MALAYSIAN COMMUNICATIONS AND MULTIMEDIA COMMISSION A Malaysian Experience

MALAYSIAN COMMUNICATIONS AND MULTIMEDIA COMMISSION - A Malaysian Experience in USP 17 March 2003 © Malaysian Communications and Multimedia Commission, 2002

AGENDA 1. The Malaysian initiative on convergence 2. The Commission and Licensing Framework 3. Universal Service Provision © Malaysian Communications and Multimedia Commission, 2002 2

Malaysian Initiative on Convergence © Malaysian Communications and Multimedia Commission, 2002

Institutional changes to facilitate convergence 1 Apr 99 1 Nov 98 Redefinition of the Ministry’s functions and formation of CMC Replacement of sectoral Acts by a convergence Act Replacement of sectoral regulators by a convergence regulator Ministry of Energy, Telecommunications & Post Ministry of Energy, Communications & Multimedia Malaysian Communications and Multimedia Commission formed Telecommunications Act 1950 Broadcasting Act 1988 JTM MOI (Licensing Division) © Malaysian Communications and Multimedia Commission, 2002 Malaysian Communications and Multimedia Act 1998 Malaysian Communications and Multimedia Commission 4

The Commission and Licensing Framework © Malaysian Communications and Multimedia Commission, 2002

The Commission has a dual role in the C&M sector Regulatory Developmental Managing for conformance Planning for Performance (Conformance) (Performance) In fulfilling its role, the Commission is guided by the 10 National Policy objectives for communications and multimedia © Malaysian Communications and Multimedia Commission, 2002 6

10 National Policy Objectives for the Communications & Multimedia sector 6. 1. Creating a global hub: To establish Malaysia as a major global centre and hub for communications and multimedia information and content services; 7. 2. Building a civil society: To promote a civil society where information-based services will provide the basis of 8. continuing enhancements to quality of work and life; 3. Nurturing local content and culture: To grow and nurture local information resources and cultural representation 9. that facilitate the national identity and global diversity; Promoting access and equity: To ensure an equitable provision of affordable services over ubiquitous national infrastructure; Creating a robust applications environment: To create a robust applications environment for end users; Facilitating efficient allocation of resources: To facilitate the efficient allocation of resources such as skilled labour, capital, knowledge and national assets; Developing industry capabilities: To promote the development of capabilities and skills within Malaysia’s convergence industries, and 4. Ensuring long-term benefits for end -users: To regulate for the long-term 10. Promoting secure and safe benefit of the end user; networking: To ensure information 5. Nurturing user confidence: To security and network reliability and promote a high level of consumer integrity. confidence in service delivery from the Source: Section 3(2) of the Communications and industry; Multimedia Act 1998 (Act 588) © Malaysian Communications and Multimedia Commission, 2002 7

Licensing for convergence Licenses issued under CMA 98 are technology-neutral and service-neutral VAN licence Content Services ISP licence Broadcasting licence Telecommunication licence The old licenses that were issued were based on specific technologies, and specific services Applications Services Network Facilities Under the old licensing framework all activities related to the provision of a particular service are vertically integrated for the provision of that service The new licensing framework promotes vertical separation between facilities, network, applications, and content © Malaysian Communications and Multimedia Commission, 2002 8

Industry Participants under CMA Network Facilities Owners of facilities such as satellite earth stations, broadband fibre optic cables, Provider (NFP) telecommunications lines and exchanges, radio communications transmission equipment, mobile communications base stations, and broadcasting transmission towers and equipment Network Service Providers (NSP) Provides the basic connectivity and bandwidth to support a variety of applications Provides particular functions such as voice Applications Service Providers services, data services, content-based services, electronic commerce and other (ASP) transmission services Content Application Service Providers (CASP) A special subset of applications service providers including traditional broadcast services and newer services such as online publishing and information services © Malaysian Communications and Multimedia Commission, 2002 9

Universal Service Provision (USP) © Malaysian Communications and Multimedia Commission, 2002

Household penetration rates of various services Television sets Fixed lines 95% 75% 59% Mobile phones 54% 22% PC 24% 9% © Malaysian Communications and Multimedia Commission, 2002 Total households Urban households Rural households 11

The two prong strategy for bridging the digital divide % PSTN penetration Ramp up to capture the digital opportunities Provide Basic services Basic access Affordable rates Multimedia services Broadband access Competitive rates Catch-up to reduce the digital divide within the country © Malaysian Communications and Multimedia Commission, 2002 GDP per capita 12

