The wireless broadband sector is moving into a new era with the roll-out of 4G services scheduled for 2013. The LTE spectrum assignment will increase speeds and lower congestion across networks, while a unique approach to regulation is expected to encourage both competition and collaboration.

TENTATIVE LICENCES: The Malaysian Communications and Multimedia Commission (MCMC) announced in December 2011 a tentative award of licences in the 2.6-Ghz spectrum – needed for LTE – to nine telecoms companies. Maxis, Celcom,, U Mobile, Packet One, RED tone, and YTL will each get 20 Mhz of spectrum, while new player Puncak Semangat would receive 30 Mhz and Asiaspace will receive 10 Mhz. Operators will be able to roll out their networks in 2013, pending the final approval of their licence by the MCMC, which could still alter its award.

The decision surprised many in the sector because the heavy investment required to deploy LTE would seem to limit the number of potential networks. Moreover, some argued that players such as Asiaspace, which failed to launch a WiMAX network even after being fined for its delay, should not be rewarded with spectrum. However, the MCMC argued that the decision would serve to promote competition, telling OBG that despite the wishes of big telecoms companies, spreading out the licences would keep the market dynamic. Still, the MCMC has pushed players in the sector to collaborate rather than roll out too much duplicate infrastructure. MCMC sources told OBG that it preferred to see three or four total networks rather than nine, and that it would push operators to harmonise their deployments.

Telecoms companies have indeed sought to rationalise their LTE investments through partnerships and roaming agreements. Maxis and U Mobile had already formed such a partnership – their landmark 3G sharing agreement covers LTE, meaning that U Mobile will eventually depend on Maxis, in some areas, for 2G, 3G and 4G. Maxis also announced a partnership with RED tone to share infrastructure and spectrum. Its competitors have not been idle, however – DiGi and Celcom announced they would share 218 base stations, saving each provider an estimated RM2.2bn (709.7m) over 10 years.

WIMAX WOES: WiMAX players, meanwhile, have had to accept that LTE, which is backwards-compatible with 2G/3G but not with WiMAX, is the current standard.

P1’s approach is to harmonise LTE and WiMAX in a combined network, while expanding its WiMAX service into East Malaysia. YTL, on the other hand, have been more reluctant to embrace LTE, announcing a partnership with Asiaspace that focuses on expanding in its 2.3Ghz WiMAX spectrum, not the newly opened band.

Even with rationalisation, the LTE roll-out will challenge carriers to balance between too much spending, which would endanger profit margins, and too little, which could sour consumers on the new technology.

Indeed, the 4G transition comes as many carriers are still upgrading their networks to 3G – DiGi, for example, is in the midst of a network upgrade that will bring its 3G coverage from 52% to 70% by the end of 2012.

Maxis and Celcom, meanwhile, each reached 81% 3G coverage in 2011 thanks to aggressive upgrading. The companies have both announced that capex would remain at around RM1bn ($322.6m) each for 2012.

COMPATIBILITY ISSUES: Telecoms players also face difficulties regarding device compatibility. Few Malaysians own devices that can be used with advanced networks not yet available to them. None of the phones available on contract in September 2012 from any of the four operators supported LTE, for example.

Finally, the mystery of the LTE roll-out is what newcomer Puncak Semangat is planning. The company, which is linked to billionaire Syed Mokhtar Al Bukhary, won the largest amount of spectrum, but has revealed no concrete plans to deploy a network as yet. However, its planned acquisitions of internet service provider Jaring and broadband wholesaler Fibrecomm could possibly turn it into a powerhouse. The only question is whether, given the high level of competition in the sector, there will be any market share left for it to grab.