Mobile phone has come of age

DO you remember the brick size mobile phone?

Some of you may ask what is a brick phone. Well, it was a term used frequently to call those black box phones in the early 80s. The early brick phones earned their name from their size and shape as big as a house brick. They were bulky and huge with fat antennas, a far cry from the slim mobile phones today.

The calling

The birth of cellular telephony began in the 1980s in Malaysia, when NMT 450 (Nordic Mobile Telephone) standard was introduced by Telekom Malaysia Bhd, (TM) with its analogue Atur 450 network, operating on a 450 MHz band.

It was reported that the initial investment cost about RM50mil to set up a network of five mobile exchanges and 954 radio channels.

It was the first mobile communication service in the country, but the handsets those days were huge and capacity of the network was small.

TM was the dominant player for cellular phone services for almost five years. From one operator, the numbers swelled as the Government dished out more licences.

The ETACS (extended total access communications system), was introduced by Cellular Communications Network (M) Sdn Bhd (Celcom) in 1989. Its ART 900 analogue service was launched in 1989, and the phones were relatively smaller. ART900 operates on the 900 MHz frequencies operating with the 010 prefix.

However, due to some business considerations, TM sold its 900 MHz analogue system to the Alpine Resources Sdn Bhd in 1989, which later changed its name to Technology Resources Industries Bhd (TRI).

Setting the stage

In 1993, the Government announced that it would award licences to two more operators. Subsequently, TM invested in a stake in Mobikom Sdn Bhd, which operated the Mobifon 800 network – a dual mode analogue and digital system operating in the 800MHz band.

Mobikom is a consortium formed by TM, Edaran Otomobil Nasional Bhd, PNB Equity Resource Corp Sdn Bhd and Sapura Holdings Sdn Bhd, and Ananda Krishnan’s privately-held Binariang Sdn Bhd (known as Maxis today).

TM subsequently acquired the remaining shares in Mobikom, that it did not already own, from others making Mobikom a wholly-owned subsidiary of Telekom Malaysia in 1998.

In 1994, the Government announced the award of three more personal cellular network (PCN) systems to Electronic and Telematique (M) Sdn Bhd, a subsidiary of Sapura Holdings Bhd; MRCB Telecommunications and Mutiara Telecommunications Sdn Bhd (better known as DiGi).

A year after, the Government decided to set start the ball rolling for a consolidation for the crowding celluar industry. It was reported that at that point, there were nine telecommunication players, with various licences under their stable.

With so many licences dished out earlier, the industry became fragmented and had to be consolidated.

As a result, TM moved to acquire MRCB Telecommunications Sdn Bhd, operator of the Emartel cellular network in 1996. The move sparked further consolidations in the industry.

TM went on to buy two other cellular operators, Mobikom Sdn Bhd in 1998, and Celcom in 2003.

By 1996, there were several operators, but now, there are only three main operators – Celcom, DiGi.Com Bhd and Maxis Bhd after rounds of consolidation in the industry.

TM got out of the cellular business in 2008 in a demerger exercise. Its cellular business were hived off to Axiata Group, but it retained both the 450 and 800 Mhz spectrums. The 800 Mhz spectrum was with Mobikom which was embroiled in a legal suit during the demerger exercise.

Spectrum sales

A few years ago, the country’s regulator Malaysian Communications and Multimedia Commission (MCMC) made a significant amount of money from selling 3G spectrum in two separate rounds. The first round was done in 2002 and the second round was in November 2005.

The 2.15Mhz 3G spectrum blocks awarded for 15 years was priced at RM50mil each, and the winners were chosen via beauty contest in 2002.

MCMC awarded two blocks of spectrum to TM and Maxis Communications Bhd then in the first round. In May 2005, Celcom (M) Bhd (the mobile arm of TM then) became the first local telco to launch 3G services in Malaysia and Maxis launched its 3G phone service in July the same year.

Subsequently, the regulator opened a second round of 3G bid and awarded it to Time dotCom Bhd and MiTV Corp Sdn Bhd. The price tag for the second round was RM55mil instead of RM50mil, for custody until April 1, 2018. However, if a lump sum payment is made before the spectrum was assigned, the price tag falls to RM50mil (RM45mil in round one).

After several failed bids to win a 3G licence from government tenders, DiGi acquired the 3G spectrum from Time dotCom Bhd in 2008 through a share-swap exercise.

Spectrum allocation has been done in so many ways in the past leaving some players with more spectrum than they need while some are hoping to get more. In the mid 90s, the country saw an industry-wide consolidation.

The Government is currently in consultation with the telecom industry to work out a blueprint on spectrum planning and refarming.

Trial and error

The government had also awarded WiMAX (Worldwide Interoperability for Microwave Access) spectrum in 1997.

MCMC gave out four super high speed Internet access licences to subsidiaries of Green Packet Bhd, YTL e-Solutions Bhd, Asiaspace Sdn Bhd and REDtone International Bhd. The first three are licensed to offer WiMAX service in Peninsular Malaysia, while REDtone’s area of operation is Sabah and Sarawak.

The tender for the WiMAX 2.3 Ghz was initially opened in May 2006 but was subsequently called off as it did not meet the Energy, Water and Communications Ministry’s requirements. The original had attracted bids from 17 telecom operators.

However, in November 2006, the ministry gave the MCMC the go-ahead to evaluate the 17 applications.

The Government did not open any tender for the high-speed broadband (HSBB) project awarded to TM. The HSBB, UniFi was launched early this year.

The RM11.3bil project, signed in September 2008, is a public-private partnership agreement between TM and the Government to develop next-generation HSBB infrastructure and services for the nation. TM is forking out RM8.9bil while the Government is co-investing RM2.4bil on an incurred claims basis based on project milestones reached by TM.

The most recent is the allocation of the 2.6GHz spectrum a block of 20MHz to nine players meant for 4G. Likewise, no tender was called for this spectrum. The conditions of these awards, including fees, locations within the band are still unclear as the operators are to submit respective business plans to MCMC.

So far, only two players – REDtone International Bhd and Maxis Bhd – announced their plans to submit a detailed business plan to MCMC for the 4G spectrum.


By LEONG HUNG YEE
hungyee@thestar.com.my