PM to calm telcos upset with YTL’s new TV spectrum

November 26, 2010

Najib will need to reassure telecommunications players riled by the unilateral award. — file pic

 

KUALA LUMPUR, Nov 26 — New network provider YTL Communication’s sole rights to a portion of digital television broadband spectrum has upset competitors who now want Datuk Seri Najib Razak to settle the issue in the fast-growing and lucrative industry.
Singapore’s The Straits Times said the prime minister will meet senior telco officials next Monday to defuse the widening controversy over the 700Mhz spectrum said to be given to tycoon Tan Sri Francis Yeoh’s YTL to operate its hybrid television service slated for end 2011. It can also be used to widen its broadband service.

“I guess the fear is YTL gets the spectrum for ‘broadcast’ purposes and ‘later’ comes back to amend the use of it to broadband on the pretext that convergence of technologies is already happening. Hence their big mantra about quadruple play,” a government source told The Malaysian Insider when asked to comment on The Straits Times’ report.

The Straits Times report quoted the chief executive officer of a large financial institution which has made huge loans to the country’s mobile operators, describing the award of the licence to YTL “scandalous.”
“Without access to the (700MHz) spectrum, the big three won’t be able to expand.” With this stranglehold, YTL “can either shut out other telcos, or resell bandwidth to them.”

The industry fears YTL will repurpose its spectrum allocation by claiming convergence.

While details of the licence are not yet public knowledge, it is believed the award was made without consultation with the three main mobile telcos, including Celcom Axiata which is government-controlled.
Media reports over the past month said that the Malaysian Communications and Multimedia Commission (MCMC) had issued 80Mhz of the 700Mhz spectrum to YTL, which had a disastrous launch of its long-delayed YES 4G WIMAX service.
The other WIMAX provider is P1 but the new spectrum could give YTL total control over the next wave of new technologies in the telco sector. Called Long Term Evolution (LTE), it powers the 4G market which both YTL and P1 claim to provide now. However, their current services do not meet the International Telecommunication Union’s (ITU) criteria for 4G.
The other two big players are Maxis Broadband and Digi Telecommunications. There were previously nine telcos in Malaysia but the regional financial crisis in 1997 forced a consolidation in the sector.

The prime minister now has to step carefully as he works towards defusing the situation. A senior government official said in The Straits Times report, “The industry wants him to review the licence. But to backtrack could also put him in a bad light.”
Senior executives of Celcom Axiata initiated this meeting with the prime minister. Their argument is that they, “together with the other two main players in the mobile business, have invested billions of ringgit in infrastructure over the past decade to service its 26 million or so subscribers.”
They contend the “government can’t just give a relatively new player such a licence and turn its back on the established operators.”

Broadband spectrums are highly coveted in the industry, and in Europe, these are auctioned, a move which raises huge amounts of capital for the countries.

YTL signed an agreement with the US-based Sezmi last month to offer hybrid TV services in Malaysia at the end of 2011. However, YTL would require new spectrum/frequency to offer such services.
Sources said YTL will deploy the Sezmi service using DVB-T2 (Digital Video Broadcasting – Second Generation Terrestrial) technology, which is now used in the United Kingdom and Italy, and being trialled in Spain and Germany.

The 700Mhz band is now being used for terrestrial television (TV) broadcast in Malaysia until sometime around 2015, but there are some unused spectrum in 700Mhz range which YTL could use to offer basic hybrid TV services end next year, said industry website malaysianwireless.com.
The 700Mhz spectrum has been prized all over the world including the United States where Yahoo, eBay and Google banded together in March 2007 to force the hand of the US Federal Communications Commission (FCC) to enable the parties to have a say in what is to be done with the spectrum.
The FCC has dubbed  the 700Mhz to a “beach front” property and YTL’s reported rights to it is seen as disadvantageous to its rivals.

“The thing that caused the irk in most is, it seems, they were the only ones who even got a conditional offer,” the government source added.