THE four mobile players should have reasons to rejoice as their biggest fear of unreasonably high pricing for spectrum has been somewhat removed.
They will not have to pay the exorbitant pricing for spectrum their global counterparts have to contend with.
This week, the industry regulator released the long-awaited pricing for the 900MHz and 1800MHz airwaves bands.
So far, analysts have retained their “neutral’’ stance on the sector because there were no big surprises in the pricing. The players seem contend, given the fact that there has been no outburst thus far. Hence, it should be seen as “fair’’ and manageable.
Spectrum is a prized commodity and globally, governments rake billions of dollars selling air waves. The trend just caught up here to monetize bandwidth.
For the longest time, spectrum in Malaysia was given out via allotment. Many in the past have received spectrum via political patronage, some have sold their spectrum and made money out of it. Several others have kept the spectrum, not used it, but are unwilling to return it. Only a handful use the spectrum to bring to market services for the consumers.
Globally, players pay a lump sum for spectrum and yearly recurring payments for usage.
Based on that, the regulator has set a new benchmark for usage of spectrum. There is now a lump-sum payment for the two bands, capped yearly payments, and a 15-year timeframe for usage of the airwaves.
The move lends more certainty to players so that they can plan ahead and they know they have the spectrum for a specified period of time.
According to recent announcements, the four mobile players – Celcom Axiata Bhd, Digi.Com Bhd, Maxis Bhd and U Mobile Sdn Bhd – will pay RM2.7bil in lump-sum payments, which can be paid at one go or over five years.
Yearly payments from the four is about RM234mil each year for 15 years, and that totals RM3.5bil.
Arising from this new way of pricing spectrum, these four will fork out RM6.24bil in total over 15 years for usage of the two bands.
All this is part of a the re-farming of spectrum, and the two bands are the first step. The next will be the prized 700MHz that every player has set eyes on. After that will be the 2300MHz and 2800MHz bands.
Essentially, there will be more lump-sum payments to the Government for the other bands and also the yearly fees could change from existing equations. Early estimations for the 700MHz by analysts is that the cost per 10MHz block could be about RM400mil to RM500mil.
While setting a benchmark pricing and optimising usage of spectrum via re-farming bodes well for the industry, there are two big issues the regulator has to be wary of.
Firstly, this way of pricing spectrum should essentially weed out the not-so-serious players, but the onus is really on the regulator not to allot spectrum based on patronage. It has to be mindful that in the past, such practices have been futile and cost the industry through redundancies, with white knights needed to rescue the ailing companies.
Celcom and Maxis had to buy up other players in the past, and as it is, the industry is already over crowded. So its selective process need to be re-looked at.
Secondly, and while the MCMC assures that “costs are not passed down to subscribers, it is a condition of the allocation that players shall offer packages that are cheaper than current prices to their subscribers”, what guarantee is that the players will not do it?
To ensure the cost of the one lump sum imposed on players for the two bands is not passed on to consumers, the regulator needs to be more proactive in scrutinizing every deal that reaches the market in its bid to protect the consumers. Will it do that?
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They will not have to pay the exorbitant pricing for spectrum their global counterparts have to contend with.
This week, the industry regulator released the long-awaited pricing for the 900MHz and 1800MHz airwaves bands.
So far, analysts have retained their “neutral’’ stance on the sector because there were no big surprises in the pricing. The players seem contend, given the fact that there has been no outburst thus far. Hence, it should be seen as “fair’’ and manageable.
Spectrum is a prized commodity and globally, governments rake billions of dollars selling air waves. The trend just caught up here to monetize bandwidth.
For the longest time, spectrum in Malaysia was given out via allotment. Many in the past have received spectrum via political patronage, some have sold their spectrum and made money out of it. Several others have kept the spectrum, not used it, but are unwilling to return it. Only a handful use the spectrum to bring to market services for the consumers.
Globally, players pay a lump sum for spectrum and yearly recurring payments for usage.
Based on that, the regulator has set a new benchmark for usage of spectrum. There is now a lump-sum payment for the two bands, capped yearly payments, and a 15-year timeframe for usage of the airwaves.
The move lends more certainty to players so that they can plan ahead and they know they have the spectrum for a specified period of time.
According to recent announcements, the four mobile players – Celcom Axiata Bhd, Digi.Com Bhd, Maxis Bhd and U Mobile Sdn Bhd – will pay RM2.7bil in lump-sum payments, which can be paid at one go or over five years.
Yearly payments from the four is about RM234mil each year for 15 years, and that totals RM3.5bil.
Arising from this new way of pricing spectrum, these four will fork out RM6.24bil in total over 15 years for usage of the two bands.
All this is part of a the re-farming of spectrum, and the two bands are the first step. The next will be the prized 700MHz that every player has set eyes on. After that will be the 2300MHz and 2800MHz bands.
Essentially, there will be more lump-sum payments to the Government for the other bands and also the yearly fees could change from existing equations. Early estimations for the 700MHz by analysts is that the cost per 10MHz block could be about RM400mil to RM500mil.
While setting a benchmark pricing and optimising usage of spectrum via re-farming bodes well for the industry, there are two big issues the regulator has to be wary of.
Firstly, this way of pricing spectrum should essentially weed out the not-so-serious players, but the onus is really on the regulator not to allot spectrum based on patronage. It has to be mindful that in the past, such practices have been futile and cost the industry through redundancies, with white knights needed to rescue the ailing companies.
Celcom and Maxis had to buy up other players in the past, and as it is, the industry is already over crowded. So its selective process need to be re-looked at.
Secondly, and while the MCMC assures that “costs are not passed down to subscribers, it is a condition of the allocation that players shall offer packages that are cheaper than current prices to their subscribers”, what guarantee is that the players will not do it?
To ensure the cost of the one lump sum imposed on players for the two bands is not passed on to consumers, the regulator needs to be more proactive in scrutinizing every deal that reaches the market in its bid to protect the consumers. Will it do that?
Click here for Free Signals OR Give A Missed Call : +60350219047 Follow Us On Twitter : www.twitter.com/epicresearchmy Like Us On Facebook : www.facebook.com/EpicResearchMalaysia Need Any Assistance Feel Free To Mail Us at : info@epicresearch.my
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