Malaysia threatens to revoke WiMax licenses

Minister warns licensees to adhere to agreements or risk losing their right to deploy WiMax services in Malaysia. One operator denies missing Aug. 31 launch deadline.
Written by Lee Min Keong, Contributor

MALAYSIA--The government has issued a stern warning to the country's WiMax license holders that they may lose their right to offer such services if they fail to meet certain terms and conditions by year-end.

Three of the four licensees only managed to launch their services end of last month, and must now meet the next looming deadline to ensure their networks cover 25 percent of the Malaysian population by year-end. The service providers were initially expected to roll out commercial services by end-2007.

"Frankly, I am just waiting for whoever that can't deliver," Minister of Energy, Water and Communications Shaziman Abu Mansor, warned last month after launching the country's first 802.16e mobile WiMax service by Packet One Network (P1). "I want to take the license and give it to someone who is serious to roll out [the WiMax services]."

Shaziman also said the ministry would ensure the WiMax operators complied with the standard of services promised, such as availability and speed of connection, and would not hesitate to take action if they breached the conditions.

I think the minister means it when he says he will revoke their licenses, and it is possible he'll make an example of someone.
A telecom analyst based in Malaysia

Apart from P1, REDtone International and Asiaspace also managed to launch their WiMax services at the tail-end of last month. However, YTL's subsidiary Y-Max Networks has yet to launch its service.

Shaziman was firm about the year-end deadline for WiMax licensees to achieve a minimum 25 percent population coverage. License holders will also need to cover at least 40 percent of the population in areas they are licensed within three years. P1, Y-Max and Asiaspace can roll out their services nationwide, while REDtone is confined to the East Malaysian states of Sabah and Sarawak.

Threat will encourage compliance
A telecommunications analyst at a local research house based in Kuala Lumpur, said he would not be surprised if Shaziman decides to crack the whip on errant licensees, given the earlier fiasco where companies awarded 3G spectrums failed to roll out services as stipulated.

"When the WiMax licensees signed the agreement with the government, they knew what the requirements were. If they fail to meet the deadlines, they must be prepared to incur the penalties," said the analyst, who spoke on condition of anonymity, in a phone interview with ZDNet Asia.

"I think the minister means it when he says he will revoke their licenses, and it is possible he'll make an example of someone," he said.

The analyst added that any action to make good of this threat would be a positive development for the country, as it would encourage telecommunication licensees to take government regulations seriously.

He also noted there had not been much information from Y-Max regarding its WiMax rollout. "As it is backed by public-listed YTL, I don't see financing as an issue. The delay in rolling out their service may well be related to technical issues," he added.

When contacted, a Y-Max official confirmed the company had yet to officially launch its service as it is setting up its network infrastructure and working with devices vendors to offer a variety of WiMax-enabled devices to users. He said the company's technology partner for the rollout was U.S.-based Sprint Nextel's XOHM business unit.

In a phone interview with ZDNet Asia, the Y-Max spokesperson said the company was currently testing its service in the Bukit Bintang area of Kuala Lumpur. He denied Y-Max had missed the government's Aug. 31 deadline, saying the server provider already has "live services" for some customers, albeit still at the pilot stage.

Pressed to reveal the commercial launch date of the company's WiMax service, he said: "[It will be] very soon."

Broadband deal finally sealed
Meanwhile, the uncertainty surrounding the 11.3 billion ringgit (US$3.3 billion) nationwide high-speed broadband (HSBB) project was finally resolved last week when incumbent Telekom Malaysia (TM) confirmed it won the contract to the implement FTTH (fiber-to-the-home) HSBB network. TM's hold on the massive project was initially in question when little-known company, High Speed Broadband Technology (HSBT), emerged with a counter-offer.

The signing of the agreement was postponed twice, in July and August, so that the Cabinet Committee on Broadband--chaired by Deputy Prime Minister Najib Razak--could evaluate HSBT's proposal. Industry observers then felt HSBT could have an advantage as the company is jointly owned by a business unit under the Pahang state government, which Najib headed in the mid-1980s.

The initiative will link 1.3 million premises over a 10-year period, which will see the Malaysian government invest some 2.4 billion ringgit (US$710.2 million) while TM will fork out the remaining 8.9 billion ringgit (US$2.6 billion). HSBT had proposed to wire up 2.5 million premises with an investment of 18 billion ringgit (US$5.3 billion), without any government funding.

Local research firm AmResearch said over the long term, WiMax players will see intense competition from the HSBB project. "We think TM is the ideal candidate to provide mass broadband coverage as it has the financial clout and existing infrastructure to complement the [HSBB] roll-out," the company said, in a recent research note.

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

Editorial standards