M'sia launches high-speed broadband amid challenges

Telekom Malaysia begins offering UniFi services, but analysts say carrier now faces uphill battle expanding high-speed broadband network and managing customer expectation.
Written by Edwin Yapp, Contributor

KUALA LUMPUR--Malaysia's foray into high-speed broadband (HSBB) service has been mildly lauded by the industry, but analysts believe this is only the first of many steps needed for the industry to fully capitalize on the advantages HSBB has to offer.

Adeel Najam, industry analyst with Frost & Sullivan, noted that the launch of Telekom Malaysia's (TM) HSBB, dubbed UniFi, is a milestone network deployment.

"HSBB will enable users in Malaysia to experience high-speed broadband based on fiber technology already available in other developed markets of Asia-Pacific," Najam told ZDNet Asia in an e-mail interview. "With 311,000 premises passed, TM is on its target for HSBB rollout."

He added that TM's UniFI service encompassed triple-play options, including broadband services, free calls to TM fixed-line phones and some IPTV channels.

While priced higher than some other markets in the region, he noted that the service offers better value than similar offerings from competitors such as Time DotCom. "These packages are expected to cater to the premium segment of the broadband market," he said.

Basheer Ali Majeed, Malaysia country sales manager for Red Hat Asia-Pacific, said with the advent of UniFi, opportunities for cloud computing are likely to become more attractive for small and midsize businesses as they turn to the cloud rather than relying on self-hosted applications.

"With HSBB, Malaysian businesses can now better leverage and utilize the pay-as-you-use model, and this would stimulate the adoption of technologies such as virtualization," Majeed said in a statement.

Challenges ahead
Despite some positive feedback from the industry, Najam noted that TM might still face some challenges going forward.

These issues include timely and efficient installations of fiber at the customer premise as subscriptions start coming in, he said, adding that the carrier would have to smoothen out any technical glitches to provide its subscribers with enhanced quality of service.

"Content acquisition will be another key challenge for TM as it will need to manage a similar programming lineup if it wants to attract Astro's subscribers with its IPTV offering," he said.

Astro is Malaysia's only satellite service provider and currently provides over 100 channels on a subscription model.

Chua Fong Yang, market analyst of telecommunications research for IDC Malaysia, concurs.

He noted that competitors such Astro, Time dotCom and other mobile service providers, would have to improve their core expertise and enhance their offerings to gain a competitive edge before TM begins cannibalizing their markets.

Chua said in an e-mail interview: "The biggest challenge for TM is to cautiously manage their competitors and customers' expectations, since it will be penetrating different market segments that have different needs."

The analyst said UniFi will not have an immediate impact on Malaysian consumers because of the limited coverage and high broadband tariffs.

While TM can now offer triple-play service packages, he noted that most local broadband subscribers are still price-sensitive and will be reluctant to upgrade just to enjoy IPTV services and free fixed-line offerings.

"The lack of interesting IPTV content and consumers' hesitation to use fixed-line phones will continue to be a main challenge for TM to convince potential subscribers to make the switch," he said.

According to Chua, TM will also need to accelerate its HSBB expansion program in key economic developments and commercial areas so the business community can access the HSBB services.

He added that the carrier will need to be transparent in its billing mechanism for wholesale customers as IDC anticipates fixed, mobile and WiMax service providers may rent the last-mile connectivity from TM for their expansion needs.

"The lack of transparency in the wholesale price will halt the national broadband penetration progress should TM decide to increase fees at their discretion, without government intervention," he cautioned.

Service details
Officially launched Wednesday by Malaysian Prime Minister Najib Tun Razak, UniFi is currently available in four urban areas in the Klang Valley: Bangsar, Shah Alam, Subang Jaya and Taman Tun Dr. Ismail.

The coverage areas are expected to expand to include 22 exchanges by July and another further 22 by December, extending the service to other areas in the Klang Valley including popular suburbs such as Petaling Jaya, Damansara and Kelana Jaya.

About 62 percent of other urban and densely populated areas within the country is expected to be covered by 2010, and 92 percent by 2011, according to company officials.

UniFi is available in three packages for consumers and another three for enterprises. Subscribers can chose from a 5 megabit per second (Mbps), 10Mpbs or 20 Mbps service package for 149 ringgit (US$44.7), 199 ringgit (US$59.7) and 249 ringgit (US$74.7) per month, respectively.

Home subscribers can make and receive free calls to and from TM fixed-lines nationwide, and access 22 IPTV channels and video-on-demand titles, which will be updated every month.

Packages for enterprises begin at 199 ringgit (US$59.7), 599 ringgit (US$179.7) and 899 ringgit (US$269.7) per month for 5Mbps, 10Mbps and 20Mbps, respectively, excluding IPTV services.

Both enterprise and home subscribers must sign a minimum 24-month service contract with TM.

To date, the carrier has invested 1.9 billion ringgit (US$569.9 million) of a total 11.3 billion ringgit (US$3.4 billion) earmarked for the HSBB project spanning 10 years.

Edwin Yapp is a freelance IT writer based in Malaysia.

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