REPORT OF THE SELECT COMMITTEE ON LABOUR AND PUBLIC ENTERPRISES ON STUDY TOUR TO MALAYSIA, DATED 30 NOVEMBER 2005:
A. BACKGROUND
The Energy, Water and Communications Ministry have set up industry forums to promote industry self-regulation and self-discipline. The CMC is required to provide for the establishment of, Access forums, Technical Standard Forums, Content Forums and Consumer Forums.
The forums are set up in terms of set guidelines. Their primary task is to prepare and develop voluntary Industry Codes. The CMC has to designate each Industry Forum before codes can be registered. The role of the Industry forum will be to monitor the implementation of codes and to ensure that there is high level of compliance within the industry. The Access Forum is responsible for developing Access Codes that are to be sued as model for terms and conditions of compliance with standard access obligations. The Technical Standards Forum is for the development of technical standards, which determine for access obligations. There is also a Content Forum, which is responsible for the development of Content Code, which shall model procedures for dealing with offensive or indecent content. Another is the Consumer Forum is set up to develop Consumer code which will include procedures for protection of consumer interests.
The Universal Service Provision (USP) was set up in terms of the provisions in the Communications and Multimedia Ac, 1998 and was implemented in the beginning of 2002.
The 8th Malaysia Plan (2001-2005) sets the government’s contribution to the USP at US$ 250 million. This contribution is contribution to provide communication infrastructure to schools and other critical public and community facilities in underserved areas. The Industry is also expected to make a contribution in terms of USP Policy, which was approved in 2001. All licensees except the CASP are required to make a contribution of 6% of their weighed income to the Universal Service Fund. The funds from Industry players, within the sector will be used mainly for communication infrastructure development.
The success of the performance of USP is evident in noted implications for bridging the digital divide. There is an increase accessibility and connectivity in rural and underserved areas through the implementation of the Universal Service Provision program (i.e. government contribution and the Universal Services Fund). There is widening awareness on ICT usage through the proliferation of Rural Internet Centres and the E-Community Projects. IT education has been enhanced through smart school initiatives in rural and underserved areas (linking schools to the national and global networks), Net School programmes. It has also encouraged distance learning through rural Internet Centres. Malaysia is becoming a knowledge-based society, by reducing disparities are reduced by ICT. The e-culturalisation is becoming an as the integral part of daily life.
2. An overview of the Communications and Multimedia Industry in Malaysia
2.1 Presentation by the Monitoring and Enforcement Division
Malaysian Communications and Multimedia Commission is a convergence Regulator which was established under the Communications and Multimedia Act of 1998, the Digital Signatures Act 1997 and Postal Services Act 1991. The Commission is responsible for the telecoms, broadcasters and ISPS, the postal and courier services and digital certification authorities.
The Commission: is made of seven Board Members who are appointed by the Minister and the Chairmen who also act as the CEO. The role of the Board is to advise, decide and implement the legislation.
The Commission works through a consultative process with the relevant role players, and consumers proposes regulation and makes recommendations to the Minister who introduce these through to Cabinet and later to Parliament. There is considerations for appeal through the Tribunal court for instances where the industry may not be satisfied with a particular regulation. This option has however not yet been put in place.
The move or change towards convergence was a process that involved legislative changes. These were fundamental in facilitating the change towards convergence. The Malaysian Communications, 1998 replaced all the Sectoral Acts, i.e. the telecommunications Act 1950, the Broadcasting Act 1998; the Postal Services Act, 1991 and the Digital signature Act, 1997. The same was for the Sectoral Regulators, i.e. the Postal Department and licensing, the division became the responsibility of the Commission. On 1 November 1998, the functions of the Ministry of Energy, Telecommunications and Post were changed to Ministry of Energy, Communications & Multimedia. The Malaysia Communications Act 1998 came into force and the Communications Multimedia Commission was formed.
Concerning licensing processes, the old licenses that were issued based on specific technologies and specific services, like licenses for broadcasting, telecommunications, VAN, and ISP licenses were shifted into licenses for specific needs for new technologies which required neutral and service neutral licenses. There were two types of licenses that which were issues for class and individual categories. The Commission awards individual licenses to those services (content, applications network services and network facilities) with significant economic or social impact. In April 2005, it began to consider awarding of license to ASP category, which require only class license in order to operate.
The Committee noted that it is imperative that all relevant legislations are carefully considered prior to convergence. The Minister should have an important role to play in order to have effective regulation of the industry.
2.2 Market Liberalisation process in Malaysia
The Malaysian communications structure has gradually progressed from being focused on a fixed line in 1980 into to cellular, Internet access and broadcasting in 2000. It s envisaged that by 2010 the industry would be fully competitive and become a converged market for Multi media and Communications.
