This article first appeared in The Edge Malaysia Weekly on February 20, 2023 - February 26, 2023

THE Malaysian Communications and Multimedia Commission (MCMC) has released its new determination on the mandatory standard on access pricing (MSAP), which, among other things, entails reductions in regulated access prices for Telekom Malaysia Bhd’s high-speed broadband (HSBB) network.

The determination, which essentially sets out new access price ceilings for regulated telecoms services under the Access List for the next three years effective March 1, 2023, also introduces new price ceilings for higher bandwidths on both HSBB and transmission services.

Signed by MCMC interim chairman Datuk Muhammad Azmi Mohd Zain on Feb 16, the determination replaces the previous version that was first implemented in 2018, and was extended in 2020 and again on Dec 16, 2022.

New access prices for Layer 2 and Layer 3 HSBB network services are lower by between 6.4% and 64.7% compared with existing prices, The Edge’s tabulation shows.

For example, access prices for Layer 3 HSBB network service gateway on 500Gbps have been reduced from RM2.639 million per month currently (the price maintained since year 2020) to RM1.273 million per month in 2023, RM1.088 million per month in 2024 and RM931,037.06 in 2025.

Within the network services, the end-to-end and trunk transmission services will see a staggered reduction in prices of 25% to 75% across the three-year period come March 1.

The impact of the new access pricing on the various telecoms players is not immediately clear.

Some analysts, however, had been looking out for the new MSAP prices to work out their impact on wholesale prices that Telekom Malaysia charges access seekers (other telecoms operators) riding on its HSBB network to offer broadband services to retail consumers. In theory, lower access or wholesale costs for access seekers should result in lower broadband prices for the end consumer, though it may take longer for the infrastructure owner to recoup investment costs.

Among the country’s listed telecoms operators, the share price of Telekom Malaysia, the country’s largest fixed broadband player, reacted the most after the MSAP determination was implemented in 2018 when the new government and minister at the time decreed that operators work towards achieving better broadband connections at “double the speed, half the price”.

Investors with longer-term horizons who dared to pick up the beaten-down stock at the time would have profited when the dust settled as the share price more than tripled from its low of RM2.15 in October 2018 to RM6.70 in February 2021. To meet the government’s requirements, telecoms players came up with new introductory broadband packages at prices that were between 34% and 56% lower than before.

Just this month, Communications and Digital Minister Fahmi Fadzil reportedly said that the government has proposed RM69 a month as the baseline for unlimited fixed broadband at a speed of 30Mbps, and RM5 a month for prepaid mobile internet.

“This is a policy announcement. It is up to the telecommunications companies if they want to give a better offer,” Fahmi reportedly said on Feb 5.

On Friday, CelcomDigi, Maxis Bhd (Maxis), Telekom Malaysia (Unifi Mobile), U Mobile Sdn Bhd (U Mobile) and YTL Communications Sdn Bhd (Yes) introduced a prepaid mobile plan with 3Mbps speed and 30GB data quota at only RM30 for six months, effective from end-February to end-December this year.

On 5G, the MCMC said it will not apply price regulation to 5G access services with 4G EPC (evolved packet core) and the 5G standalone service during the current regulatory period. It will, however, review the need for regulated price setting for 5G in one year’s time.

The commission also adjusted the proportion of data traffic under 5G to be at 15% in 2023, and to rise further to 30% in 2024, 45% in 2025 and further to 65% by 2027.

To calculate the costs for fixed services, the MCMC incorporated a pre-tax weighted average cost of capital (WACC) of 8.93%, versus 8.77% incorporated previously before taking into account the government’s investment in HSBB, or the weighted average of 8.27% at the time.

Meanwhile, it set the pre-tax WACC for mobile services at 9.24%, compared with 10% previously.

Other components are 5G (4.99%), while the benchmark digital terrestrial television (DTT) multiplexing was set at 7.94% from 9.51%, whereas infrastructure sharing’s WACC stood at 8.84% (from 10.08%).

On mobile services, the MCMC said the spectrum allocation of the modelled operator will not change. “The MCMC will continue to assume 1800MHz for coverage in urban and suburban areas with 900MHz to be used in rural areas,” it said.

It projected a 20% growth assumption for data traffic per subscription for 2023-2025, although it lowered the 2022 growth rate to 10%.

The new determination follows two public inquiries on the mandatory standard of access, as well as the access pricing, conducted from June to August 2022, as well as from October 2022 to January 2023 respectively. A total of 16 responses were received, across 16 industry players as well as Sarawak Digital Economy Corp Bhd and Persatuan Penyedia Infrastruktur Telekomunikasi Malaysia.

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's App Store and Android's Google Play.