A New Regulatory Framework
Extraterritorial Application
Licences and Activities
Transition Period
Licence Requirement

A New Regulatory Framework

The Malaysian government aims to regulate the communications industries as a 'converged' industry (ie, the progressive integration of the telephone, television and computer industries) through a new licensing policy introduced by the Communications and Multimedia Act (CMA). The CMA came into force in April 1999. Whereas the ownership of facilities and the provision of communication services has historically been dominated by one entity, the new legal framework envisages that the infrastructure and services can be provided by many entities (ie, resulting in a horizontally-segmented market).

Because the communications industry is developing rapidly, the new regulatory structure governing licensed entities has built-in flexibility to allow the Communications and Multimedia Commission to respond quickly and appropriately to problems as they arise. The thrust of the new legislation is to encourage industry self-regulation, and provide for government intervention only when necessary.

Extraterritorial Application

The CMA expressly states that it has extraterritorial application. However, the CMA is arguably limited in its application to licensees under the act, or persons who provide or will provide relevant facilities and services in Malaysia.

The Communications Minister may exclude or exempt any person, place or geographical description from the provisions of the act, including the licensing requirements. In making his decision whether to grant an exemption, the minister will consider whether the CMA requires compliance with industrial codes or minimum technical, operational, consumer or social standards.

The CMA does not provide the procedure for applying for an exemption. Anyone interested in obtaining an exemption from licensing requirements should write to the Communications and Multimedia Commission.

Licences and Activities

The table below sets out the following:

  • the four categories of activities required to be licensed;

  • examples of each category and an indication whether they are likely to be the subject of individual or class licences; and

  • available exemptions in respect of each category.

The CMA enables the minister to issue two types of licences - individual and class. An individual licence is granted to a specified person to undertake a specified scope of activity. A class licence is granted to any person who wishes to undertake a specified activity.

An individual licence is granted where the regulator is of the view that regulatory control is required based on the following factors:

  • the requirement to control ownership of significant facilities and provision of significant services;

  • the requirement to control market entry;

  • the requirement to establish conditions of operation that are specific to an individual operator; and

  • the requirement to limit the scope of the licensed activities (ie, whether there are any existing exclusivity guarantees or other arrangements that must be preserved).

The procedure for applying for an individual licence is set out in subsidiary legislation. The applicant needs to satisfy the commission that (among other things) it has the technical and financial ability to undertake the activity.

Where a person intends to operate under a class licence, mere registration as a licensee and the payment of the prescribed fee is sufficient.

Category of Licensed Activity / Definition Examples of Activities
(Source: CMC Information Paper)
1. Ownership of 'network facilities'
defined as any element or combination of elements of physical infrastructure used principally for, or in connection with, the provision of network services, but does not include customer equipment.

Individual Licence

  • satellite operators
  • owners of fibre optic cable networks
  • owners of wireless networks

Class Licence

  • owners of facilities used to provide niche services
  • owners of minor or ancillary network facilities.
A person who has been determined by the minister to be a nominated facilities provider.

2. Provision of 'network services'
defined as services for carrying communications by means of guided and/or unguided electromagnetic radiation.

Individual Licence

  • providers of significant network services or services provided to a large proportion of the population (eg, PSTN connectivity)

Class Licence

  • providers of minor network services, value added network services or services provided to a small or selected proportion of the population (eg, basic internet access/ connectivity)



3. Provision of 'applications services'
defined as services provided by means of, but not solely by means of, one or more network services.

Individual Licence

  • any applications services (eg, voice services, WWW, electronic commerce applications)

Class Licence
no examples provided by the CMC

Section 129 specifically exempts any applications service provider who is not subject to a class licence from the prohibitions under the act. This indicates that some applications service providers will not require a licence under the act.
4. Provision of 'content applications service'
defined as applications services which provides content.

Individual Licence

  • content services of broad appeal (eg, television broadcasting, radio broadcasting)

Class Licence

  • content applications services of moderate appeal (eg, internet entertainment, online shopping, online information services)

Exemptions are available in respect of closed content applications services, the provision of content incidental to applications services and limited content applications services. The ambit of these exceptions is currently unclear and subject to ministerial determinations and guidelines.

Transition Period

The CMA provides that existing licences issued pursuant to the Telecommunications Act 1950 continue to be valid provided that before March 31 2000 they are registered with the commission. The licensees are requested to notify the commission whether they intend to seek a new individual licence under the CMA as a substitute for their existing licences.

When the CMA came into force on April 1 1999, the minister announced a one-year moratorium on the issuance of new licences in order to make it easy for existing licensees to comply with the new regulatory regime.

Licence Requirement

In determining whether the CMA requires an activity to be licensed, one needs to consider the following:

  • Has the Minister granted a general exemption in respect of the person or place, premises or geographical area in question?

  • Does the activity in question fall within one or more of the four licensing categories in the CMA or does it fall within the specific exemptions?

  • If the answers to the above two questions point to a requirement to be licensed, the next issue is what type of licence is required: individual or class licence?

For further information on this topic please contact Julian Ding at Zaid Ibrahim & Co by telephone (+603 257 9999) or by fax (+603 254 4888) or by email ([email protected]).
The materials contained on this web site are for general information purposes only and are subject to the disclaimer.