From the ground up: Improving connectivity will require large investments in infrastructure

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A drive to bring Malaysia’s internet services up to speed is gathering pace, with ICT infrastructure earmarked for an investment boost in 2015 and long-term solutions under discussion. Malaysia currently lags behind several of its peers when it comes to download speeds, while demand for faster broadband is set to rise significantly in the coming years. Increasing ICT’s contribution to growth forms a key part of the government’s master plan for the economy. Under its Malaysia Digital Economy initiative, the administration expects the industry to contribute 17% to GDP by 2020. The leadership is also targeting a compound annual growth rate of 9.8% in five key sub-sectors, including ICT services, e-commerce, ICT manufacturing, ICT trade, and content and media, over the next seven years.

Boosting Broadband

Ahmad Shabery Cheek, minister of communications and multimedia, told reporters in November 2013 that the government was looking at undertaking an in-depth study into ways of boosting broadband speeds to 40-50 Mbps by the year 2020. He also said there is a rising demand for faster data transfer speeds, with one study showing that Malaysians will want a service operating at 49 Mbps by 2018.

At present, Malaysia offers a limited fibre-optic internet service, with operations restricted to key urban areas, mainly in the capital. Proposals to construct a fibre-optic network, providing a backbone service across the country, have already been submitted by the private sector. However, the project would have limitations and require feeder-link connections to be put in place for wide-ranging access to be made available. A fibre-optic roll-out would produce extensive opportunities for ICT service providers, while the faster rates offered by a new grid should also open doors for firms to market more advanced technology suited to higher speeds. However, the cost of near-total connectivity through fibre optics would require a long-term initiative.

Strengthening Existing Services

In the meantime, Malaysia is focusing on strengthening its existing ICT backbone. The national budget for 2014 allocated funds for several projects aimed at widening the reach of the net and boosting operating speeds. Among the new initiatives is a $566m joint public-private project, which will expand high-speed broadband coverage. The budget set aside RM1.5bn ($468.15m) for the construction of 1000 telecoms transmission towers over the next three years to increase internet coverage in rural areas, while access in Sabah and Sarawak is set to be improved through the laying of undersea cables.

Peer Pressure

National broadband penetration currently stands at nearly 70%, up from 30% in 2006, according to data from the Malaysian Communications and Multimedia Commission. However, research shows that Malaysia lags behind several of its South-east Asian peers when it comes to broadband speeds. Data compiled by web analytics firm Net Index put Malaysia’s average broadband download speed at 4.56 Mbps when tested over a 30-day period. While marginally higher than the Philippines (4.55 Mbps), Malaysia’s average broadband speed was lower than that of Brunei Darussalam (4.69 Mbps), Vietnam (11.70 Mbps), Thailand (12.47 Mbps) and Singapore (39.90 Mbps).

Malaysia placed 112th globally for broadband speed on the index, which was compiled using data from the broadband connection analysis website The Philippines ranked 114th, while Thailand placed 54th. However, the country did perform strongly in the second edition of the World Wide Web Foundation’s comparative study of international web penetration, empowerment and socio-economic impact, which was released in November 2013. In its first appearance on the index, Malaysia placed 37th out of the 81 countries assessed, clinching second position among ASEAN members, behind Singapore.

However, the survey also identified areas where Malaysia could improve, including freedom and openness. In addition, the index highlighted issues around safety, online privacy and information protection. The foundation’s results confirm that Malaysia would benefit from faster, cheaper and easier access to the web.

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The Report: Malaysia 2014

Telecoms & IT chapter from The Report: Malaysia 2014

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