Interest in broadband usage builds

As many as 100,000 businesses, government agencies and individuals have registered their interest in using broadband in the four northern states of Malaysia, says the Malaysian Communications and Multimedia Commission (MCMC). It has created a portal to ascertain the level of demand for broadband in Malaysia as part of its National Broadband Plan (NBP). At present, the MCMC is collecting the data to come up with a broadband cost-based financial model. "We have now a massive supply and demand financial model to find out what the proper pricing for broadband should be. Our Excel spreadsheets on this run into 15 megabits (Mb) of data and it's building up," says Yow Lock Sen, head of industry research & analysis at the MCMC. Yow was speaking at the Broadband Track at the recent MSC ICT Policy Summit. Aiming for 50 per cent broadband penetration The NBP envisions that 50 per cent of households in Malaysia will subscribe to some form of a broadband service by 2007. Specifically, there should be a gradual rollout of broadband speeds of between six and 10 megabits per second (Mbps) starting next year and reach up to 20 Mbps by 2007. The NBP, which is a work-in-progress by the MCMC, has been conducting a survey in Penang, Kedah, Perlis and Perak to gauge the demand for broadband. According to Yow, just a month after launching the portal, there were 76,958 registrants for broadband. Of these, the public sector made up 9.0 per cent while the private sector made up the other 91 per cent. In the latter, businesses accounted for 60,345 registrants while individuals numbered 9,483. The manufacturing sector and small and medium-size companies made up the bulk of registrants. Another function of the NBP is to figure out the broadband needs of the government. According to the NBP, it is going to cost the government a whopping RM5 billion to fulfill its broadband needs. This demand is primarily for providing high-speed connectivity for government-run educational institutions and medical-related establishments such as hospitals and clinics around the country. "The fundamental principle here is that there must be an aggregation of demand and planned expenditure from all sectors of government, including local government, in order to create critical mass. This, in turn, will create a long-term revenue stream for the infrastructure built, thereby justifying the broadband rollout. This rollout will also have the effect of allowing residences and small and medium-size companies in the same vicinity to be served," Yow says. The government will issue long-term contracts - for eight-year periods - to allow service providers to achieve return on investment. The contracts will require rolling out fibre-optic networks to rural regions (for hospitals and schools, for example), and companies will be invited to put in a tender. "Bidding consortia may typically involve construction companies, entrepreneurs as well as telecommunications operators," says Yow, adding that "an upfront cash injection [in the form of a low-interest loan] could be provided by the government to assist new entities". Another speaker at the Broadband Track, John Poston of Analysys Consulting Ltd, touched on the importance of broadband. (Analysys provides consulting services to the MCMC on the NBP.) The question he sought to answer was whether widespread broadband access was the solution to bridge the digital divide as well as the key for Malaysia to become a global hub. Poston, who has worked with British Telecom and Singapore's Starhub, says this is an important issue for Malaysia as it is in the early stage of rolling out broadband. "This is precisely why we need to talk about it. If Malaysia already had 40 per cent broadband penetration, we needn't worry about it," he notes. He cites a similar situation in the history of the US. "The combination of telegraph lines and railroads led to new ways of doing things and this translated into economic growth for the US," he says. In the case of broadband, if it is increasingly available at affordable prices, this will lead to a higher take-up by businesses, residences and the public sector. This, in turn, will affect the country in various ways - from increasing productivity (for businesses) and bridging the digital divide to improving public services. "All of these will have a collective impact on the gross domestic product [GDP] growth of a country," Poston predicts. But interestingly, he adds, the first step in broadband development often widens the digital divide instead of closing it. This is because market forces will dictate that broadband is initially made available to major cities and urban areas. "Which is why a national broadband plan is needed, to strike a balance." He says such a plan must help people understand the benefits of computers and broadband and it must cater to affordable access for all geographic areas. There must be services running on the broadband network that assist people in meeting their social and economic needs, he adds. The Canadian government, for example, is committed to ensuring broadband access for all its communities by 2005, he says. In 2000, a national broadband task force was established to advise the Canadian government on how best to go about it. Poston says the task force emphasised the provision of broadband to some very difficult areas, namely those with small communities such as the Inuit tribe. South Korea is another good example, particularly because it is known for its leadership position in broadband deployment and usage. Poston says that in 1999, South Korea's broadband penetration overtook that of the rest of the world, with an interesting effect on the economic performance of the country. "During the rapid broadband growth, the contribution of information and communications technology [ICT] to the country's GDP also enjoyed rapid growth, hitting 13 per cent from 1999 to 2000," he points out. "This suggests that there is some correlation between broadband and economic growth." Poston adds that the electronic component, software and ICT service industries have generally benefited from the prevalence of broadband in the country. South Korea's policy initiatives have made universal access a major theme and the country's public services are now making use of the broadband network. "Although the public sector did not drive the broadband rollout, it is following it and making use of it." But in Malaysia's case, says Poston, a national broadband plan, although necessary, will not be sufficient for it to achieve the global-hub status it seeks. Such a hub requires other factors to be in place too, including knowledge skills and entrepreneurship, the availability of high quality international access at best prices, and an array of content and application services. "Hence, broadband will be a quantum leap towards achieving global-hub status only if other steps are taken to promote connectivity, application and services." As for the role of broadband in bridging the digital divide, Poston says market forces alone will not suffice. This will require policy actions and government funding.