The Overall objectives for Universal Service Provision To promote the widespread availability and usage of network services and/or applications services throughout Malaysia by encouraging the installation of network facilities and the provision of network services and/or applications services in underserved areas or for underserved groups within the community © Malaysian Communications and Multimedia Commission, 2002 13

Definition of “underserved” • “Underserved area” means an area where the penetration rate for PSTN is 20% below the national penetration rate • “Underserved group within the community” means a group of people linked by similar characteristics from a socio-cultural or economic perspective, within a served area, who do not have collective or individual access © Malaysian Communications and Multimedia Commission, 2002 14

Latest Regulation Communications and Multimedia (Universal Service Provision) Regulations 2002 Public Inquiry Commission Determination Ministerial Direction System of USP set in the CMA © Malaysian Communications and Multimedia Commission, 2002 15

System of USP in the CMA • Section 202(1) - The Minister may direct the Commission to determine a system to promote the widespread availability and usage of network services and/or applications services throughout Malaysia by encouraging the installation of network facilities and the provision for network services and/or application services in underserved groups within the community • Section 203(1) – A determination by the Commission under subsection 202(1) shall include definitions of “underserved areas” and “underserved groups within the community • Section 204(1) - For the purposes of this Act, a fund to be known as the “Universal Service Provision Fund” (“USP Fund”) is established and it shall be controlled and operated by the Commission • Section 204(2) – The Minister may make regulations regarding contributions by licensees, under this Act, to the USP Fund any other matters related to or incidental to the establishment and operation of the USP Fund © Malaysian Communications and Multimedia Commission, 2002 16

Communications and Multimedia (Universal Service Provision) Regulations 2002 • USP Objectives • Notification of universal service targets • Universal Service Plan and Designation of Universal Service Provider • Implementation of the Universal Service Plan • Costing of USP • USP Fund © Malaysian Communications and Multimedia Commission, 2002 17

Graphical representation of the Four USP objectives SERVICES TYPE OF ACCESS Basic telephony The Internet Collective access Objective 1: Collective access to basic telephony and public payphone services Objective 3: Collective access to Internet access services Individual access Objective 2: Individual access to basic telephony services Objective 4: Individual access to Internet access services © Malaysian Communications and Multimedia Commission, 2002 18

C&M (USP) Regulations - Graphical Points Underserved Connected Implementation of universal service plan Designation of the universal service provider Progress Report Compliance with QOS standards Costing USP Licensees Claims Draft universal service plan USP Fund Notification of universal service targets © Malaysian Communications and Multimedia Commission, 2002 19

Selected Highlights • Universal Service Plan and Designation of Universal Service Provider Ø Request licensee to submit draft of universal service plan in respect of universal service target identified Ø Licensee draft universal service plan contain • Location details within the universal service target • Network facilities to be installed • Technology deployed • Timetable for provision of application services • Capital cost for installation • Estimates of operating costs Ø Approval of Plan & designation of Universal Service Provider • Implementation of the Universal Service Plan Ø Progress report – first report not later than 3 months from notification of approval of Plan and thereafter once every 2 months © Malaysian Communications and Multimedia Commission, 2002 20

Selected Highlights • Costing of universal service provision Ø Commission shall pay the designated universal service provider from the USP Fund the cost incurred in implementing the approved universal service plan in a universal service target ØThe net cost in implementing the approved universal service plan is computed as: Net USP cost = avoidable cost - revenue forgone • USP Fund ØContribution - By licensee of 6% of its weighted net revenue. Only by those whose net revenue > RM 500, 000. ØCommission shall maintain proper accounts of the USP Fund - Annual report and statement of accounts © Malaysian Communications and Multimedia Commission, 2002 21

Selected Highlights • Register of USP • General Penalty (a) non-confidential summaries of the approved universal service plans (b) designated universal service providers (c) universal service target (d) a list of licensees contributing to the USP Fund Ø Any person who commits an offence under these Regulations shall on conviction be liable to a fine not exceeding RM 300, 000 or to imprisonment for a term not exceeding 3 years or to both © Malaysian Communications and Multimedia Commission, 2002 22

Key Issues and Resolution for Way Forward • Digital Divide ü recognition ü measurement • Implementation ü monitoring ü review • Service Providers Cooperation © Malaysian Communications and Multimedia Commission, 2002 23

THANK YOU Main Office: Malaysian Communications and Multimedia Commission Level 11, Menara Dato’ Onn, Putra World Trade Centre, 45 Jalan Tun Ismail, 50480 Kuala Lumpur, MALAYSIA Tel: +603 4047 7000 Fax: +603 2693 4881 Website: www. cmc. gov. my © Malaysian Communications and Multimedia Commission, 2002 24