STAR, Friday December 4, 2009
PETALING JAYA: The Malaysian Communications and Multimedia Commission (MCMC) is fast-tracking the use of its Universal Service Provision (USP) fund, having awarded RM264mil last week, and will announce a further RM1.4bil worth of funding before the year-end, sources said.
According to the 2008 annual report of the MCMC on the USP fund, the fund size totalled RM4.7bil as at the end of last year. The figure is believed to have topped RM5bil to date. This would make the MCMC one of the richest government regulatory bodies. (The USP fund is deposited with local banks CIMB, RHB, EON Bank and Maybank, the annual report revealed.)
The USP awards were given to telecommunications operators that had submitted proposals, based on tenders the MCMC had put out earlier this year, for broadband coverage in under-served areas.
The fund came into force in 2003, collecting at least 6% of revenue from all licensed telecommunications operators, which amounted to an average of close to RM800mil per year, although the collection surpassed RM1bil in 2008 alone.
The USP fund is aimed at providing telecoms facilities and Internet access to under-served areas, which are essentially areas where telecommunications operators have not ventured into due to insufficient demand.
As at the end of last year, only RM314mil of the USP fund had been disbursed and most of this was to provide basic telephony services, with the main recipient being Telekom Malaysia Bhd (TM).
Since last year, the MCMC has changed the USP fund’s focus from basic telephony to broadband, with speeds of more than 256 kilobits per second.
The MCMC lists out the geographical pockets concerned and invites proposals from licensed operators, offering to fund the additional costs involved to make the venture into those areas viable.
The MCMC picks the proposals that give the “most bang for the buck”, as one industry observer explained it. Operators are able to claim not only the capital expenditure involved but also operational expenditure for up to five years. The operators are also allowed to charge the end customer for the services they roll out in those areas.
On Tuesday, aggressive WiMAX operator Green Packet Bhd said it had clinched a RM41.5mil USP project to roll out its wireless broadband service in parts of Kedah and Perak.
However, it is understood that other operators had also won parcels of the RM264mil worth of USP contracts, the largest recipient being TM. TM declined to provide specifics but did confirm that it had won some of the recent USP fund tenders.
Industry players reckon that TM, being the largest fixed-line operator, has an advantage in winning USP-funded projects due to its widespread fixed-line infrastructure already in place. TM also contributes relatively less to the USP fund (see chart) as the contribution formula takes into account how much of rural roll out a licensee has undertaken in a given year. It should be noted that TM has refuted comments that it has a “sunken cost” advantage as it continuously invests in upgrading and maintaining its infrastructure and network.
The MCMC’s fast track in disbursing the USP fund is said to be driven by the Government’s target of having 50% broadband penetration in the whole country by the end of next year.
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