Licenses issued as at August 2005
|
Type |
Individual |
Class |
Total |
Percentage in relation to foreign equity |
|
NFP |
50 |
27 |
77 |
30% |
|
NSP |
54 |
30 |
84 |
49% |
|
ASP |
- |
249 |
249 |
49% |
|
CASP |
20 |
- |
20 |
30% |
|
Total |
124 |
306 |
430 |
In order to ensure that economic benefits are realized. The Commission has set up a number of regulatory measures that have to be adhered to by each industry player:
In order to discourage domineering and to lessen competition within the industry, CMC has established a competition regulation, which prohibits price fixing, tying and linking. The Access regulation unit ensures that Mandatory standards on Accessing are observed and that the Mandatory Standard on Access pricing is contained. The
Access Forum focuses on retail rate aspects of the industry, both in the regulated services (i.e. local and STD call to PST) and the Non-regulated services i.e. mobile, VoIP.
Assessment of Dominant Position: An impact assessment study on the performance of the market is being considered. The market under study will focus on: Fixed line access to the PSTN; Mobile Telephony services; Upstream Network Facilities (NFP); Interconnected (SP); Leased Line services (retail) (NFP); Broadband retail services (ASP); and Analogue terrestrial TV broadcasting transmission services (NFP)
The study will be conducted to measure the dominance of the licensee against set threshold levels. These would be measured against set fixtures:
Firm’s Market share Inference
Above 54% Presumption of dominance
25-45% No presumption (grey area)
Below 25% Presumption that the firm is not dominant.
In instances where the findings may reveal dominant impact but with no immediate impact, no action will be taken. However if the dominant licensee engages in a conduct, which has or may have impact on SLC, the Commission will apply the provision of Section 39 of MCM Act.
3. Visit to Telkom Malaysia (TM)
The Company believes n the philosophy of a world where change is the only constant. In response to that, TM has transformed from being a local telephony institution into one with global presence and multimedia strength. It continues to constantly reinvent to keep pace with the accelerated changes in the industry and the global marketplace. This has been achieved by reshaping its portfolio of business and its philosophy of managing the business so as to prosper in this competitive environment.
Its mission is to approach the new millennium, with enthusiasm and embrace the changes and also identify the new opportunities to provide more value to our customers. TM is to remain committed not only in meeting the demands of our customers but also in anticipating them. We would like to be the telecommunications company of choice when we say "Weíre Here For You".
The Committee believes that the success of Malaysia is due to a combination of issues, the close relations between the government and the private sector as well adoption and determination by both parties in realising set goals in placing the country in the global market.
4. Visit to the Multimedia University
The visit was characterized by briefings on the programmes offered in the different faculties in the institution. This was followed by a brief tour to laboratories for: e-Gallery, Nokia Wireless Communications, Intel Microelectronics, Telecommunications and to the Electromagnetic (EM) Laboratory. The Committee further arranged for a meeting with the South African students. This proved to be very fruitful, as the young students expressed gratefulness to the delegation. The experiences learnt by the students will place the country in an advantageous position. The delegation is however concerned that those students were the last intake, as Telkom SA will not be sponsoring the scholarship.
Conclusion
The delegation is humbled by the progress made by Malaysia in following the liberalization process. The government and the industry are all ready in pursuing the objective of convergence system. The CMC of Malaysia can be similar to ICASA in South Africa. There is a need for legislative amendments to be effected, which could pave way to effective management of the communications industry sector in South Africa. The Committee has noted with great interest the process and legislative changes introduce by Malaysian prior to confirmation of convergence to have such power legislative changes need to be made in Broadcasting, ICASA Act and the Postal Services Act. These would assist ICASA in ensuring that the objectives of convergence are realised.
The Committee would like to encourage Telkom and government to find way of continuing the support of students who study in Malaysia.
5. Comparative Analysis
It has taken Malaysia 20 years to liberalize the communications industry and move towards convergence. Industry players and academic institutions were involved in the process. It is noted that convergence is a process; the relevant structures need to be informed all the time.
South Africa may have taken the move towards converge too soon, given that the process only started in 2003. The delegation is excited about the observations but concerned that South Africa may have to pass on a number of huddles once the convergence bill is finished. The country may not have enough capacity to deal with the constant technological regulatory mechanisms that come with convergence.
Convergence in Malaysia is not without its challenges: Though the country is ahead in terms of convergence, it still has a challenge of non-availability of data and records to measure its performance. The faster changes in technology require equal change in regulations. It is a challenge to regulate content with the content of new media of convergence. There is a gap between telecom centric incumbents and new entrants. Commission has to conduct investigation on anti-corruption behaviors eg. Price fixing. Lastly the considered understudy to be undertaken has to monitor the implementation of the Act.
It was noted that Malaysian government might not be able to have control over the content provided by the industry. This is something that needs to be addressed in South Africa, as there could be a lot of movement without proper control measures in place.
6. Word of appreciation
As the Committee would like to extend appreciation to support received from the High Commissioner and his office during our study visit.