With data use growing strongly and existing capacity under pressure, Malaysia’s broadband network is undergoing necessary expansion to keep up with demand. Indeed, as penetration growth slows, improving speeds and service quality have become a priority.
The Malaysian Communications and Multimedia Commission (MCMC), the industry regulator, expects household broadband penetration to rise to 65% by the end of 2012, up from 62.9% in 2011, the local press reported on April 16.
Mohamed Sharil Tarmizi, the chairman of the MCMC, stated that broadband growth would be driven by demand for higher internet speed in both the fixed-line and mobile segments. According to Sharil, the market may be nearing saturation, but there remains substantial scope for improving capacity.
Sharil cited the largely state-owned Telekom Malaysia’s UniFi high-speed broadband services as a market leader in strengthening broadband infrastructure. He said that lowering costs and broadening awareness would also support further penetration growth.
Malaysia’s new 2.6-gigahertz (GHz) spectrum for long-term evolution wireless communication (LTE), expected to be introduced in 2013, will be central to efforts to increase capacity. Sharil asserted that the new spectrum would complement those in the lower band, particularly those of 1 GHz and below.
In December 2011, the MCMC allocated spectrum in the 2.6-GHz band to nine companies, including the country’s four GSM operators. The development is expected to help support the expansion of mobile broadband services and ease existing bottlenecks in the system, as well as provide faster connectivity.
LTE comes none too soon, as current networks may be finding it harder to cope with the rapid expansion of data traffic driven by the increasing use of smartphones, tablets and other internet-reliant devices. According to Nitin Bhat, a partner and the head of consulting at Frost & Sullivan, data volumes are doubling every 12 to 15 months.
Sharil has said he expects the rollout of LTE to increase cooperation between operators on sharing infrastructure. He anticipates that some firms will opt to use mobile virtual network operator (MVNO) technology on existing infrastructure, rather than building extensive new network equipment, which is capital-intensive. This would be particularly useful to newcomers to the segment, who lack infrastructure of their own.
By sharing transmission networks, base stations and towers, operators can potentially lower capital and fixed costs, which will allow them to bring down prices to the consumer, strengthen services, or both. Joint investments could also reduce capital risk.
“Infrastructure rationalisation” is a relatively new trend in the competitive Malaysian information and communications technology (ICT) market, but one that could bear fruit.
In 2011, mobile firms Maxis and U Mobile agreed to share the former’s 3G radio access network (RAN), following an announcement in 2011 that Celcom Axiata and DiGi, the country’s other mobile operators, would look to collaborate on networks and infrastructure.
Some analysts have been critical of the decision to award so many players access to the 2.6-GHz spectrum, arguing that it could lead to a fragmented market, with some players under-utilising their allotted capacity, and the more successful finding their limited bandwidth pressured.
However, it is still unclear how many of the operators will actually commence operations in the near future. Overall, the introduction of LTE, with its capabilities for speed and volumes, is an important step forward for the sector.
