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Asian Strategy & Leadership Institute Bank Pembangunan
THE 4TH NATIONAL UTILITIES SUMMIT 2007
Blazing New Trails: Developments, Strategies &Opportunities for a Profitable Future
Broadband Ambitions for Malaysia
Zamani bin Zakariah
Senior Director MyICMS DirectorateMalaysian Communications and Multimedia Commission
Kuala Lumpur29 August 2007
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AGENDA
1. Broadband status in Malaysia2. Malaysia Regional Internet Hub
3. Malaysia Digital Cities: A futureWorld of Broadband Connectivity
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APPLICATIONS/SERVICES & CONTENTS: DRIVERS FOR
BROADBAND DELIVERY VIA WIRELINE AND WIRELESSTECHNOLOGIES
Source: BT presentation BWF Europe 2006, MCMC
Broadband to
general
population
Ultra hi-
speed
broadband
Gaming
VoIP Video TelephonyVideoConferencing
Video- on-demand
HDTV
100kbps 1Mbps 10Mbps 100Mbps +
Multi-channel HDTV
xDSL
256kbps
Wireless (3G/HSDPA, WiMax, FixedWireless)
Fibre to the user
Medical Imaging
Digital Home
e-govt, e-transactions,
e-learning
InternetAccessApplication
Speed
Applications/ Services &
Contents
Last mile
infrastructure
(technologies)
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2003 2004 2005 2006
Source: NBP(MEWC), MCMC, McKinsey
Objectives of the NBP
Generate adequate broadband supply via
multiple technologies
Stimulate demand via content and applications Explore funding mechanisms
Identify and close regulatory gaps
Strategies Adopted
Reach critical mass from public sector adoption
Government departments
Schools University and research
Hospitals
Internet Community centres
Spill over benefits to private sector and homes
Policy and regulatory initiatives to promote
industry Intensify competition in the last mile
Encourage new entrants
Implement bitstream
Utilize USP (universal service provision) fund
National Broadband Plan 2004
NBP commenced
1
2
Total Broadband connections (000s)
Numbers as per NBP definition
National Broadband Plan (NBP) The
Vision
897
1,276
693
282
502
253
110
897
1,303
NBP
Actuals (xDSL,
FWA, Satellite)
Include 3G
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2006
MyICMS 886 :OVERALL STRATEGY FOR BROADBAND ASCATALYST FOR INDUSTRY DEVELOPMENT
Source: MCMC
Objectives of the MyICMS 886
to propel Malaysia in the delivery of
advanced ICMS services towardsimproving the quality of life of
Malaysian and at boosting
Malaysias global competitiveness.
towards building a ubiquitous service
environment.Strategies Adopted
Identified 8 key service areas, 8
types of infrastructure and 6 growth
areas as focus points for
development
Aims to create a catalystic cycle
enhancing investment in existing
services and infrastructure to
generate growth areas
MyICMS 886 (2006 2010)
1
2
MyICMS 886 HH penetration
1,300
MyICMS 886 Launched in Dec 2005
*Note: Reviewed (July 2007) target of 50%
household (HH) in 2010
2008
2,800 4,200
2010
25%
75%
50%
Total Broadband connections (000s)
MyICMS 886 Targets
*50%
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Services
1. High Speed
Broadband2. 3G & Beyond3. Mobile TV4. Digital Multimedia
Broadcasting
5. Digital Home6. Short RangeCommunications (e.g.RFID-based)
7. VoIP/InternetTelephony
8. USP - UniversalService Provision
Areas under other government agencies and industry sectors
1. Content
Development (e.g.education,entertainment, games)
2. ICT Education Hub3. Digital Multimedia
Receivers (set top box)4. CommunicationDevices (e.g. VoIPphones)
5. EmbeddedComponents &
Devices (e.g. RFID)6. Foreign Ventures
Growth Areas
Hard1. Multiservice
ConvergenceNetworks
2. 3G Cellular Networks3. Satellite Networks
Soft
4. Next GenerationInternet Protocol(IPv6)
5. Home InternetAdoption
6. Information & Network
Security7. Competence
Development8. Product Design &
Manufacturing
Infrastructure
MyICMS 886 Core Elements
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7Source: OECD,MCMC
Broadband Penetration 2006 (Per 100 Population)
29.1
25.0
20.2
17.1 17.0
12.5
6.0
3.31.3
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
Korea
Hong
Kon
g
Japan
Germ
any
Sing
apore
