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DiGi enters M'sia mobile broadband market

Although a late entrant, the operator expects to capture one-third of market in three to five years, says CEO.
Written by Edwin Yapp, Contributor

PETALING JAYA--DiGi Telecommunications has finally launched its long-awaited mobile broadband service based on the High Speed Packet Access (HSPA) technology.

Johan Dennelind, CEO of DiGi, told the media during the launch that despite being a late entrant to the 3G market, he is confident DiGi can capture a third of the market in three to five years.

"We believe that we have a value proposition that is unique," he said. "We are confident that we can capture one-third of the market as long as we deliver our service promise to our customers."

Dennelind noted there is pent-up demand for mobile broadband services in the country, as 60 percent of the people already actively use the Internet but only about 20 percent of households are connected to the Web in Malaysia.

DiGi's road to 3G

DiGi Telecommunications first bid for 3G licenses in 2002, when the government, through industry regulator Malaysian Communications and Multimedia Commission (MCMC), first issued such licenses in Malaysia. However, DiGi subsequently opted not to bid for a license citing various reasons.
In November 2005, when the MCMC decided to award the second round of 3G licenses, only three takers were interested: DiGi, TIME dotCom and MiTV. In April 2006, the MCMC said the winning bidders were TIME dotCom and MiTV. This stunned the telco world as many industry observers expected DiGi to be shoo-in for the license.
DiGi’s foray into 3G finally became a reality when it completed a transfer of 3G spectrum from government-backed TIME dotCom in 2008, effectively allowing it to operate a 3G network.

Claiming that many Malaysian broadband users are not happy with their current broadband services, Dennelind noted current market practice promises theoretical limits for service offerings with operators charging customers for bandwidth that fluctuates.

"For us, it’s about how we set the expectation for our users," he explained. "This is why we’re introducing the concept of ‘likely average speeds’ (LAS) with our service as we prefer to focus on average speeds in order to be transparent to our customers on exactly what they’ll get for the price they are paying."

According to Albern Murty, head of new business and strategy, DiGi is offering three packages to its subscribers. The first two are targeted at casual and intermediate users and will have LAS of 700 kilobits per second (kbps) and peak speeds of 2 megabits per second (Mbps). The high-end package will have LAS of 2Mbps and peak speeds of 5Mpbs.

DiGi HSPA’s service is available in Damansara, Petaling Jaya, Subang Jaya, Sunway and Bangsar. The operator said customers in other key areas in the Klang Valley will be able to experience the service "within weeks". Other major areas in the country, such as Penang and Johor Baru, are expected to be covered only by year's end.

DiGi also plans to launch its 3G voice and data services for mobile phones only "at a later date". Asked why this is so, Dennelind said: "We will only launch voice and data services when we are satisfied that our roll out has the right quality of service."

Not necessarily a bad thing
An industry analyst ZDNet Asia spoke with noted DiGi’s late entry to the market is not necessarily disadvantageous to the mobile operator.

Marc Einstein, senior industry analyst, Frost & Sullivan Asia Pacific, said although four years late, DiGi can benefit from mobile networks that are significantly faster and cheaper today. It can also gain from a plethora of affordable 3G devices, he added.

"Not having a 3G license [earlier] did not hurt DiGi, as it has been able to increase both its prepaid and postpaid market shares without 3G services," he told ZDNet Asia in an e-mail interview.

However, Einstein said that DiGi's most serious challenge in the 3G space is competition from other operators, including non-3G players.

"With three other 3G players in the market, four WiMax operators and fiber-to-the-home (FTTH) coming from Telekom Malaysia, the broadband sector in Malaysia has become the most competitive in the region.

Despite this saturation, Einstein said there is still tremendous room for growth in Malaysia, as there are only about 400,000 wireless broadband subscribers in the country, which could reach up to 3 million over the next five years.

"But DiGi and all the other operators will need to differentiate their service portfolios to stay afloat amidst intense competition."

Edwin Yapp is a freelance IT writer based in Malaysia.

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