Minister of Energy, Communications and Multimedia Datuk Amar Leo Moggie announced the appointment of Datuk V.Danabalan as the new chairman of the Malaysian Communications and Multimedia Commission (MCMC).
He said the appointment, which takes effect Feb 1 2004, was upon consideration that Danabalan most suited for the position based on his experience.
"He is a good man and I am confident that he will perform his duties well," Moggie told reporters after officiating the launch of Maxis Communications Bhd's latest addition of satellite-based communications solutions, the SkyStream VSAT (Very Small Aperture Terminal) service.
Danabalan, who is currently senior vice persident of the Multimedia Development Corportion Sdn Bhd (MDC), replaced Tan Sri Nuraizah Abdul Hamid as chairman for a period of three years from the effective date.
"Datuk Danabalan is of course no newcomer to the industry and we are confident he will be able to serve the industry and country well," he said.
MCMC's key roles was the regulation of communications and multimedia industry based on the powers provided for in the Malaysian Communications and Multimedia Commission Act (1998) and the Communications and Multimedia Act (1998).
It also plays a role to implement and promote the government's national policy objectives for the communications and multimedia sector.
A person who does not have the appropriate licence if he performs any of these activities commits an offence and upon conviction, will be liable to a maximum fine of RM500,000 or imprisonment for a maximum of five years or both the fine and imprisonment.
Licence and control
An individual licence is granted for activities which require a high degree of regulatory control. Class licences are renewable annually and does not require such a high degree of regulatory control as an individual licence.
The CMA additionally states that no person may provide a content applications service unless:
(a) The person holds a valid individual licence to provide the content applications service; or
(b) The content applications service is subject to a valid class licence.
The Minister also has the power to determine the meaning of a “closed content service.” The provision of a closed content applications service shall be exempt from the licensing provisions of the CMA. A closed content applications service can mean:
(a) A content applications service confined to a single dwelling; or
(b) A content applications service provided only to the employees or officers of a single corporate body.
A licensee must also provide the facility or service in accordance to the standard conditions. These standard licence conditions are provided for in the Schedule to the Act. The Schedule also contains what are called special conditions and may be included in the licence by the Minister.
The CMA defines an individual licence as a licence for a specified person to conduct a specified activity. A person normally applies for an individual licence to:
a) Own or provide network facilities, which are satellite earth stations, broadband fibre optic cables, communications lines and exchanges, radio-communications transmission equipment, mobile communications base stations or any broadcasting tower or equipment;
b) Provide a network service;
c) Provide an applications service like voice service, data service, content-based service or any service provided in connection with e-commerce or any other transaction or transmission service; or
d) Provide any content applications service, which includes any traditional broadcasting service or any online publishing or information service.
The Communications and Multimedia (Licensing) Regulations 1999 provides that on the recommendation of MCMC, the Minister may decide that a particular facility or service is subject to an individual licence. In recommending that a particular facility or service is subject to an individual licence, MCMC must consider the following matters:
a) The need to control market entry into that particular facility or service;
b) The significance and size of the investment involved;
c) The targeted customer base in terms of size and spread;
d) The need to control significant national assets;
e) The need to establish the conditions of operations that are specific to a particular applicant; and
f) Such other matters as MCMC may decide from time to time.
The following persons or entities cannot apply for an individual licence:
(a) A person who is operating under an existing class licence in respect of the same service or activity;
(b) An individual or a sole proprietorship;
(c) A partnership;
(d) A company incorporated outside Malaysia; and
(e) A foreign company as defined under the Companies Act 1965.
The Minister can conditionally grant certain individual licences upon the registration of undertakings by the prospective licensee. The Minister can also vary, modify, add to or revoke any special or additional condition attached to the individual licence. The licensee may also apply to the Minister to modify, vary, revoke, transfer, assign or sub-licence the individual licence. A licensee can also surrender his individual licence to the Minister.
The Minister also has the power to suspend or cancel an individual licence if:
a) The licensee has failed to pay any amount required by the CMA or the licence itself;
b) The licensee has failed to comply with the provision of the CMA or the terms and conditions of the individual licence;
c) The licensee has contravened any other written law relevant to the communications and multimedia industry;
d) The licensee has failed to comply with any instrument issued, made or given by the Minister or MCMC; or
e) The suspension or cancellation is in public interest.
After the suspension, cancellation or expiry of the licence, the licensee must immediately stop providing the facility or service which is the subject-matter of the licence. However, the Minister may allow the licensee to carry on providing the facility or service to wind up the latter’s affairs or if it has applied to renew its licence.
If a licensee continues to provide the relevant facility or service, then it will have committed an offence and upon conviction, be liable to a maximum fine of RM500,000 or a maximum imprisonment term of five years or both the fine and prison sentence.
