Keng Yaik’s legacy?
Broadband penetration, local content, and liberalising telco industry
May 1, 2006
Before becoming the Minister of Energy, Water and Communication in 2004, Datuk Seri Dr Lim Keng Yaik manned fort as the Minister for Primary Industries. His tenure took him through the rigorous period of massive development during the late 1980’s and the doldrums of the Asian Financial Crisis. It was his mettle in the palm oil industry that has unquestionably helped ascertain Malaysia’s continued foreign exchange income during those stormy years of the late 1990s. Despite the extended economic gloom, palm oil outshined other commodities in export revenue and provided the country much shelter in managing its fiscal shortfall that seriously impacted the neighbouring countries.
However, sitting in his new ministry where water, energy and communications industries are housed in one, his responsibility tripled. Leaving energy and water industries aside, to what extent is he going to leave behind a legacy that equalled his days spent in primary industries?
Currently, he has a plateful of unresolved issues. Fast-track broadband penetration; propelling the development of content to make broadband pervasiveness relevant; mobile-number portability; faster broadband speeds, operators’ lukewarm response to the registration of prepaid cellular service users. All are in a deadlock. How are to further liberalise the telecommunications industry when the telcos continued to resist the country’s public policies?
INDUSTRY RESISTANCE. Over the last two years, we have noticed that Keng Yaik did not make much headway in liberalising the telco industry, and the Minister himself has openly voiced his displeasure several times in the mass media.
Are the individual licensees in the teleco industries -- notably TM, Maxis and DiGi – classified under the ‘Little Napoleans’ who disrupt Malaysia’s forward charge that the PM lamented about?
Lately, we heard of Keng Yaik hinting that the government may force the country's three mobile players to step up domestic roaming and improve their services.
This is still a nagging pain in the form of quality of service (QoS) despite the fact that Malaysia has moved into mobile telephony for over 10 years. Under domestic roaming, when a network's cellular coverage is not available, a distressed mobile user is diverted to the network of a rival telco that can provide the coverage. But this hadn’t happened since Keng Yaik brought it up almost two years ago.
And so the minister said he saw resistance from the firms in getting them to voluntarily launch domestic roaming service across the country. He promised that if the government would introduce laws making it mandatory for them to do so.
Besides, we have also heard of Keng Yaik’s rationale for denying DiGi a 3G license and spectrum. He was quoted in the media as saying that the move was intended to break a monopoly of content among the three mobile phone operators.
It warrants highlighting that there are larger issues looming out there when the Minister outcried that telcos have become monopolistic, and that their behaviour of profit maximisation is hindering the development of the nation’s information and communications technology (ICT) industry.
The Minister has admitted Malaysia’s ICT industry, which is worth RM25 billion, is obviously lagging far behind that of South Korea’s which is pegged at RM570 billion.
He blamed the short-sighted players who apparently fail to realise that if the country’s ICT industry can be properly developed, it would contribute significantly to the Gross National Product. That’s common sense but ample food for thought.
LOCAL CONTENT. Coming back to Keng Yaik Lim’s rationale of the government’s latest awarding of 3G licenses, he remarked that the main barrier to 3G adoption in Malaysia is the lack of local content. He mentioned explicitly that when the government awarded the licences the first time, to Maxis and Celcom, the government wanted to spur the growth of content creation for 3G and also that of the mobile virtual network operator (MVNO) industry. Dead end.
What actually happened is that local content developers are getting a very raw deal because, under the Content Provider Platform (CPA) for SMS/WAP-based content, the cellular service providers usually take 60% of the profit for content services, leaving the content creators with only 40%. In contrast, DiGi retains 30% of the proceeds from the profit-sharing model with the balance 70% going to the content providers.
In Japan’s NTT DoCoMo, content developers are rewarded with 85 to 90% of the profit, depending on the popularity of the content genres.
I remember the Minister said: “The time has come in order to develop the industry, we have to regulate and open up the industry and stop the monopoly that causes bottlenecks. It's time for action.”
But how are we to move forward when the local content providers are given just bread-scrump?