The Communications Content and Infrastructure (CCI) sector spans a wide ecosystem, from content generation to networks, services and devices. In 2009, the sector contributed RM22 billion of GNI from telecommunications, TV and broadcasting as well as post and courier.
For Malaysia to transition from a middle-income to high-income economy the continued development of the communications content and infrastructure sector is fundamental. The sector should now build on the infrastructure investments of the past and shift to providing applications and content in order to enable the knowledge-based society.
There are three focus areas for developing this sector: creative content development, local hosting of content and ecosystem enhancement.
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To address the current lack of critical mass of local content, we will start before the end of 2010 with digitising the existing archives at RTM, FINAS and Media Prima. Once the 200,000-plus hours are digitised and available, they will provide a solid base for further enhancement and usage in producing new storylines by a large number of content developers.
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Creating a content hosting platform (CHP) through co-investment from telecommunications sector companies will further drive efficiency in creative content intellectual property (IP) distribution. The CHP will be operational in Q3 2011 and will provide benefits to the Malaysian content developers, infrastructure providers and broadcasters.
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The content economy thrives on the ideas and talents of its practitioners. The creative market of ideas relies heavily on an efficient value chain which promotes and enhances the value of the original ideas.
We will articulate a series of initiatives to help drive the growth of Malaysia’s content industry. These initiatives are designed to ensure that creative content practitioners will be able to focus their energies on creating the most compelling content possible.
The initiatives will require the full commitment of both public and private sectors to work together.
The EPP will pursue a collaborative model to capture the strengths of both types of companies. In parallel, financial institutions are driving towards interoperability among their existing non-mobile electronic payment systems.
Our approach will be centred on a mobile payments component and ensure full interoperability with all platforms. This will expand the user base to cover the currently unbanked population who do, however, have access to mobile phones and tapping merchants for whom installing terminals would not be commercially viable.
A further step in our approach is to address and remove roadblocks in the way of developing electronic payments. Currently, telecommunications companies and banks have independently launched electronic and mobile payment platforms.
Taken separately, these individual platforms cannot reach the critical mass of customers and merchants. We will drive towards forming a consortium with participation of both telecommunications and financial services companies, as a means to set up an integrated payment platform. This will combine existing start-up initiatives in micropayments to ensure support from all relevant participants.
A National Taskforce led by Bank Negara Malaysia (BNM) and Malaysian Communications and Multimedia Commission (MCMC) will oversee the formation of the National Payment Consortium, to be concluded by end of Q1 2011. One of the first tasks of the consortium will be to drive the adoption by BNM and MCMC of the technical standards required for platform interoperability by Q2 2011. Lower transaction costs and the larger scale achieved through inter-operability will make the platform attractive to consumers and merchants.
To mitigate existing security concerns, the consortium will obtain the certification of Bank Negara, building on the current initiative by MCMC and BNM to develop a standard for electronic transactions. Starting in Q2 2011, the consortium will drive a large media and public awareness campaign for the 1Malaysia Payments system.
Under the Consortium’s leadership, the platform will become operational before end of 2011. The deployment of our strategy is based on creating an interface platform to unify and make the existing start-up platforms interoperable, which will be fully operational by the end of 2011.
Google Inc is spearheading the ‘Get Malaysian Business Online’ (GMBO) initiative. GMBO aims to remove the barriers that prevent most Malaysian businesses from going online.
GMBO aims to bring at least 50,000 Malaysian Small Medium Enterprises (SMEs) online within a year and make them successful on the internet. Currently, less than 15% of Malaysia’s 700,000 active SMEs are online.
This initiative is led by Google in partnership with the Malaysian Communications and Multimedia Commission (MCMC), .myDomain Registry and iTrain.
Our approach is based on tight collaboration between the public and private sector, easy access to the system, device distribution and content and a campaign to drive awareness.
Malaysia can improve bandwidth availability to educational institutions by rolling out fibre to reachable schools. Reachable schools, primarily located in non-rural areas, will have 10 to 100 Mbps of bandwidth by 2020. For rural schools, VSAT4 and new wireless technologies will be deployed. The private sector will drive this deployment to accelerate implementation.
