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Malaysia gets new 3G operator

Newly re-branded local operator U Mobile, expects to launch its 3G services within the next two months. But analysts say it will face challenges.
Written by Edwin Yapp, Contributor
KUALA LUMPUR--Local mobile operator U Mobile has officially unveiled plans to launch its 3G mobile services, expected to go live within the next two months.

Speaking to the media at the official launch and re-branding of the company, Kenneth Chang, executive director of U Mobile, said its 3G mobile network is up and running and currently available in the Klang Valley and other major cities across the country.

Formerly known as MiTV Networks, U Mobile received its license to operate a 3G network from its parent company MiTV, in March 2006. 3G licenses in the country are issued by the Malaysian Communications and Multimedia Commission (MCMC). MiTV and another local player TTdotCom, beat out then-leading contender, DiGi Telecommunication, in a hotly contested 3G spectrum license bidding exercise.

Asked how many 3G subscribers U Mobile is targeting to bag in the next 12 months, Chang said: "It's too premature to announce this, but we are targeting segments which we believe are currently untapped.

"The surveys we've done show that consumers are looking for a new player to offer them new services, and we know what they need and how to price it," he said.

Chang also revealed that U Mobile has signed a domestic roaming agreement with Celcom, which launched its 3G services in May 2005.

Domestic roaming allows subscribers from one network to select another when there is no network coverage available in the location they are currently at.

"This agreement allows our subscribers to roam onto Celcom's network [in areas where] there is no U Mobile network coverage," Chang explained. "However, this does not preclude U Mobile [expanding] our own network as we will be busy improving our coverage."

"Our service is very close to being launched commercially," he said. "We have already completed our interconnection with Celcom and we're now waiting to finish up with Maxis and DiGi, after which we will be fully ready to go live."

Uphill 3G climb
However, new entrants such as U Mobile, will face significant challenges in its bid to capture Malaysia's 3G market, according to some industry analysts.

"The situation for 3G is very different now to what it was two years ago, as costs are much lower and 3G handsets are no longer a major barrier," Nathan Burley, research analyst at Ovum, told ZDNet Asia in an e-mail interview.

Mobile TV service
U Mobile today also unveiled its mobile broadcast TV service, enabling consumers to watch TV on-the-go. Dubbed Mobile LiveTV, the service will be offered via the Digital Video Broadcast-Handheld (DVB-H) standard and made commercially available in "the next couple of months", Chang said. "We already have six channels [running] today, and each channel boasts of DVD-like video broadcast quality."
An extension of the Digital Video Broadcast-Terrestrial (DVB-T) technology, DVB-H is optimized for delivering broadcast TV to mobile devices and is one of several platforms competing to become a global standard in this space. Other rival standard include Qualcomm's MediaFLO and DMB (Digital Multimedia Broadcasting).

"[New market] entrants need to build scale, and few have managed to gain significant market share following launches in established markets [in the region]," Burley noted.

Janice Chong, ICT practice telecom research manager at research house Frost & Sullivan Asia Pacific, said U Mobile is expected to face significant challenges in building its subscriber base from scratch.

"Amid Malaysia's high mobile penetration rate, acquiring a customer base would prove to be a costly exercise, particularly when constrained by limited network coverage, diseconomies of scale and the lack of financial flexibility compared to the [other] major mobile carriers," Chong said in an e-mail interview.

She added that without a proven track record, U Mobile is expected to face teething problems such as network coverage and interoperability issues, billing issues, and readiness to address customer complaints in an effective and timely manner.

According to Frost & Sullivan, the number of 3G subscribers in Malaysia grew from 431,000 in December 2006 to 700,000 in June 2007.

Chang declined to reveal how much U Mobile has invested in its 3G and mobile TV networks, noting only that the company has "invested hundreds of millions of ringgit into our networks".

Edwin Yapp is a freelance IT writer based in Malaysia.

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