Malaysia’s broadband plan – stimulating the private sector

Through the Malaysia National Broadband Plan (NBP), the government of Malaysia is promoting the establishment of universal access and service (UAS) to broadband Internet. As opposed to costly government intervention in building and managing a national broadband network, the strategy is for government to invest in broadband network connectivity and services for key regional organizations in order to stimulate critical demand for broadband services. Infrastructure and service provision is to be carried out by industry, supported through enabling regulations and incentives that establish an open market in which industry operators can creatively meet the growing demand for broadband connectivity in a variety of ways that include fixed, wireless and satellite approaches. 

Malaysia is one of the leading economies in the region with a GDP of approximately USD 357 billion that has transformed from mainly a raw materials export economy into high technology sectors. With a population of 27 million, Malaysia’s increasingly affluent and skilled workforce have readily adopted the use of ICTs in business and personal activities. Mobile phone use is substantial with penetration rates of around 75 per cent of the population and demand for Internet, especially broadband, is growing. Despite this, only about 14 per cent of national households have broadband. Exacerbating this is limited market demand in the less lucrative rural and peri-urban markets.

The government of Malaysia recognized the barriers and challenges to broadband access would require more than simply broadband infrastructure but also flexible approaches to infrastructure development and service delivery that would serve to lower broadband costs in marginal areas. Increased regional awareness of broadband potential is also needed in important community activities and services to generate a critical level of use of broadband that would stimulate the increased subscriptions to broadband services and encourage private industry to deploy needed networks

The NBP Programme
To address the issues the NBP was launched in 2004 through the efforts of the Ministry of Energy, Water and Communication and the Malaysian Communications and Multimedia Commission. An autonomous steering committee was established to manage the plan and task forces set up for fact finding in areas of policy and regulation, technical applications and industry. Broadband Stakeholder Groups (BSGs) were also organized with industry, community and government representatives at regional levels to assist in identifying key institutions and areas for broadband connectivity investment and critical feedback in crystallizing local demand for broadband services. Based on findings, targets were set to increase the number of broadband subscribers to 1.3 million or 5 per cent of the population in order to develop a critical mass of demand in underserved markets that would provide incentives for industry to establish necessary infrastructure and services.

A central component of programme focus is in connecting key institutions to broadband services and stimulating increased usage through investing in broadband network capacities. Planned approaches include investing in connecting government offices, schools and community organizations to broadband Internet and promoting e-government services accessible to local residents. Examples of targets for network and broadband connectivity for institutions include:

  • Broadband service subscriptions for organizations paid by government;
  • Connection of approximately 900 Federal, state and local government departments;
  • Networking around 10 000 primary schools through the Schoolnet programme;
  • 74 000 connections for public universities and research institutions;
  • 4 000 hospitals and clinics networked and connected to internet resources; and
  • 1 700 libraries and a multitude of community centres with a focus on educational, entertainment and e-commerce applications.

The NBP includes development of telecommunications policies and regulations that serve to build capacities introduce financial incentives and encourage infrastructure building in underserved regional areas. Examples include measures to unbundle and co-locate services, opening Malaysia’s Universal Services Programme for broadband initiatives, and allowing for broadband service delivery through multiple technologies including wireless solutions.

Industry response
In response to regulatory and financial incentives, telecommunications industries have initiated a number of solutions to increase penetration of broadband services. In September 2006 leading mobile operator, Maxis Communications Berhad, launched Maxis Wireless Broadband, a 3.5G (HSDPA) mobile service providing households and business customers with wireless broadband connection for both information and telephony services via a single wireless modem terminal. The service has proven popular with year end subscriptions in 2007 expected to total nearly 100 000 subscribers.

Enabling strategies
Nonetheless, challenges of stimulating demand in underserved areas have required that the NBP involve regionally specific measures and flexible policy and regulatory approaches. Enabling policies have been established to increase the number of SME businesses providing broadband services. Some policy examples include provision of suitable taxation regimes, financing mechanisms and government contracts as incentives for SME businesses. Example of regulations identified to support the competitiveness of regional markets include introducing flexibility in both the pricing of services and the types services that can be bundled in underserved areas.

Further, NBP task force and BSGs input provide assistance in feasibility analysis through carrying out regional supply and demand surveys and openly sharing results with stakeholders and industry. As an innovative approach to assessing local service viability, the NBP secretariat set up a geographic database where local businesses and households register their need for broadband services and geographic location; information crucial for identifying local market demand for broadband services and investment decisions in broadband infrastructure.

Since its inception in 2004, Malaysia’s NBP has spurred greater integration of broadband services in key organizations of regional and underserved markets. New forms of broadband services delivery such as wireless HSPA have helped connect underserved areas. Although targeted levels of broadband connectivity originally outlined in the NBP are not yet fully realized, crucial experience and lessons learned are improving the implementation and approach of plan activities. An updated version of the NBP is set to be officially released in early 2008. Some of the expected changes include the establishment of minimum standards in network speeds for main client categories that include public, government and industry.

Sources: Ministry of Energy, Water and Communications & Malaysian Communications and Multimedia Commission, 2006 2nd Ed., National Broadband Plan: Enabling Highspeed Broadband Under MyICMS 886
GSM Association, 2007, Case Study Series – Maxis HSDPA: Shaking up the Broadband Market.
Business Times, National Broadband Plan Details to Be Released, January 2008 Internet:

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