.3Ghz spectrum to operate WiMAX services. They were, in order of submission: NasionCom Sdn Bhd, MiTV Corp Sdn Bhd, Asiaspace dotCom Sdn Bhd, REDtone-CNX Broadband Sdn Bhd, Celcom Timur (Sabah) Sdn Bhd, DiGi Telecommunications Sdn Bhd, MIB Comm Sdn Bhd (which Green Packet Bhd will pay RM6 million for a 55% stake if it wins), Maxis Broadband Sdn Bhd, Telekom Malaysia Bhd, Fibrecomm Network (M) Sdn Bhd, SGR Capital Sdn Bhd, Go Litespeed Broadband Sdn Bhd, Bizsurf (M) Sdn Bhd, IP Mobility Sdn Bhd, Jaring Communications Sdn Bhd, Optical Communication Engineering Sdn Bhd and Electcoms Wireless Sdn Bhd.

  Notably, Optical Communications Engineering Sdn Bhd (OpComm), a company owned by media mogul Tiong Hiew King of the Ming Pao-SinChew group, has also lost in the bid.

• Positive 3: There are four companies, instead of just two speculated earlier, who were assigned the 2.3Ghz spectrum to operate WiMAX. They are Bizsurf (M) Sdn Bhd, MIB Comm Sdn Bhd, Redtone-CNX Broadband Sdn Bhd and Asiaspace Dotcom Sdn Bhd.

  According to an official statement issued by industry regulator Malaysia Communications and Multimedia Commission (MCMC), Bizsurf was awarded the 2330 to 2360 bandwidth, MIB 2360 to 2390, Asiaspace 2300 to 2330 and Redtone-CNX the 2375 to 2400 bandwidth.

  Except for Redtone-CNX, whose areas of operation are restricted to Sabah and Sarawak, the others will deploy their services in Peninsular Malaysia.

  This is despite the smokescreen that MCMC has sent out before, that WiMAX spectrum will only be conferred on companies that had the capacity roll out their services nationwide.

  Prior to that, a number of NFP/NSP licensees had been assigned the 2.4Ghz, 2.5Ghz and 3.4 Ghz spectra to operate a variety of broadband services. However, the exercise did not see significant market penetration results as most operators, largely due to limited fund for capital expenditure, had resorted to cherry-picking the lower-branches market in urban centres, making the service coverage areas significantly fragmented.

• Positive 4: The WiMAX spectrum tender process displays a suave tactical ply by the Government to induce a more vibrant environment to develop the broadband service provisioning industry, whereby consortia with financial clouts are allowed to subtly buy into nimble start-ups, and finance them into new brands that will propel keener competition, hence efficiency, in the market place which is not held in monopoly, and duopoly depending on whichever way one looks at it.

  Of the four successful applicants, MIB is a 55% subsidiary of Green Packet Bhd; Bizsurf is a 50%-associate of YTL e-Solutions Bhd; and REDtone-CNX Broadband is a subsidiary of REDtone International Bhd. All three are listed on Mesdaq. Wjereas, Asiaspace Dotcom is a telecommunications and broadcast infrastructure company that was previously awarded the rights to build 50 cellular base stations in 2003.

  Under the tender exercise, the spectrum-winning companies are expected to invest between RM250 to RM300 million each during the first three years of operations. According to market sources, only Green Packet/MIB and YTL e-Solutions/Bizsurf are cash rich among the four successful recipients.

  The for recipients are also expected to swiftly roll out the service to 25% of the population in the area given to them by the end of 2007, with a service provision of at least 1MBps at affordable rates, industry regulator MCMC said.

  By the end of the third year in operations, the four operators are expected to provide service coverage to at least 40% of the population in the areas given to them.

And here are some of the initial industry rumblings that had rattled the ears of Screenshots:

• Negative One: Why YTL e-Solutions?

  The open tender for the 2.3Ghx spectrum to operate WiMAX services was open in May 2006 and aborted on the eve of the tender closing date on July 15, 2006. See Screenshots here, here and here.

  It is noted that, on the YTL Corporation Bhd website, YTL e-Solutions Berhad had only bought into 50% share equity of Bizsurf (M) Sdn Bhd (Bizsurf) on December 22, 2006, on the back of an enlarged authorised capital of RM5 million, to "co-operate in respect of the operations, management and development of the business of providing broadband internet access and other businesses and activities Bizsurf decides to engage in".

  Prior to this, YTL has not been noted as a national-scale commercial broadband player, though YTL e-Solutions has been credited for creating a WiFi zone for the 300-metre long Bintang Walk and non-real time digital content aboard the Express Rail Link (ERL) that transports travellers who commute between KLIA and KL Sentral.

• Negative Two: Why Asiaspace?

  One of the four successful recipients, Asiaspace DotCom Sdn Bhd, is a company led by politicallywell-connected businessman Abdul Ghani Abdullah. The company holds a suit of individual licenses, including NFP and NSP, to operate as a telecommunications and broadcast infrastructure company. It was previously awarded the monopy rights to build 50 cellular base stations in 2003, and mobile telephone operators were then directed to rent space for towers erected by the company. (See the archive story in a government website when Leo Moggie was the minister in charge of Communications and Multimedia portfolio.)

  In September 2006, after the tender for the 2.3Ghz WiMAX spectrum was cancelled, Asiaspace announced that it had entered into an agreement with Tenaga Nasional Bhd (TNB) to provide broadband services by using the latter's fibre optic network.

  Media reports said the agreement would enable Asiaspace to utilise TNB's vast fibre optic network - believed to be around 10,000km -- as well as its facilities to offer duct fibre services and lease line services to businesses and eventually home users.

  Screenshots understands that it was rehash of a market hype from Asiaspace that dated back to July 2004.

  To date, nothing concrete has come about of the Asiaspace-TNB tie-up. In fact, when speculation heightened last month about the forerunners for the WiMAV spectum, Asiaspace was not even in the pundits' list.

  It's financial capabilities to roll out WiMAX has yet to be articulated though it announced immediately after winning the bid yesterday that it would invest RM300 million and RM400 million to effect a timely roll-out by this year

Meanwhile in the aftermath of the second rejection, DiGi released an immediate response by saying that it respects the Government's decision but regrets the loss of opportunity to use its "resources and skills to benefit all consumers; enabling Malaysia to be a reference country for successful mobile broadband development".

However, DiGi reiterated that it would remain committed in supporting the government's telecommunication objectives. "We stand ready with practical and realistic solutions to quickly enable high-speed connectivity for both urban and rural areas in Malaysia," the statement said.

DiGi also said the Government's decision in the WiMAX spectrum has no impact on its core business.

Maxis, which also lost in the bid, also made similar pledge as DiGi's.