The Minister can also grant class licences. A person desiring to operate under a class licence in respect of any network facilities, network service or applications service must go through a process of registration with MCMC.
General competition practices
One interesting and unique provision of the CMA is the provision which prohibits licensees from engaging in any conduct which has the purpose of substantially lessening competition in a communications market. The title to the section reads “Prohibition on anti-competitive conduct.”
MCMC can publish guidelines to clarify the meaning of “substantial lessening of competition.” Additionally, licensees cannot enter into any understanding, agreement or arrangement which provides for:
(a) rate fixing;
(b) market sharing;
(c) the boycott of a supplier of apparatus; or
(d) the boycott of another competitor.
Licensees are also prohibited from making tying or linking arrangements – a licensee shall not make it a condition for the provision or supply of a product or service in a communications market that the person acquiring such a product or service is also required to acquire or not to acquire any other product or service either from himself or from another person.
Let us say that a customer wants to acquire a communications service from a licensee. The licensee cannot have an agreement with the customer stating that the latter shall only obtain the services of the licensee and not to acquire services from any other third company.
MCMC can also determine that a licensee is in a dominant position in a communications market. Communications market here means an economic market for a network service, or an applications service, or for goods or services used in conjunction with a network service or an applications service, or for access to facilities used in conjunction with either a network service or an applications service.
MCMC can also publish guidelines to clarify how it will apply the test of “dominant position” to a licensee. MCMC may direct a licensee in a dominant position in a communications market to cease a conduct in that communications market which has, or may have, the effect of substantially lessening competition in any communications market, and to implement appropriate remedies.
Before engaging in any conduct that may be construed to have the purpose or the effect of substantially lessening competition in a communications market, a licensee can apply to MCMC for authorisation of the conduct. MCMC shall authorise the conduct if it is satisfied that the authorisation is in national interest. However, MCMC can require the licensee to submit an undertaking regarding the latter’s conduct in any relevant matter.
A person who contravenes these general competition principles will be liable to a fine of up to RM500,000 or imprisonment for five years or less, or both the fine and prison term.
It must be noted here that this anti-competition provisions are new to the Malaysian legal system. Currently, there are no cases on this section, let alone the CMA itself. It would be interesting to know how the courts will interpret this section. MCMC, by the acts of licensing and regulation could curtail monopoly itself, without the need for this provision.
Access to services
Generally, a network facilities provider and a network service provider shall provide access to their network facilities or network services listed in the access list to any of the following parties, where the latter makes a written request for access on reasonable terms and conditions:
(a) network facilities provider;
(b) network service provider;
(c) applications service provider; or
(d) content applications service provider.
A network facilities provider or a network service provider which breaches this provision shall be liable to a maximum fine of RM500,000 or to a maximum of five years in prison or both the fine and imprisonment.
The access agreement between the parties must be registered with MCMC and if not registered, cannot be enforceable.
A party who desires to dispute the compliance of the access agreement may notify MCMC of the dispute under the latter’s resolution of dispute process.
In March 2003, MCMC designated the Malaysian Access Forum Berhad (MAFB) as the access forum for the industry. MAFB’s main tasks are:
- To develop the Access Code, a voluntary code which will guide the operations of the industry;
- To make recommendations to MCMC on the services and facilities to be included in, or removed from, the access list; and
- To prepare the Access Code, which are model terms and conditions for standard access obligations. In August 2003, MCMC issued the mandatory standard on access to promote further competition. The standard was issued to create certainty for access seekers and access providers – it sets out indicative model terms and conditions and identifies key access and interconnection issues. Because of this standard, licenses are required to amend their existing access agreements by March 2004.
The founder members of MAFB are the major telecommunications companies in Malaysia.
Spectrum assignment
Spectrum means the continuous range of electromagnetic wave frequencies up to and including a frequency of 420 terahertz. Generally, no person shall intentionally transmit in any part of the spectrum to provide a network service unless the person holds a spectrum assignment, an apparatus assignment or the use of the spectrum is subject to a class assignment.
However, MCMC may issue a spectrum assignment which confers rights on a person to use one or more specified frequency bands. It can only do so after the Minister determines the frequency bands for spectrum assignment. The spectrum assignment must be consistent with the spectrum plan. MCMC’s website states that in 2002, two companies have been shortlisted to bid for the spectrum assignment for the rollout of 3G services in Malaysia.
MCMC can also issue an apparatus assignment which confers rights on a person to use the spectrum to operate a network facility of a specified kind at a specified frequency or in any specified frequency band or bands, with the exception that if the Minister has determined a frequency band is for spectrum assignment, then MCMC cannot issue an apparatus assignment which overlaps with this frequency band. An apparatus assignment can only be issued for a maximum period of 5 years or less. An apparatus assignment must also be in line with the spectrum plan. A holder of an apparatus assignment can authorize a third party to operate a network facility that is the subject of the apparatus assignment.