Irelan
d
Klan
gVa
lley
Mala
ysia
Thailan
d
Selected Countries
Broadband
Penetration
BROADBAND PENETRATION: COMPARISON
WITH SELECTED COUNTRIES
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BROADBAND PENETRATION IN MALAYSIA COMPARED TOOTHER CITY STATES
Terengganu
Kelantan
Selangor
MelakaJohor
N Sembilan
Perak
Sarawak
Kedah
Pahang
Sabah
Labuan
Hong Kong
Singapore
WP Kuala Lumpur
Penang
Broadband penetration, 2006Percent households
Source: MCMC Selected Facts and Figures Q1 2007; OFTA-Hong Kong; IDA
Malaysia
3.2
68.0
52.4
12.034.5
21.3
19.8
10.8
10.7
9.3
7.6
7.3
7.2
5.4
4.6
4.9
4.6
BROADBAND PENETRATION IN WP KULALA LUMPURLAGS OTHER CITY STATES (SINGAPORE AND HONGKONG)
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2004 05 06 07 08 09 2010
Gap
Current
trajectory
MyICMS targets% Household
0
10
2030
40
50
60
70
80
1. To achieve the targets set , resolutions are
required to address current demand and supply
constraints
2. Correct demand stimulation will even help
Malaysia to achieve > 75% household penetration
3. Current DEL capacity cover 97% household with
80% of household already have at least 1 Mbps
capable copper
BROADBAND PENETRATION AND MARKET GROWTH
Source MCMC, McKinsey
Direct Exchange Lines (DEL) % Capacity used
CURRENT MARKET PACE WILL LEAD TO~35% HOUSEHOLD PENETRATION BY 2010
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CONSUMERS NEED FOR BROADBAND
Source: MCMC Malaysia Household InternetSurvey 2005
SupplyDemand
Market structure that can
balance the dual aims of
both promoting competition
(so as to keep the pricesaffordable) and ensuringefficient investment (so as
to attract infrastructureroll-out) is needed
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* Broadband prices less than 2% of income, at current price of USD 18 for 512 kbps
DSL service
** Triangulated using state level income vs. broadband penetration levels and nationalpenetration level
Source: Department of Statistics; MCMC; McKinsey
25.960K+
Mass affluent
45.218K-60K
Middle income
28.8
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BROADBAND PRICE vs. MONTHLY INCOME (2006)
Broadband Price per 100 kbps
0 0.01 0.01 0.02 0.04
0.66
1.82
0
0.5
1
1.5
2
Japa
n
Korea
Singap
ore
Germ
any
Hong
Kon
g
Mala
ysia
Philipin
es
Selected Countries
%o
fm
onthlyincome
Source: ITU Information Society Statistics Database. 9th Malaysia Plan
Malaysia average monthly
income ~ RM1645
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R2
= 0.6352
0
10
20
30
40
50
60
70
80
0 30 60 90 120 150 180 210
BROADBAND REVENUE/PRICING
Monthly Consumer ARPU (PPP adjusted)2005 (USD)
Broadband Connections per
household, 2005 Percent
Turkey
ThailandIndia Indonesia
Philippines
Greece
Malaysia
Hungary
Poland
Ireland
Czech
Republic
New
ZealandAustralia
Portugal
Hong KongSouth Korea
DenmarkNetherlands
SwitzerlandFinland
Canada
Norway
Belgium
IsraelJapan
USUKSingaporeFranc
e Austria
German
y Italy
Spain
Taiwan
SlovakiaChina
Source: ITU; Ovum; McKinsey
Sweden
RETAIL BROADBAND
PRICES ARE NOW
RELATIVELY LOW
COMPARED TO
INTERNATIONAL
BENCHMARKS
At current price levels,
Malaysias broadband
penetration could be
doubled based onaffordability criteria
Therefore, access price
is not the key issue
Attractiveness ofapplications and quality
of service need to be
focused as next stage
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GEORGETOWN
KUALA TRENGGANU
KANGAR
ALOR STAR
IPOH
SHAH ALAM
SEREMBAN
MELAKA
KUANTAN
KOTA BHARU
JOHOR BAHRU
KUALA LUMPUR
IskandarDevelopmentRegion
Klang ValleyBroadbandPush
NorthernCorridor (incl.Penang)
KOTA KINABALU
KUCHING
Industrial parks/FTZs covered
State Capitals covered
Non populated areas
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CURRENT ISSUES AND CHALLENGES
Thrusts Issues
Compelling reasons for broadband remain
uncertain
Lack of local content Lack of attractive e-government applications
Availability:broadband forgeneral
population
High SpeedBroadband in
select areas
Reach of multiple infrastructures still limited (e.g.,
HSDPA just launched, WiMax licenses recently
issued)
Attractiveness
Supply
Demand
Economics very challenging
Needed to keep competitiveness of Malaysia vs.
