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Thursday, November 26, 2009

Investors put off by Malaysia’s high-cost, low-speed broadband

Business Times Singapore) - Consumers in Malaysia pay some of the highest prices for broadband in the region, one major reason being the monopoly which state-owned Telekom Malaysia (TM) holds on submarine cable landing rights, a senior executive at a multinational company has asserted.

There is no shortage of gateway service providers seeking landing rights because of the pent-up demand for quality bandwidth, but the government must deregulate or liberalise gateways in order to improve competitiveness by providing larger broadband at lower costs, said Ryaz Patel, Intel Electronics country manager for Malaysia and Brunei.

Patel’s comments that the lacklustre quality and high cost of broadband is hurting the country’s knowledge aspirations come on the heels of warnings by Australian businesses that slow Internet speeds were putting them off investing in Malaysia.

Malaysia Australia Business Council vice-chairman Michael Halpin said large technical documents from Australia had difficulty getting sent over because of the poor quality broadband.

“Australian and American investors see this as a nuisance and an impediment to them to do business successfully here,” he said.

In a press briefing on Intel’s roadmap for 2010, Patel observed Malaysian consumers pay significantly more for broadband, but even to buy broadband wholesale as a service provider was ‘“frighteningly expensive” compared to its neighbours.

His comparison of regional costs showed Malaysian broadband offers some of the lowest speeds in the region, but at the highest costs.

For the fastest bandwidth of 100 megabit per second, Singapore users pay nearly US$85 (RM286.56) or US$10.20 mbps.

For 4mbps in Malaysia, consumers pay US$76 or US$35 mbps. Vietnam’s 3mbps bandwidth — although a tad slower — costs users US$50.55, or US$16.85 mbps.

In the region, broadband costs in Indonesia and India also tend to be higher.

TM is likely to resist liberalisation as it has invested huge sums in infrastructure and now owns or leases capacity on more than 10 submarine cable networks which span more than 60,000 fibre-route miles.

But Patel said if Malaysia aspires to be a knowledge-based society, it needs to get more computers as well as quality and affordable broadband into more homes.

“(And) the single biggest link has to do with landing rights.”

Malaysia is aiming for 50 per cent household broadband penetration next year from about 30 per cent now. Broadband users can access 10MB speeds next year when TM rolls out high-speed broadband in selected suburbs in the Klang Valley in the first phase of its nationwide rollout.

Last month, Thailand broke a state-owned enterprise hold on submarine cable landing rights in the country by granting a licence to the first private operator, True Internet Gateway Co Ltd, which pointed out it would be able to source submarine bandwidth capacity from a wide range of providers directly, resulting in greater bandwidth being available at more competitive prices.

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