MCMC may also issue a class assignment which will confer rights on any person to use any frequency band or bands. This assignment must also be consistent with the spectrum plan. Also, the class assignment cannot be issued if it authorises the use of a designated spectrum assignment.
Spectrum plan
The spectrum plan essentially divides the spectrum in Malaysia into a number of frequency bands and specifies the general purpose in which the bands can be used. The plan must also be made available to the public, for a fee. The plan must define how the spectrum is to be used. It must also spell out the methodology of assignment and re-assignment of the spectrum.
In developing the spectrum plan, MCMC must take into account the objects of the CMA, the impact of the spectrum plan on existing users and any applicable international standards and conventions, including those of the International Telecommunication Union. The plan can also detail procedures for the assignment of spectrum assignments/apparatus assignments by auction, by tender or at a fixed price.
The Minister may determine that a specific spectrum assignment/apparatus assignment may only be rights issued to particular persons or classes of persons who satisfy such conditions specified in the Minister’s determination.
In the first edition of the spectrum plan which was issued in January 2002, MCMC stated that the plan will provide a guide on how the spectrum is currently used and how MCMC plans to develop it in the near future. The challenge for MCMC in this regard is to manage the current resources in the best manner possible and to ensure that it is utilised efficiently to fulfil society’s needs and the demands of technology.
The Minister can also direct MCMC to develop procedures for compulsory acquisition by MCMC of assignments in a determined spectrum. MCMC can also recommend to the Minister that assignments in a determined spectrum be compulsorily acquired in accordance with a reassignment of spectrum consistent with the spectrum plan.
MCMC may pay a reasonable amount of compensation to the holder of the assignment whose assignment has been compulsorily acquired. It is interesting to note that MCMC is not obliged to pay the holder compensation – instead, it has a choice whether or not it desires to do so.
Numbering and electronic addressing
MCMC shall be vested with the control, planning, administration and assignment of the numbering and electronic addressing of network services and applications services. MCMC must also develop a numbering and electronic addressing plan. In this regard, MCMC is in the process of drafting such a plan which will include the concept of mobile number portability (MNP) which will allow consumers to transfer the number from their wired land line to their cellphone or the number of one mobile service provider to another mobile service provider.
MCMC may appoint a third party to manage or maintain an integrated public number database or an integrated electronic address database and must offer the public access to it. The CMA also makes the hindering of interoperability a criminal offence, where a person found guilty of the offence shall be liable to a maximum fine of RM500,000 or a term of imprisonment of no more than five years, or both the fine and prison term.
MCMC may designate an industry body to be the forum for technical standards. This technical standards forum (or MCMC) could establish a technical code, which must include:
(a) requirements for network interoperability, including the provision of certain network capabilities such as calling line identification capability and pre-selection capability; and
(b) the promotion of safety of network facilities.
MCMC can even register certifying agencies for the purposes of certifying compliance with the technical code.
Consumer protection
Under the CMA, a non-exempt network service provider or applications service provider must deal reasonably with consumers and adequately address consumer complaints. If a provider does not do so, he is liable to a maximum fine of RM20,000 or a maximum term of six months in prison, or both.
This may be the first piece of legislation in Malaysia which makes it a criminal offence not to give good customer service. Some may wish that this type of provision could be written in to other laws in Malaysia – however, this provision would be redundant if no enforcement took place.
Under the CMA, MCMC may designate an industry body to be the consumer forum. MCMC has already done this by designating the body called the Communications and Multimedia Consumer Forum of Malaysia (CFM) to be the consumer forum.
CFM comprises of 47 members which include service providers, universities and NGOs. The CMA also calls for the creation of the consumer code, which must include model procedures for:
a) Reasonably meeting consumer requirements;
b) The handling of customer complaints and disputes including an inexpensive arbitration process other than judicial proceedings, and procedures for the compensation of customers in the case of a breach of the code; and/or
c) The protection of consumer information.
CFM launched the general consumer code of practice in November last year, which includes handling of consumer complaints, outlines the rights of the consumer and sets procedures for compensation when the code is breached. CFM took almost four years to draft the code, which is binding on all members of CFM.
Under the CMA, the Minister can also create a list of required applications services, which may include:
(a) emergency services (including access to controlled network facilities and network services for the purposes of providing emergency services);
(b) directory assistance services (including access to controlled network facilities, network services and relevant databases);
(c) operator assistance services; and
(d) services for disabled consumers.
The Minister can determine the classes of network service providers that must provide the services on this list.
