Sabah: Closing the broadband divide


Economic News

22 Dec 2011
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With the federal government targeting broadband penetration rates of 75% by the end of 2015, much work remains to be done in Sabah, which, at 33%, has the lowest penetration rate of all Malaysia’s states. Some progress has been seen in this regard recently, however, with several telecoms companies moving to boost their investments in Eastern Malaysia.

The issue of inequality in ICT infrastructure between East and West Malaysia was recently highlighted by Sabah’s deputy chief minister, Yee Moh Chai, who appealed to the federal government to ensure that Sabah has access to the same broadband services and pricing schemes as Peninsular Malaysia.

Yee, who is also Sabah’s resource development and information technology minister, said recently in comments to the press, “We don’t want to feel as if the federal government has neglected the development of technology and communications in Sabah.” He also added that only the federal government has the necessary authority to expand coverage in the state.

In 2007, the government of Malaysia set a target household broadband penetration rate of 50% by the end of 2010. However, Sabah was assigned a separate target rate of 25%, which the state has since surpassed. Peninsular Malaysia’s rate, however, is currently over 60%.

Meanwhile, the government’s National Broadband Initiative spells out the importance of implementing broadband services nationally, calling attention to the positive impact broadband access can have on GDP and attracting foreign direct investment, as well as promoting national competitiveness by facilitating the knowledge-based economy and creating knock-on effects in other sectors.

Yet recently, customers in Sabah have voiced dismay over a trend in which broadband telecommunications companies operating in the state have increased charges but not service quality.

Some broadband providers which had previously offered five days of access for RM10 ($3.2) reduced the number of days to two, meaning that pay-as-you-go customers are now paying more than double the original amount for a week’s internet access.

Sabahans are particularly cost sensitive, as they often pay more and make less than their counterparts on the Peninsula. However, overall costs are generally higher in Malaysia than in other regional peers. Singapore’s broadband system, for example, charges around 10% of the average fee in Malaysia to deliver 2Mbps services.

Last year, during an information, communication and technology (ICT) forum, the federal government promised to investigate reducing broadband access fees nationwide to ensure that more people – especially those in rural areas – could afford broadband service.

Indeed, a more equitable deal for Sabah’s broadband consumers may now be on the horizon. The newly appointed chairman of the Malaysian Communications & Multimedia Commission (MCMC), Mohamed Sharil Tarmizi, met with telecommunications industry CEOs in early November and reportedly told them he wants to see improvements in the quality of service and coverage for both broadband and cellular service, including narrowing the gap in rural connectivity.

Sharil’s words have apparently been heeded. Maxis, one of Malaysia’s wireless communications providers, says it is now working closely with the federal government to lower the cost of entry to broadband adoption to boost the overall penetration rate in Sabah.

In late November, Maxis reported that it had invested about RM100m ($31.4m) in the past 18 months to boost its network coverage in Eastern Malaysia. Maxis’ joint COO, Mark Dioguardi, said in local press reports that the investment has significantly improved Maxis’ coverage in the two states. In addition, Dioguardi said Maxis has also doubled down on its commitment to assist urban areas in Sabah achieve economic growth.

“Maxis aims to provide Sabahans with critical broadband connectivity through more network infrastructure investments and competitive localised customer offerings,” Dioguardi told reporters.

Other companies offering broadband services in Sabah include Celcom, DiGi, Telekom Malaysia, Y-Max, U-Mobile, Redtone-CNX, Asiapace and Packet One.

Additional improvements may be on the way. In October, YTL Communications announced it was assembling a business plan to secure licences to roll out Yes, its 4G mobile broadband network, which includes internet-with-voice service, in both Sabah and Sarawak.

Such a service cannot be launched quickly enough for those in Sabah hoping to follow the wider country’s lead in boosting its internet penetration rate and developing new, high-tech and value-added businesses.

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