OVER the past 40 years, Malaysian telecommunication industry landscape had evolved from Single Utility Operator (SUO) into Multi Utility Operators (MUO).
This landscape shift was part of the neo-liberal economic policies such as corporatisation, privatisation, and liberalisation (CLP) executed under the National Privatisation Policy during Tun Dr Mahathir Mohamad first regime.
However, the notion that MUO landscape will ramp up competition to reduce prices and increase quality for the people never arrived. The competition rate for the telecommunication sector is determined by the people power through consumer flexibility.
In fact, it was the former Minister of Communications and Multimedia, Gobind Singh Deo who had force price reduction and speed increment through the federal executive order (FEO). The Federal Parliament through the Communication and Multimedia Act [Act 588] had granted authority to the responsible federal minister for communication to regulate fees and services offered by the telecommunication corporations.
Regulatory intervention is needed because of the low consumer flexibility to switch between telecommunication corporations. The telecommunication sector has two main regulations which is minimising the consumer flexibility. The two regulations are minimum contract period and control over telephone number.
There had been minor reforms to improve consumer flexibility. However, the success rate was minimised due certain obsolete bureaucratic rules showcasing the lack of political will. The lack of political will to increase people/consumer powers is linked to the lobbying power of private telecommunication corporations and protectionism by Khazanah Nasional Bhd towards Telekom Malaysia Bhd (TM).
Minimum lock-in period
People will only realise the poor quality of their telecommunication provider after 1 month but could not exit the telecommunication corporations due to the minimum contract period up to 24 months. The minimum contract period “locks in” consumer into paying for sub-standard services preventing competition.
The minimum period allows telecommunication corporations to impose exorbitant “exit fees”. The proper legal term is “exit fees” and not “fines/saman” as propagated by certain telecommunication corporations. Fines can only be imposed by the nation-state apparatus such as regulatory agencies, public tribunals, and judiciary courts onto the people.
Certain telecommunication corporations justify the minimum contract period by claiming the need to cover the cost of the telecom equipments such as modems, decoders, and home phones. Telecommunication corporations do not allow consumer to utilise their own telecommunication equipments at the first place. Certain telco offers older model mobile phones for RM1 just to lock-in postpaid customers for 24 months.
Henceforth, telecom equipments are being forcefully pushed down the consumers throats with the minimum contract period. All form of necessary telecom equipment excluding mobile phones should be fully borne by telecommunication corporations. The telecommunication corporation can be given the privilege to recollect the telecom equipments when consumer exits the service.
Flexibility through network porting
In 2011, Malaysian Communications and Multimedia Commission (MCMC) implemented mobile number porting (MNP) to allow consumer to switch telecommunication operators without losing their mobile phone number. In 2019, more than 4 million mobile phone consumers had applied to change their telecommunication corporations. However, more than 50% of those request was rejected. Unsurprisingly, three obsolete porting rules contributes 60% of the total rejection.
The validation SMS is often overlooked because Malaysian rarely utilise their SMS. Currently, the telecommunication corporations receiving the consumer from different network must conduct identification check at customer service centres. Thus, the SP10 and SP71 rules requiring the consumer to reply to the verification SMS is purely redundant and obsolete.
The recipient telecommunication corporations can collect the overdue amount from the postpaid consumers on behalf of the previous telecommunication corporations. This will eliminate the need for clause SP52. The redundant and obsolete clauses under the MNP Business Rule needs to be abolished to increase consumer flexibility.
MCMC will introduce fixed network porting (FNP) for fixed line consumers by end of 2022. Thus, allowing business and homes to shop around for broadband and fixed line services without losing their home or office phone number. Currently, TM has an effective monopoly over the fixed line network with a market of more than 82%.
On average, countries with high customer flexibility for fixed lines experiences at 23% reduction broadband prices. This price reduction benefit all consumers, not just porting consumers. Countries with high customer flexibility through FNP have at least four times higher broadband penetration compared to countries without FNP. MCMC must refrain from introducing any redundant and obsolete rules to maximise benefits of FNP through high consumer flexibility.
Moving forward
Telecommunication is one of the prime physical infrastructure for social advancement of our modern society. Empirically, consumer flexibility will increase competition which reduces prices and increase quality. The increase in quality can be measured in network stability, coverages, and average speed. The increase in coverages and reduction in prices will improves telecom accessibility for the vulnerable communities. – Aug 10, 2021
Sharan Raj is a human rights activist, environmentalist, and infrastructure policy analyst. He is also the central committee member for Parti Sosialis Malaysia (PSM).
The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.
Photo credit: DNA
