Malaysia fines laggard WiMax licensees

Government slaps penalties totaling US$1.1 million on all but one of country's WiMax operators after they failed to meet required network coverage.
Written by Lee Min Keong, Contributor

KUALA LUMPUR--Malaysia's telecommunications regulator has fined three of the country's four WiMax licensees a total of 3.8 million ringgit (US$1.1 million) for failing to meet the required network coverage.

According to local media reports, the Malaysian Communications and Multimedia Commission (MCMC) earlier this month sent letters containing the result of its audit on network coverage by the four WiMax licensees. The regulator had reportedly instructed a drawdown of the performance bond or bank guarantee parked as a way to compel compliance.

The penalties are seen as a sign the government is losing patience with the mobile operators, which were awarded WiMax licenses in March 2007.

The MCMC then had given licensees until year-end to ensure their network coverage spanned 25 percent of the population in their allotted areas. It later extended the deadline to end-2008 and issued a warning that failure to comply could result in licenses being revoked. Information, Communications, Culture and Arts Minister Datuk Seri Dr Rais Yatim also recently reminded the MCMC to ensure providers delivered on what they had promised.

Only Packet One Networks (P1) met the target and was spared the indignity of being sanctioned.

YTL E-Solutions, the only licensee that has yet to roll out commercial services, received the heftiest penalty of 1.9 million ringgit (US$555,190). Asiaspace was fined 1.7 million ringgit (US496,750), while REDtone International escaped with a lower 210,000 ringgit (US$61,363) penalty.

License safe, awaiting appeals
For now, at least, the three companies have dodged the bullet and will retain their licenses.

YTL E-Solutions, part of Malaysian conglomerate YTL Group, and REDtone have appealed against the fines meted out by MCMC. In a statement Thursday, YTL-E said its WiMax-subsidiary Y-MAX Networks (YMN) was awaiting a response from the MCMC.

The operator said it failed to meet the requirement due to a change in its business plan, deciding to build a nationwide network instead of a piecemeal rollout. This revised deployment would result in YMN exceeding the targeted coverage stated by the MCMC "by next year", the company said.

REDtone Group CEO Zainal Amanshah admitted the company had been fined and had submitted an appeal asking to be spared the cash penalty.

"We have made a strong appeal because we know we have done everything in our power to fulfil our commitments. We are discussing this issue with MCMC and we believe MCMC will consider the merits of our appeal and do the right thing by retracting the fine," Zainal said, in a report by The Edge Financial Daily.

YTL had planned to invest up to 2.5 billion ringgit (US$731 million) over the next five years for its WiMax rollout, while AsiaSpace was looking to raise 300 million ringgit (US$87.7 million) after investing close to 100 million ringgit (US$29.2 million) to date. REDtone had planned to raise 40 million ringgit (US$11.7 million).

P1 said it has invested 300 million ringgit (US$87.7 million) and plans to invest another 1 billion ringgit (US$292.2 million) over the next five years.

Its relative success in the market has seen P1 being given greater leeway by the MCMC, which earlier this month gave the go-ahead for the company to expand its services into East Malaysia--previously REDtone's exclusive designated operating area.

P1, YTL E-Solutions and Asiaspace's area of operation was limited to Peninsular Malaysia, while REDtone's was limited to the East Malaysian states of Sabah and Sarawak.

P1 also has plans to expand across the region in a bid to build up its WiMax business. Its parent company Green Packet, through its newly incorporated subsidiary Packet One Singapore, last week inked an agreement to take over Pacnet's Facilities-based Operator (FBO) license and Wireless Broadband Access (WBA) rights in Singapore. The deal, if approved, will effectively allow P1 to provide WiMax services in the island-state.

Lee Min Keong is a freelance IT writer based in Malaysia.

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