other countries
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MEWC, MCMC, INDUSTRY HAVE TAKEN ACTION TO
ADDRESS THESE ISSUES
Award of WiMAX spectrum (2.3 GHz)
Monitoring of WiMAX, 3G and HSDPA roll out
Tower sharing T1, T2, T3
Leveraging on current capacity of copper
Mandate Broadband Under USP Programme
Promote Facilitative Role Of Local Authorities
Availability
Broadband for
general
population
(upto 1 Mbps)
License last mile solution provider (14 licensees)
Fiber roll out under KVBP
TM roll out Metro-E
State initiatives (Melaka, Kedah, Penang)
High Speed
broadband
(HSBB)
Increase PC penetration
Connecting community programs
KVBP (Klang Valley Broadband Push) pilot projects
E-government (eKL), E-commerce, E-education
Free hot spots in public areas (k-Perak, Cyberjaya)
Content stimulation initiatives
Attractiveness
- Demand
creation
Actions undertaken
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EXPLORING BREAKAWAY INITIATIVESInitiatives being considered
To increase speed of penetration, further encouraging of last
mile infrastructure competition needed
We are evaluating:
Incentives (e.g., subsidize subscriptions)
Regulatory enforcement (e.g. rollout compliance)
Potentially shared build-out for new technologies (e.g.,
WiMax)
Availability-Broadband for thegeneral population(upto1 mbps)
Selection required as nationwide rollout too expensive e.g. start
in Klang Valley, Johor Bahru and Penang
Government support necessary to ensure viability and speedy
rollout even for selected areas Declare fibre connectivity as essential utility for new housing
areas
Exploring optimal roll out model
Evaluation criteria: Lowest cost, fastest deployment, highest
adoption, effective competition Models explored: NIIMCO, PPP, Private Sector-led etc
Hi-speed broadbandin selected areas
Government to drive push
E-government Act with public commitment and funding
Attractiveness stimulate local content
Funding mechanism(s) necessary
Streamline agency coordination
Attractiveness-Demand creation
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Malaysia Regional Internet HubEstablishing MyIX (Malaysia Internet Exchange), launched on 15
December 2006
Boomerang effect: domestic traffic routed via multiple international
gateways (neighbouring/distant countries), due to lack of peeringbetween local providers, high costs of leased lines, etc. large
foreign exchange outflows.
Small local ISPs struggling to gain a footing, subsidizing the
business of large global providers.
To become a transit hub for global ISPs who are routing traffic to the
region
>50% of Malaysian transit traffic routed via neighbouring country;
issue of amount of domestic traffic that is routed locally
CMA 1998 states Malaysias aspirations to be aglobal communications hub
CMA 1998 states Malaysias aspirations to be aglobal communications hub
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TURNING THE TIDE OF TRAFFIC BACK TO MALAYSIA
11 A level playing field created for the smaller players. Peeringwith other ISPs was crucial and a neutral internet exchange
was imperative
22 With healthy competition among different ISPs, the pricingcould be expected to decline further, with better QoS. This
would further induce the growth of the industry by attracting
more consumers, and hence more potential players.
