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Three interesting developments in M'sian telco scene

The past month has witnessed some interesting headlines in the local press with regard to the telco developments in Malaysia.It first started three weeks ago when DiGi Telecommunications, perceived to be the most innovative of the three celcos in Malaysia but smallest by subscription base, announced it has secured a three-year deal to sell the Apple iPhone 3GS in the coming months.

The past month has witnessed some interesting headlines in the local press with regard to the telco developments in Malaysia.

It first started three weeks ago when DiGi Telecommunications, perceived to be the most innovative of the three celcos in Malaysia but smallest by subscription base, announced it has secured a three-year deal to sell the Apple iPhone 3GS in the coming months.

This move will effectively end Maxis' exclusive distributorship of the iPhone in the country, akin to how StarHub and MobileOne are now able to sell iPhones in Singapore besides SingTel.

Not much has been said about the launch--when, where and what will be on offer. The advertisement posted on the DiGi Web site merely has the usual PR spiel explaining how the revolutionary iPhone will be available soon via DiGi.

It also invited potential customers to sign up for updates on when the deal will be made available, as well as the posting of some videos promoting how fantastic the iPhone is.

Industry observers have noted that the move by DiGi to sell iPhones is not surprising, as there is already so much hype and publicity surrounding the device that it would make good sense for DiGi to ride on the iPhone's popularity.

More interestingly, said one observer, was the fact that DiGi can now use the iPhone as a catalyst for it to further sell its 3G mobile broadband packages to customers, and help increase its market share and revenue from its data business.

In fact, DiGi CEO Johan Dennelind was quoted as saying on Bloomberg TV, that DiGi expects to increase sales by more than 5 percent this year, higher than the industry average. Bloomberg added that DiGi's sales rose 2 percent last year, slowing from 10 percent in 2008 as Malaysia's economy shrank 1.7 percent.

Sentiments on the ground have been positive with many people showing interest in signing up for the iPhone. Already more than half a dozen people I know are interested.

But those whom I've spoken to have also indicated that while they are interested in what DiGi has to offer, there is one caveat--all of them expect DiGi's offering of the iPhone to be more competitive than what's already available via Maxis.

Going by past experiences, DiGi has always shown itself to be able to come into the market with innovative yet practical offerings, and the introduction of competition will in my opinion be good for the market.

Still, it remains to be seen how much flexibility DiGi can offer the market as Apple is always reputed to have a tight reign on the deals it makes with service providers. But hopefully, the deal will be worthwhile considering.

More spectrum please? A week after the DiGi iPhone announcement, StarBiz carried an interview with DiGi Chairman Sigve Brekke, in which he was quoted as saying that DiGi could do with more radio spectrum so that it will be able to attain better nationwide mobile phone coverage.

"We have a little bit of the 900MHz spectrum and we need more. The beauty of the 900MHz spectrum is that it is easier to have nationwide coverage with it, while with the 1,800MHz we can easily provide services in the city centre and that is why we need more of the 900MHz spectrum," he said in StarBiz.

The daily also noted that DiGi has only 4MHz of the 900MHz spectrum band while its rivals, Celcom Axiata and Maxis Communications, have 34MHz and 32MHz, respectively, courtesy of the two players having acquired competing players and their spectrum therein in the past. (There were five operators when the government first gave licences to operate mobile networks in the 1990s.)

This issue is not new as DiGi had in the past lobbied the government through industry regulator the Malaysian Communications and Multimedia Commission (MCMC) for more spectrum.

Its argument then was that since the other two operators did not need to use so much spectrum in suburban to rural areas, the government could then re-farm the spectrum so that DiGi will be able to use this freed up spectrum in these areas, thereby increasing mobile coverage in the entire country.

It's understandable why DiGi would want to request for more spectrum, especially in suburban to rural areas as the cost of providing mobile coverage via a 1800Mhz base station rises by up to three times for an equivalent area covered by a 900MHz base station. This is because the lower the frequency of operation, the further radio waves travel.

But to re-farm spectrum would require the other two players--Maxis and Celcom--to agree to do so, and this would unlikely happen, unless the regulator is able to reach a quid pro quo arrangement and give the other two players something in return.

Spectrum re-farming, thus, remains a real challenge for DiGi and has in fact been a sore point with DiGi, according to industry sources familiar with the matter. After years of trying to lobby for the re-farming precious spectrum, it remains to be seen if this will ever happen.

Rumour mill grinding The last interesting development is with regard to the Telekom Malaysia high-speed broadband (HSBB) project. Early last week, rumors began circulating in one of the most popular forums in Malaysia that TM was about to launch its HSBB at incredibly low prices.

Prices that were bandied about on one forum thread suggested that the base price of 5Mbps fixed at 30 ringgit per month, and 50Mbps at 180 ringgit per month. Of course, these are just rumors, and the information therein is impossible to verify.

But, pricing aside, what is more interesting to note is what kind of content TM will end up delivering to potential subscribers. After all, as I've said before, a big huge Internet pipe to people should not be an end in itself but a means to an end.

The launch will happen on Mar. 24 so stay tuned to find out more.