Liberalization of Multimedia Industry Will Increase Competition

Communications and Multimedia Act
Other Regulatory Initiatives

Licensing of the communications and multimedia industry in Malaysia under the Communications and Multimedia Act 1998 segments the industry, allowing the separation of facilities-based and service-based activities. Convergence between the various media is assumed to have occurred already.

Communications and Multimedia Act

The Communications and Multimedia Act 1998 categorizes activities requiring a licence according to the provision of:

• network facilities;

• network services;

• applications services; and

• content applications services.

In February 2001 the Minister of Energy Communications and Multimedia granted 27 licences including 19 individual licences for content application service providers, which were granted to replace those issued under the repealed Broadcasting Act 1988. The new licensing framework is intended to facilitate convergence by allowing licensees to provide a variety of content services, for example, the provision of terrestrial free-to-air television, subscription broadcasting and radio broadcasting.

The remaining eight are individual licences for applications services, which permit licensees to provide any application service, such as the provision of fixed and mobile telephony services, public payphone services and public switched data services. According to the chairperson of the Communications and Multimedia Commission, these applications services licensees intend to provide voice-over internet protocol to the public.

The issuance of the applications services and content applications services licences indicates the government's intention to encourage competition. In addition to the individual licences issued, the minister has granted class licences for the following applications services activities:

• directory services;

• internet access services;

• messaging services;

• private payphone services;

• telegram services; and

• audiotext hosting services provided on an opt-in basis.

Registration as a class licensee is a simpler process compared to a full application process for individual licences. However, as foreign individuals and foreign companies are not eligible to register as class licensees, a foreigner wishing to participate must incorporate a local entity and comply with foreign investment guidelines.

Notwithstanding liberalization in the service sector, no new licences for the provision of network facilities have been issued. There are now five major telecommunications players fully licensed to provide network facilities, network services and applications services. The government is aware that the issuance of any further licences for network facilities must be considered in view of the possible duplication of infrastructure and waste of capital. However, with new technologies emerging (eg, digital power lines) it remains to be seen whether further licences will be issued. In the meantime, licensed applications services that do not also have licences to provide network facilities and services must rely on existing licensees' facilities and services. This is eased somewhat by the Access List determined by the commission.

Other Regulatory Initiatives

Following a public inquiry (as discussed in Commission Seeks Industry Input), the commission has issued the Determination of Access List and the Determination on Universal Service.

Determination of Access List
The access list comprises a list of network facilities, service and applications services that must be provided on reasonable terms and conditions upon written request by an access seeker. The list includes:

• originating services, equal access and termination services (for fixed networks);

• originating services and termination services (for mobile networks);

• interconnect link services;

• private circuit completion services;

• domestic network transmission services; and

• internet access call origination services.

These services were subject to the Determination of Cost-Based Interconnect Prices issued in 1998 by the previous regulator, except for internet access call origination. Interconnect price regulation took the form of benchmark prices determined by the then director general of telecommunications. Operators were allowed to charge below the benchmark, provided that there was no discrimination or anti-competitive behaviour. The benchmark determined by the director general continues to operate until the commission concludes a study to establish a new one. The commission has indicated that it views forward-looking costs as critical.

Determination on universal service
The system of universal service provision (USP) is to be implemented in two phases. Phase One is for the provision of basic telephony and public payphones in rural areas, for which the incumbent, Telekom Malaysia Berhad, has been designated the sole universal service provider for 2000. All fixed and mobile network operators will share in the cost of providing universal service, which will continue until completion of Phase One.

Phase Two concerns the provision of widespread availability and usage of network services and/or applications services throughout Malaysia. In order of priority, the commission's universal service objectives are:

• collective access to basic telephony and public payphone services;

• individual access to basic telephony and public payphone services;

• collective access to internet access services; and

• individual access to internet access services.

The commission will set targets for both phases annually.

Licensees (except those of content applications services and those whose total revenue from designated services is less than RM500,000) must contribute 6% of their weighted revenue annually to the Universal Service Provision Fund, which will be used to assist the universal service providers in implementing the USP plan.

For further information on this topic please contact Sharon Suyin Tan or Pooi Yuee Wong at Zaid Ibrahim & Co by telephone (+603 257 9999) or by fax (+603 254 4888) or by e-mail ([email protected] or [email protected]).