The knowledge platform will be an ecosystem based on broadband connectivity, linking not only all Malaysian schools, but also related parties such as educators, students and their families. The knowledge platform will also integrate other institutions such as libraries, museums and universities.
All students and teachers will be provided with their own PCs and netbooks to enable them to connect to the integrated system. Interaction with the knowledge platform will be possible also through mobile devices. To the extent possible, these devices will be deployed under a managed environment to allow remote monitoring and automated maintenance.
The platform will support not only the E-Learning curriculum, defined by the Ministry of Education (MoE), but also Continuous Professional Development (CPD) for professionals such as teachers, lawyers and accountants. The cost savings to the Government from targeting teachers is substantial as it would greatly reduce travel expenses for their training. Electronic CPD (E-CPD) modules will be defined and accredited by their respective professional bodies, focusing on the targeted needs of professionals. The CPD applications should be made mandatory by both the Ministry of Human Resources and respective professional bodies.
E-CPD has the potential to be rolled out regionally. To do this, Malaysian professional bodies will contact their local counterparts in other countries to define module content and network providers will partner with local network companies to roll out and manage the system.
MCMC will lead the entire process and facilitate the effort in partnership with the MoE. MoE will work with network providers and SMEs to implement system requirements and content development.
Implementation will start in 2011 with a data centre and applications platform to support more than 10 million users. Educational and CPD materials will be digitised and placed onto this platform. To ensure a critical mass of adoption, the MoE will make specific portions of the digital curriculum mandatory. By 2012, 64% of schools should be connected.
The E-Healthcare EPP aims to connect all medical institutions to the HealthNet platform. The platform will allow healthcare providers to access applications that will increase their productivity while lowering costs and errors. Companies and patients will also be able to access the system to access healthcare-related services.
MCMC will lead the implementation process, while the platform requirements will be jointly determined by the network operators, the Ministry of Health (MoH) and the private healthcare sector.
The E-Healthcare EPP will provide a managed network to connect all healthcare institutions with a minimum connectivity of 2 Mbps and provide a platform for the MoH’s proposed ICARE plan. Companies, patients and insurance companies will have access to the system from anywhere. Network operators will provide medical institutions with the necessary IT equipment.
After interconnectivity among hospitals and clinics is established, four applications will be implemented to run on the platform:
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Allow patients with chronic diseases (e.g. diabetes, cardiovascular issues) to self-update their status to enable healthcare providers to remotely monitor and track their condition;
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Directly connect companies and medical institutions for electronic data transfer, thus saving time for medical record-keeping (e.g. medical certificates);
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Directly connect insurance companies and medical providers to streamline payment processes; and
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Allow patient access for electronic scheduling of appointments to reduce waiting times.
Implementation of the HealthNet platform and connectivity among medical institutions will commence in 2011. Applications will be ready by 2011 and they will be launched in 2012. By 2012, 50% of hospitals and clinics will be on HealthNet, with the ultimate objective of reaching all medical institutions by 2015.
Malaysia's E-Government initiatives launched over the past few years have been recognised by international case studies. However, there are opportunities for further improvement based on fulfilling three objectives:
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Enable a secured communication channel to Government E-Services accessible through all devices: @1Malaysia.my;
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Move towards zero face-to-face services by setting a target of having 90% of all transacted services online and all services available on all devices; and
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Create end-to-end online processes for job applications and internal circulars.
E-Government will foster a better business environment, strengthen good governance, broaden public participation and improve the productivity and efficiency of Government agencies. MCMC will take the lead in the process. It will coordinate, together with MAMPU, all the Ministries and telecommunication companies in order to determine the requirements and the necessary steps to push the migration to E-Government.
In 2011, the digital document management system will be established and by 2012, 70% of transactions across ministries and key applications for the public, businesses and employees will be online. In 2012, 50% of the counter services will be available online and the 1Malaysia Accounts will cover half of the population older than 18 years.
