By G. Sharmila
Previously, we discussed why the mobile rates consumers pay in Malaysia are higher than that of our Southeast Asian neighbours. Today we look at what can be done to help lower the mobile rates we pay.
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It’s a given that the mobile rates we pay in Malaysia are higher than many of our Asian neighbours. The question on everyone’s minds should be now: “Can mobile rates be reduced?”
Before we get into the nitty-gritty of things, one should understand that the Malaysian telecommunications market is regulated, although it is one that is largely market-driven.
To recap, analysts KiniBiz spoke to said that competition is the only thing that will drive down prices and to some extent that has happened, with relatively ‘young’ player U Mobile charging lower retail prices and hence disrupting the market in the past year and a half.
However, this disruption has not been sufficient it seems, as mobile users in Malaysia still pay higher mobile rates than some of our Asian neighbours (see previous article for a comparison of rates across Asia).
Competition is key
One way to lower prices is for the regulator, namely the Malaysian Communications and Multimedia Commission (MCMC) to slash the mobile termination rate (MTR). The MTR, which was last cut in 2013, is currently US 1.59 cents. For the uninitiated, the MTR is the rate that mobile operators charge other mobile operators to terminate calls on their network and the MTR often determines the retail prices mobile operators charge consumers.
The MTR is reportedly supposed to be cut further by year-end, but it is unclear how much the decrease will actually be. Once the rate is cut, all mobile operators will be compelled to lower their retail prices, but this is still no guarantee that prices will change drastically, as analysts have pointed out.
A better way would be for the regulator to promote greater competition and it can do this by issuing more network service provider (NSP) licenses to encourage more mobile operators to enter the market.
Although there are new players like Altel Communications Sdn Bhd, its prices aren’t much different than those charged by more established players like DiGi, Celcom or Maxis.
With more players in the market, competitive pressure will likely force mobile operators to lower their retail prices, thus benefiting the consumer.
Another way to lower retail prices would be competition from Internet service providers such as Telekom Malaysia Bhd (TM) and YTL Communications Sdn Bhd.
Zamzamzairani Mohd Isa
TM chief executive officer Zamzamzairani Md Isa had said in previous media interviews that TM plans to offer voice in its mobile offerings, leveraging on the 4G LTE (long term evolution) spectrum from PacketOne Networks Sdn Bhd (P1).
Recall that TM has a 55.3% stake in P1, with the remaining shareholding shared between Green Packet Bhd (31.1%) and South Korean telco SK Telecom (13.6%).
The telco launched its 4G mobile broadband package TMgo last year, which is available in selected areas in Kedah, Kelantan, Melaka, Negeri Sembilan, Pahang, Perak, Sabah, Sarawak and Selangor. Its 60-day TMgo package costs RM50 for 6GB or gigabytes of data, which is rather constrictive and not conducive to making frequent voice calls.
“However it’s possible that when TM begins offering voice and mobile data packages via P1, it will encroach into the mobile players’ territory and put some pressure on them,” says an analyst with a bank-backed research house who declined to be named, adding that this increased level of competition could force mobile operators to lower prices.
The analyst however, thinks that the positioning by YTL Communications is currently too niche. Although the YTL Power International Bhd subsidiary offers voice-over-Internet protocol (VOIP) services as part of its Internet plans, it’s current focus is on data. “It also lacks comprehensive coverage, which is why the big three (DiGi, Maxis and Celcom) still dominate,” he says.
The only other alternative mobile users in Malaysia have to voice services provided by mobile operators is free over-the-top (OTT) services such as Viber and Skype. Analysts have said in the past that once WhatsApp begins offering its VOIP service, mobile operators will feel the pressure to lower their rates. However, mobile data is still not cheap enough for consumers to use only OTT services for prolonged periods, hence the fallback on voice services.
No solution in sight yet
For now there doesn’t seem to be a solution in sight unless the regulator steps in to dramatically slash the MTR and thus drive down retail prices. There has been success with regulation of MTRs in the European Union and the United Kingdom, where regulatory intervention has managed to drive down the mobile rates in Europe and the UK and this practice could very well be adopted here so that consumers can benefit.
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