New Universal Service Provision Structure
Since the enactment of the Communications and Multimedia Act 1998, the telecommunications regulator has implemented initiatives to optimize the use of existing infrastructure by (i) requiring mobile telephone operators to provide a domestic roaming service between networks, and (ii) introducing a new universal service scheme.
The initiatives are intended to promote consumer confidence and the efficient allocation of resources.
Domestic roaming allows an operator to use the infrastructure of a rival operator to boost its service coverage and reception, so that customers can enjoy reception in areas where their own operator does not provide coverage. Network sharing between operators may also provide a solution to the network congestion currently faced by some operators.
On December 1 2002 the first phase of domestic roaming for cellular mobile services was introduced in the states of Johor, Negeri Sembilan, Pahang, Kedah and 10 sites in Sabah and Sarawak.
Domestic roaming will be implemented only in areas where service coverage is inadequate (eg, along the North-South expressway, and in various holiday resorts and industrial parks).
The Malaysian Communications and Multimedia Commission (MCMC) has consistently encouraged cellular mobile service providers to share the sector's infrastructure with a view to preventing expensive duplication and under-utilization of resources.
Moreover, the MCMC has allowed industry players to make their own commercial arrangements with other operators, with minimal regulatory intervention. While this may be consistent with the spirit of the Communications and Multimedia Act, some industry observers consider that stronger MCMC regulatory intervention is required to ensure the implementation of genuine domestic roaming between rival service providers.
Under the new access regime, operators may request infrastructure access on reasonable terms and conditions, and the access provider must provide access to its network facilities and services on an equitable and non-discriminatory basis. Where access is not granted, the operator seeking access may notify and involve the MCMC. Further, where the possibility of anti-competitive behaviour or abuse of dominant position arises, competition rules may be enforced.
So far, only two pairs of merging networks have announced domestic roaming arrangements between the networks of their merging partners: Telekom Malaysia's TM Touch and Celcom, and Maxis Communications and TimeCel. Cellular mobile service operator DiGi Telecommunications would be the main beneficiary of domestic roaming arrangements but has not yet announced any such agreement with any other local service operators.
While collaboration between merging networks is to be expected, the ultimate challenge is the management of a single seamless dual-band network.
New Universal Service Provision Structure
Previously, all operators were subjected to universal service obligations, pursuant to their licensing conditions. However, in practice, the implementation of a universal service was difficult to coordinate and so in 1998 the then regulator, the Ministry of Energy, Telecommunications and Post, appointed Telekom Malaysia as the sole universal service provider (USP). Other operators were obliged to contribute towards the cost of the infrastructure 'roll-out', with Telekom Malaysia taking responsibility for roll-out in rural and under-served areas.
The issue of universal service provision was controversial. In the late 1990s, the regulator required all telecommunications companies to submit roll-out plans to facilitate cooperation between all players, but at that time only the incumbent submitted its plan. Given the difficulties in securing commitments from other operators to contribute, the regulator designed a more effective plan to involve other telecommunications companies in the provision of a universal service.
Initially, this plan proceeded on the basis that Telekom Malaysia will continue as the sole provider for a period of two years beginning from January 1998. Other fixed and cellular operators were required to contribute to the roll-out costs in 12 monthly payments, payable directly to Telekom Malaysia.
Currently, under the Communications and Multimedia Act, universal service is to be provided by the licensee with network facilities in the vicinity of the universal service target area. Where more than one licensee operates in the area, the MCMC will invite them all to submit plans. Implementation costs will be reimbursed from the Universal Service Provision Fund.
Contributors to the fund
Licensees (other than content service providers, such as broadcasters) whose net revenue from the designated services exceeds M$500,000 (around US$125,000) per calendar year are required to contribute to the USP Fund. The designated services include:
- local, national and international calls;
- call termination services provided to foreign network facilities providers;
- foreign network services providers and/or foreign applications services providers;
- freephone services and operator assisted calls; and
- international roaming services.
Their annual contribution to the USP Fund must be 6% of their weighted net revenue unless the MCMC stipulates otherwise.
Operators that implement the universal service scheme can seek reimbursement from the USP Fund for avoidable costs less revenue foregone. This sum is also deducted in the event that the MCMC approves advance payment for costs.
The Universal Service Provision Regulations took effect on October 17 2002, listing the universal service objectives in the following order of priority:
- collective access by a community to public, switched telephony network and public payphone services;
- individual access to public, switched telephone network service;
- collective access by a community to internet services; and
- individual access to internet services.
The rendering of universal service must comply with quality requirements set by the MCMC.
For further information on this topic please contact Sharon Tan at Zaid Ibrahim & Co by telephone (+603 2087 9999) or by fax (+603 2094 4888) or by email ([email protected]).