To drive this, the Ministry of Housing and Local Government (Kementerian Perumahan Dan Kerajaan Tempatan or KPKT) will amend the Uniform Building By-Laws to include broadband as an essential service by the end of 2010.
This will make it mandatory for building developers to construct ducting into the nearest network boundary in all new developments. All state governments will need to adopt this in their respective statutes.
The current situation in which town planners do not gazette wireless telecommunications sites also hinders the penetration of wireless broadband. To remedy this, MCMC will amend the National Development Masterplan in all states to gazette landed and rooftop sites for wireless infrastructure by early 2011.
Developers and MCMC will find an operator to take over the ducting and provide open access to telecoms operators, while both operators and state-backed companies (SBCs) will be allowed to build towers. MCMC will regulate infrastructure access pricing to be fair and affordable by the second half of 2011.
The Mayor of Kuala Lumpur has recently announced that business operators are required to offer wireless internet facilities as a condition of license renewal. The proliferation of WiFi will improve business for these operators while helping Greater Kuala Lumpur achieve its connectivity targets.
Approaches to serving the non-urban population can be broken down by geography.
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Wireless service providers will form a consortium by the end of 2010 to lower costs of providing access through active infrastructure sharing.
Significant cost savings can be achieved through sharing electronic equipment. Up to two-thirds of capital expenditure could be reduced if multiple mobile operators shared systems, and operating costs of up to seven% of revenue can also be eliminated. Once a consortium is formed, it will reduce overlapping equipment beginning in 2011.
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MCMC’s Universal Service Provision (USP) Fund is designed to enable the roll-out of broadband to these regions. The private sector will use the USP contributor utilisation clause and access funds to build backhaul and last mile infrastructure to underserved areas with a particular focus on wireless solutions for the short and medium term. Fixed access will take a larger role over the longer term to mitigate the impact of scarce wireless spectrum.
Beyond these geographic and demographic criteria, network providers must also take into account areas populated by the urban poor as these pose similar challenges to rural and remote areas in terms of commercially viable infrastructure provisioning.
At the top end, consumers will have their traffic prioritised with the highest usage caps. In return for premium service, tariffs will be higher than today. For the ‘good enough’ segment, we will offer a package at very low tariffs, offering basic speeds and low usage caps. As an improvement on offerings today, these consumers will have the option on buying priority services on demand.
In addition, consumers may purchase application-specific priority packages, e.g. video streaming or peer-to-peer services. We will, thereby, allow end users to pay for the type of service they want and not negatively impact other users who have different needs.
The technology for this initiative is readily available; however, MCMC will need to maintain a light touch for its regulatory approach to quality of service. The industry can operationalise the smart network by 2012, and we expect 30% of service providers to offer tiered pricing plans based on service priorities by the end of that year. Over the longer term, investment savings will also accrue to the sector.
International bandwidth demand is estimated to reach at least 4 Tbps by 2020. Today, there are approximately 200 Gbps of capacity being used, with an estimated 600 Gbps that can become available. To close the gap, service providers will form a local consortium in 2011 to acquire 3 Tbps of capacity by 2020. To enable the capital expenditure, EPU and MoF will provide a soft loan to finance this project.
The increased bandwidth will lower wholesale costs and allow industry to reduce costs to consumers. In addition, it will enable the expansion of data centres in Malaysia by an estimated 3 million square feet, which will attract business from domestic and international sources.
The sector will provide facilities within this space and enable business services companies to operate advanced data centres, moving up the value chain by offering premium differentiated services. This initiative is critical to providing a means to support local content and locally host foreign content.
