KUALA LUMPUR (Dec 12, 2012): It is the "prerogative" of regulators to allocate mobile bandwidth to a new telecommunication provider and not to existing small players, said Malaysian Communications and Multimedia Commission's (MCMC) top executive, adding that its role is to excite the market by introducing competition.
Its chairman Datuk Mohamed Sharil Tarmizi said if the existing eight telecommunication players including Asiaspace Sdn Bhd were left to run the 2.6GHz spectrum for 4G or Long-Term Evolution (LTE) technology, they are likely to offer only faster speeds.
"(But) players need to look beyond faster speeds and start looking at applications and solutions such as cloud services," he told a news briefing on Malaysia's digital transformation yesterday,
Certain quarters have questioned the recent award of a 40MHz block of the 2.6GHz spectrum by MCMC to Puncak Semangat Sdn Bhd, which is reportedly linked to tycoon Tan Sri Syed Mokhtar Al-Bukhary, in part because the company is a complete newcomer to the telecommunication industry.
Puncak Semangat's spectrum block was the largest among the eight recipients, which saw the remaining seven getting 20MHz each. However, Asiaspace was not included in the latest list.
"The business cycle is determined by the market, but regulators create the environment and conditions. If any of the companies fail, MCMC can take the spectrum back," he said, adding that MCMC also fines companies for non-compliance.
He said the regulator also does not want small players to be left behind and thus, had decided to award the spectrum in small blocks to encourage smart partnerships among them.
"When you duplicate infrastructure, it is (not only) bad for the environment, but is inefficient and money flows out of the country because a lot of equipment are purchased from overseas.
"Back end is the same but the players differentiate themselves via service offerings. We are looking at infrastructure consolidation, not player consolidation," he said.
Sharil also dismissed reports that Puncak Semangat had received the lion's share of the 2.6GHz spectrum.
He said the allocation was small compared with what the bigger players have currently. With the latest award, Celcom Axiata Bhd, DiGi Telecommunications Sdn Bhd and Maxis Broadband Sdn Bhd now have 139MHz, 109MHz and 137MHz respectively, including the previous frequencies already awarded to them.
Asked why MCMC did not auction the spectrum, he said the players with money can pay for the spectrum but they are not always the ones with the best ideas.
"We're ready for auction and we have the framework for it but we don't want it. We need to be mindful of the development agenda that we have.
"Auctions are best when coverage, service quality and reinvestments are not a problem. If these issues are present, an auction might stunt reinvestment. Auctions only work if demand outstrips supply," he said.
DAP member of Parliament Tony Pua said the government had lost a source of revenue by not setting an auction requirement for the award, as practised in most developed countries such as Germany, Sweden and the UK.
In a separate statement yesterday, Maxis Bhd said it will invest RM500 million over the next three years to activate 4G LTE services offering download speeds 10 times faster than 3G which will work seamlessly with its existing 3G networks.