Eventually a self-sustainable industry will emerge with a
balanced number of players
33
This would also give local players a leverage whennegotiating with international carriers, and more
international carriers would be attracted to Malaysia. The
aspiration of becoming a global hub would be realised
44
Local content and application providers could benefitfrom the growth of the industry. Potential for catalysing
further content development
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HAVING OWN LOCAL EXCHANGE POINT IS MORE
EFFICIENT
TMNet AS4788
SingTel AS7473
Maxis AS9543
Time AS9920
MIX Jaring AS2400
DiGi AS4818
The Internet Traffic Model (In the absence of IXP) The Internet Traffic Model with an IXP
TMNet AS4788
SingTel AS7473
Maxis AS9543
Time AS9920
MIX Jaring AS2400
DiGi AS4818
HutchisonAS9304VerioAS2914 VerizonAS701Teleglobe/VSNLAS6453International carriers
HutchisonAS9304VerioAS2914 VerizonAS701Teleglobe/VSNLAS6453International carriers
Increasingnumber of smallerISPs
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CARRIER-NEUTRAL EXCHANGE: CATALYST TO ACHIEVING OBJECTIVEOF REDUCING COSTS TO SMEs AND IMPROVING QoS
Domestic traffic no longer needs to
travel outside the country before
reaching its destination
ISPs can connect at the carrier-
neutral internet exchange site to
peer and transmit traffic; Only a port
charge paid to NIPI and a local
leased line connection is required
With nationwide rollout of NIPI
(multiple site cross-country), ISPs
only connect at the nodes they wish
to transmit traffic to
Reduced costs to the SMEs11
Traffic latency for local traffic is
vastly improved due to the decrease
of number of hops between the
source and the destination
This also means increased quality
of service for the customer. As a
result of this, this could further
increase the broadband penetration
In addition, a greater number of
players will be motivated to join the
market to provide their services due
to the increased demand
Improved quality of service22
addresses issues pertaining to peering, backhaul and connectivity costs which are holding
back the industry.
equips Malaysias service providers with a neutral, ubiquitous platform to deploy services.
provides the vital catalyst to achieve governments ambitious initiatives (MyICMS & NBP)
addresses issues pertaining to peering, backhaul and connectivity costs which are holding
back the industry.
equips Malaysias service providers with a neutral, ubiquitous platform to deploy services.
provides the vital catalyst to achieve governments ambitious initiatives (MyICMS & NBP)
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MyICMS 886 and the MSC Vision(MSC Multimedia Super Corridor)
Transform
Malaysiainto
aknowledge
society
Phase3
2020
NextLeap
GrowMSC
IntoaGlobal
ICTHu
b
2010
1996
2004
Create
MultimediaSuper
Corridor(MSC)
DeliveradvancedICMServices
Ubiquitousservice
ImproveQualityOfLife
BoostGlobalCompetitiveness
MyICMS886
Leapfrog into
Leadership inthe
Knowledgeeconomy
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Malaysia Digital Cities: A Future World of Broadband Connectivity
MSC Cybercities and Cybercentres
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Malaysia Digital Cities: A Future World of Broadband Connectivity
Klang Valley Broadband Push (KVBP)
Accelerate meeting MyICMS 886 broadband targets Create model metropolis to be emulated in other states
Winning comparisons to other city states (Singapore,
Hong Kong, etc.)
Facilitate turning the Klang Valley into an MSC* area
Complement e-KL initiatives
(* multimedia super corridor)
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Malaysia Digital Cities: A Future World of Broadband Connectivity
The Klang Valley
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Promotion of broadband through awareness;
broadband complaints centre
Broadband Awareness
Offering broadband service to disabled groupUrban Undeserved Community
Improve broadband infrastructure and services in
key public institutions
ICT Facilitation
Create demand for broadband infrastructure and
applications (Identified 5 libraries)
U-Library
Increase and promote broadband services,
utilisation and online content/applications
Hotspots
Creating a municipality with world class
communications infrastructure supporting
broadband service. (Identified 4 local authorities)
Model Local Authority
DescriptionProjects
Showcase for mobile broadband technology;
platform to trial innovative applications/contents
Putrajaya-Shah Alam Mobile
Broadband Highway Project
KVBP Phase 1
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THANK YOU
Zamani bin Zakariah
Senior Director
MyICMS 886 Directorate
Malaysian Communications and Multimedia CommissionTel: +60 3 8688 8370/1
Fax: +60 3 8688 1005
e-mail: zamani@cmc.gov.my
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