Investments to date:
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Cahaya Malaysia Cable System
Telekom Malaysia Berhad (TM) will lay the Cahaya Malaysia Cable System, a two-fibre pair cable system linking Malaysia direct to Japan as well as to Hong Kong. This project is in collaboration with NTT Communications Corporation. This state-of-the-art cable system will provide Malaysia with 500Gbps of capacity when it is put into service in mid 2012. Investment: RM418.5 million (USD120 million). |
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Batam Damai Melaka (BDM) Cable System
Telekom Malaysia Berhad (TM), PT XL Axiata Tbk and PT Mora Telematika will work together to deploy the BDM Cable System which will connect approximately 400 km distance between the two countries with two routes, Melaka-Batam and Melaka-Dumai.
The BDM cable system consists of two fibre pairs, designed to provide 1.28 Tbps adopting Dense Wavelength Division Multiplexing (DWDM) technology to provide upgradable, future-proof transmission facilities. Upon RFS by the end of the year, BDM will carry 20Gbps of capacity. Investment: RM 22.68 million in 2011.
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Beyond the EPPs, the CCI sector will grow through the domestic growth of existing companies as well as through Malaysian ownership of foreign companies. Broadly, growth will be pursued along four fronts: fixed service, mobile services, courier, post and broadcast, and regional operations. These business opportunities will provide RM11.7 billion (USD3.3 billion) in incremental GNI and create 17,265 new jobs by 2020.
Growth from fixed services will come primarily from fixed broadband and data lines. Fixed broadband subscribers will grow by 10.5% compound annual growth rate (CAGR), as existing fixed line users take advantage of bundled packages. Services such as IPTV and online gaming and music will drive much of this increased uptake. Fixed data lines will grow by 2.6% CAGR as more companies require their own internal networks. This opportunity will contribute RM1.7 billion (USD456 million) in incremental GNI and create 3,250 new jobs by 2020.
Mobile services will see subscription growth in all segments: voice, data and broadband. Voice lines will grow by 2.7% CAGR driven by both the growing population and increasing tendency of subscribers to have multiple mobile accounts. Mobile data, which includes SMS, content and services that do not require an Internet connection, will grow in line with subscriber growth.
Lastly, mobile broadband subscribers will grow rapidly by 10.5% CAGR as 3G users begin to access the Internet, more advanced devices induce Malaysians to use their phones as their primary means of Internet access and lower costs allow mobile Internet access to become more widespread. This opportunity will contribute RM3.6 billion (USD1 billion) in incremental GNI and create 5,788 new jobs by 2020.
Courier, post and broadcast sector’s GNI contribution will grow by 5.2% annually over the next ten years.
The courier and post sector will offer a broader range of services such as commercial transaction fulfilment, warehousing, inventory management, demand planning for manufacturers and assembly services. A multi- tiered licensing system prepared by Malaysian Communications and Multimedia Commission (MCMC) will impose higher requirements for top tier license holders and will encourage consolidation, raising the capacity of the sector to invest.
Furthermore, the post and courier sector has an opportunity to capitalise on the expected growth in electronic commerce and offer services specifically designed to meet the needs of merchants. Further opportunities exist in expansion in regional logistics, subject to obtaining freight forwarding licenses, as well as in competing internally on quality and performance of service rather than price.
Although paid broadcasting has almost reached a plateau in terms of penetration, new opportunities for the broadcast sector will open up as new services are introduced. Digital terrestrial TV will allow the broadcasting of more channels and will have a positive impact on revenues starting in 2015, when MCMC plans to mandate the switching off of analogue broadcasting.
Additional upside opportunities may come from mobile TV and 3D TV content. The infrastructure for offering these services are generally in place. Solutions are being explored to address content creation for these new channels and overcoming barriers to adoption.
This opportunity will contribute RM1.6 billion (USD457 million) in incremental GNI and create 7,563 new jobs by 2020.
Malaysian companies in the sector such as Axiata, Maxis and Astro are aggressively pursuing international opportunities in large and fast growing markets such as Indonesia, India and Bangladesh. Currently, these investments account for approximately RM2.5 billion (USD712 million) of GNI. By 2020, these investments will generate additional GNI of RM4.8 billion (USD1.4 billion) and 664 new jobs, as the Malaysian controlled companies leverage the fast growth of these markets and pursue market share.