Philosophy Politics Economics

Ahad, 13 Januari 2013

Philosophy Politics Economics

MCMC Defends 4G-LTE Spectrum Award: No Track Record Needed

Posted: 13 Dec 2012 10:50 PM PST

MCMC's defence of the award of the biggest share of the 4G-LTE spectrum to Puncak Semangat is lame, and the excuse not to auction the license doesn't even begin to make sense.

Malaysian Communications and Multimedia Commission (MCMC) has defended its decision to award the biggest share of the 4G-LTE spectrum to Puncak Semangat Sdn Bhd which is owned by tycoon Tan Sri Syed Mokhtar Al-Bukhary.

Its chairman, Datuk Mohd Sharil Tarmizi said on Tuesday that the award is to "introduce additional competition". He said "look at the market now, if we left those 8 players on their own, where would the solutions, applications and innovation be?"

Datuk Mohd Sharil Tarmizi also said that MCMC has the power to "take back the spectrum" should players fail to meet their targets.

The MCMC Chairman's response defies all logic because, if the 8 existing players are "not" competing by providing "innovation" today, then MCMC must be responsible for allowing the collusion between the 8 parties. Under the Malaysia Communications & Multimedia Act, the MCMC is the authority to promote competition and bar collusion between telecommunication players. And certainly, by international standards, 8 players are more than sufficient to generate a highly competitive environment. Most other developed nations have far fewer than 8 players in the industry, and yet remain highly competitive and innovative.

While we are all for competition in the industry, the manner in which the license and quota is awarded must be questioned. Some of the companies awarded with 3G and WIMAX licenses by MCMC have failed miserably, proving that MCMC is not an all-seeing "oracle".

The fact that MCMC has the power to retract its award at any time does not give basis to an award of the largest share of the bandwidth to a completely new player in the industry.

Furthermore, a regulator's role is certainly not to play "judge" in evaluating business plans, but to facilitate competition, prevent monopolistic practices and ensuring quality service provision.

If the argument that the arbitrary award to Puncak Semangat is to improve competition rest on shaky grounds, then Datuk Sharil's statement that MCMC decided against an auction for the bandwidth because "the highest bidder may not necessarily be the one with the best ideas" holds even less water.

MCMC's decision against an auction for the bandwidth is contrary to international best practices where both developed and developing countries have raised valuable income for the Government while promoting a highly competitive telecommunications industry. UK, Germany, Sweden and even Thailand have held auctions, raising billions of ringgit in proceeds, while Singapore, Taiwan and Brazil are planning their auctions for next year.

Datuk Sharil was quoted by The Edge Financial Daily that "an auction is best when the spectrum is convenient and quality of the spectrum is not a problem" does not even make any sense. It sounds like a response designed to confound the people, without even beginning to answer the question.

A company that is committed and believes it will trump the competition will be more than able to participate in an auction for the new spectrum. And should the company fail, the MCMC still has the power to withdraw its award while keeping the proceeds of the auction. Hence under such circumstances, there is even greater incentive for the players to compete and innovate to ensure a successful business. This will at the same time benefit consumers.

MCMC must commit to the Prime Minister Datuk Seri Najib Razak's own slogan that "the era where the Government knows best is over", and let the market play its part in determining the winner. MCMC should instead focus on its role to prevent collusion between industry players, punish players who fail to provide quality services and create an even playing field for all parties in the industry.

Otherwise, it becomes clear that MCMC is over-extending its regulatory role to play "god" of the industry by deciding which company's profit to fatten, and ignoring the interest of the millions of telecommunication users in Malaysia.

4G-LTE Spectrum Award: No Track Record Needed

Posted: 09 Dec 2012 10:47 PM PST

It is become endemic of the Malaysian regulatory authorities to award quotas and licences to companies with questionable financial credentials and without any track record in the relevant industries.

Last week, Malaysian Communications and Multimedia Commission (MCMC) announced the allocation of the 4G-LTE spectrum where all 7 existing broadband players in the market – Maxis Broadband Sdn Bhd, Digi Telecommunications Sdn Bhd, Celcom Axiata Bhd, U Mobile Sdn Bhd, Redtone Marketing Sdn Bhd, YTL Communications and Packet One Networks (M) Sdn Bhd were granted 20MHz of bandwidth.

However, what took the industry by surprise was the award of the largest share of the bandwith of 40MHz to a little known entity Puncak Semangat Sdn Bhd, owned by tycoon Tan Sri Syed Mokhtar Al-Bukhary.

The most straightforward question to ask MCMC is – why is it that a company with zero track record in the industry has been given the privilege of securing the largest chunk of the bandwidth?

It appears that MCMC which has landed in controversy in the past, is persisting in awarding licenses to companies with little track record or financial capabilities. In the past award of bandwidth for the 3G and WIMAX spectrum, several companies have failed to deliver the services or have effectively sold their license for a quick profit.

What is most disappointing the the award of licenses in Malaysia is there is not auction requirement as practised in most other developed countries. The auction process will not only ensure the most committed companies to take part in the exercise, but will also raise valuable revenue for the Government.

For example, the Office of Communications, the independent telecommunications regulator in the United Kingdom has set a reserve auction price of GBP1.3 billion for the 4G-LTE licences and the industry expects the Government to raise between GBP3 to 4 billion!

In 2010, the highest bid in the German spectrum auction was 7.5 Million Euros for two blocks in the 800 MHz band.

In 2008 Sweden concluded an electronic 16-day auction for nine 15-year 4G-licenses for a total bandwidth of 190 MHz in the 2,6 GHz band. The total required minimum bids were SEK 50,000,000, but the total winning bids were USD314 million.

Other countries such as Taiwan, Singapore, Brazil are planning for 4G auctions in 2013. Similarly, Thailand has only just concluded their 3G auction, netting their Government US$1.4 billion in the process despite a more depressed market environment, and alleged collusion to lower the auction price.

It appears that in Malaysia, our regulators are more interested in enhancing the profits of our telecommunication companies, and even then favouring certain connected parties despite their lack of track record.

The above is the clear cut case of lost opportunity for the Government to raise valuable funds to provide much needed services and facilities for Malaysians, such as toll-free highways and affordable homes.

Pakatan Rakyat will ensure that all licenses granted by our various regulatory bodies, particularly in the energy and telecommunication will be awarded in an open, transparent and competitive manner to ensure that the best bids will win the licences and the Government will also be able to maximise its revenue in the interest of the rakyat.

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Ahad, 13 Januari 2013