Slow net speed will hit Malaysia’s e-commerce badly, warns economist

GEORGE TOWN: Malaysia needs to pay more attention to developing its fixed-line broadband to meet future needs instead of just mobile broadband, a World Bank economist said.

He said this was necessary to ensure Malaysia does not lag behind its regional peers in an increasingly lucrative and expanding digital economy.

Richard Record, a lead economist at the World Bank Group, said while Malaysia had come up tops in terms of mobile use, fixed-line broadband internet adoption numbers were too low.

Fixed-line broadband is the key to the future of the country’s economy, he said when giving a talk at the “Malaysia Economic Monitor: Navigating Change” seminar at the Penang Institute here recently.

He said fixed-lined broadband not only leads to faster mobile internet speeds, but also allows businesses to cope better with cloud computing and e-commerce solutions.

“Malaysia must aim to go beyond 100Mbps in internet speed, so that videos can be streamed and to allow e-commerce and businesses to manage their supply chains on cloud computing.

“It will allow the government to coordinate across their agencies in real time.

“Without ultrafast broadband, innovations such as artificial intelligence, the Internet-of-Things, and Industry 4.0 will not be feasible.”

Record said a World Bank study by the Malaysia Digital Economy (MDE) team showed despite spending the most in the Asean region in developing fixed broadband services between 2010 and 2016, there are currently just nine fixed broadband users for every 100 people in the country.

He said this contrasted sharply with figures showing Malaysia has 92 mobile broadband users for every 100 people.

Record said Malaysia’s fixed-line broadband adoption rate was at 36% — which was much lower than other regional peers such as Vietnam (42%), Australia (77%) and China (79%).

He said Malaysians received an average speed of 18.6Mbps on mobile internet, which is lower than countries with comparable incomes such as Hungary, Mexico, Poland and Turkey.

He said within Asean, Myanmar, Vietnam and Singapore had faster mobile internet speeds than Malaysia.

As for fixed broadband speeds, Malaysia scored 26.9Mbps, lower than Greece, Mexico and Turkey, although the last two countries have the lowest incomes in the group.

Neighbouring Thailand and Singapore have much faster fixed-line broadband speeds, Record said.

He said with lower-than-desired download speeds on mobile and fixed internet services and high pricing for such services compared with the region, the country would be left behind.

He said Malaysians were also charged the highest for internet on mobile and fixed lines in Asean, paying US$7.16 (about RM30) per month for 500MB of prepaid data on mobile.

Record blamed this on the high internet protocol (IP) transit prices on telco providers by Telekom Malaysia (TM), which has a stake in 12 out of 20 internet submarine cables coming into Malaysia.

He said due to this, the prices are passed down to consumers and hence internet is pricier for most people.

Laying fibre cables have been costly too, he said, with a telco company claiming wayleave deposits were increased 200 times by the works ministry in early 2017.

‘More competition, lower prices’

Record said the only way Malaysia could do well in improving its internet connectivity is to level the playing field by ensuring TM opens up its infrastructure to all interested parties.

He said with TM having more than 830,000km of fibre-optic cables and 92% of the fixed-line broadband market, the telecom giant should be made an “enabler” for other players to offer internet services.

He said the present monopoly has impeded new, high-quality infrastructure from being built and improvement in the coverage.

Record said the country should rely on new service providers, piggybacking on TM’s infrastructure.

He said Malaysia could learn from France, which had a similar monopoly situation.

In 2008, the French government ordered France Telecom to share its lines and open up to alternative access providers.

He said today, the French internet market has grown rapidly. Last year, it had the highest level of household broadband penetration in Europe.

Record said to effect this change, Malaysia’s internet regulators, the Malaysian Communications and Multimedia Commission (MCMC), must put into place policies for TM to open up its infrastructure.

He said public policies and regulations must be applied on TM’s dominance, ensuring prices are reasonable for new internet players to enter the market.

Source: https://goo.gl/TRv8hm | Predeep Nambiar – September 30, 2018