Whatever it is, MCMC can use its powers to resolve complaints from customers in relation to matters like the failure of a licensee to comply with the consumer code. Under the CMA, MCMC must establish procedures for the making, receipt and handling of complaints of consumers regarding the conduct or operation of licensees. These procedures were subsequently established in July 2003. Therefore, MCMC has substantial powers to ensure that there is some level of protection for the consumer.
Network facilities providers, network service providers, applications service providers and content applications service providers are required to publish the rates charged to customers. Rates of providers must comply with the following principles:
(a) rates must be fair;
(b) rates should be oriented toward costs and, in general, cross-subsidies should be eliminated;
(c) rates should not contain discounts that unreasonably prejudice the competitive opportunities of other providers;
(d) rates should be structured and levels set to attract investment into the communications and multimedia industry; and
(e) rates should take into account the regulations and recommendations of the international organisations of which Malaysia is a member.
On the recommendation of MCMC, the Minister may determine the rates for any facilities or services for good cause, or as the public interest may require. The Minister can also determine special rate regulation regimes or forbear from regulating rates where the rates are not in accordance with the above principles or for a particular group of persons or a particular area.
The Minister may make rules to prescribe the level of rates to be charged for specified or classes of network facilities, network services, applications services or content applications services. In this regard, the Communications and Multimedia (Rates) Rules were created in 2002 by the Minister. It also came into force in 2002.
The Minister may direct the Commission to determine a system to promote the widespread availability and usage of network services and/or applications services throughout Malaysia by encouraging the installation of network facilities and the provision for network services and/or applications services in underserved areas or for underserved groups within the community.
In this regard, the Minister issued the Communications and Multimedia (Universal Service Provision) Regulations in 2002. It also came into force in 2002.
Under the CMA, content application service providers or any person using a content application service, must not provide content which is obscene, indecent, false, menacing or offensive which will annoy, abuse, threaten or harass any person. Any person who does otherwise will be liable to a fine not exceeding RM50,000 or a prison term not exceeding one year, or both. The person will also be liable to a further fine of RM1,000 for every day the offence continues after his conviction.
Under the CMA, MCMC can designate an industry body to be a content forum. A content code prepared by the forum must include model procedures for dealing with offensive and indecent content.
Additional criminal offences
The CMA also provides for several other criminal offences – where a person uses any apparatus or device with intent to obtain information regarding the contents, sender or addressee of any communication without approval by a registered certifying agency commits a criminal offence. The person is liable to a maximum fine of RM50,000 or an imprisonment term of not more than two years, or both.
A person who:
(a) dishonestly transmits or allows the transmission of any communication or dishonestly obtains a service provided by a licensed network facilities provider, network service provider, applications service provider or content applications service provider; or
(b) dishonestly receives a content applications service from a place within Malaysia not intended for general reception, with intent to avoid payment of any rate or fee;
(c) commits a criminal offence.
The person will be liable to a fine of not more than RM300,000 or a maximum prison term of three years, or both.
Similarly, a person commits an offence if he possesses, obtains or creates a system designed to fraudulently use or obtain any network facilities, network service, applications service or content applications service. The penalties are the same as the offences above.
A criminal offence is also committed by a person who by means of any network facilities or network service or applications service knowingly initiates the transmission of any request, comment, suggestion or other communication which is obscene, indecent, false, menacing or offensive in character with intent to annoy, abuse, threaten or harass another person.
A similar offence is where a person initiates communication using any applications service, whether continuously, repeatedly or otherwise, with or without disclosing his identity and with intent to annoy, abuse, threaten or harass any person at any number or electronic address.
Also, if a person knowingly permits a network service or applications service under the person’s control to be used for providing obscene communication for commercial purposes through a network service or applications service commits a criminal offence.
These three offences carry the penalty of a fine of not more than RM50,000 or to an imprisonment term of not more than one year, or both.
A person who knowingly or with intention to defraud produces, uses, sells or supplies any counterfeit access device or if he tries to sell an access device without the authorisation of the issuer of the access device, commits an offence.
In August 2003, a staff of a computer shop was charged under this provision in the Petaling Jaya Sessions Court for possession of forged Astro smartcards and a smartcard reader which can be used to produce forged smartcards.
No person can operate a call back service under the Act. A call back service means a service using any network facilities, network service or applications service that, through uncompleted call signalling or polling from a foreign location, enables a user in Malaysia to call a foreign point without paying the rate imposed by an authorised Malaysian network facilities provider, network service provider and/or applications service provider for a call from Malaysia to such point.
If a company commits an offence, the CEO, directors, managers and company secretary may be charged severally or jointly in the same proceedings with the company. If the company is found guilty, these persons will also be found guilty unless they can prove that the offence was committed without their knowledge or consent and that they had taken all precautions and exercised due diligence to prevent the commission of the offence.