APAC Policy Perspectives Series 1: Malaysia
Malaysia: Public Policies and Regulation, Legal and regulatory framework on FTTH/Fiber Networks
The Communications and Multimedia Act 1998 [Act 588] (“CMA 1998”) in Malaysia provides a legal framework that supports the deployment and adoption of Fiber-to-the-Home (“FTTH”) networks in several ways. The following are the key aspects of the regulatory framework:
Licensing:
The CMA 1998 under section 126 imposes a requirement on network facilities providers (who own or provide the network), network services providers and applications services providers to hold a valid individual or class licences granted under the CMA 1998, which expressly authorise the ownership or provision of facilities and services. This requirement extends to the network facilities and services providers that deploy FTTH networks in Malaysia therefore, providing legal certainty by bringing the providers of FTTH networks and services under the regulatory ambit of the CMA 1998. Compliance with licensing requirements is mandatory under section 127 of the CMA 1998, which ensures the quality, reliability, and safety of FTTH networks and services.
Infrastructure and Right-of-Way:
Chapter 1 of Part X of the CMA 1998 provides the relevant provisions regarding the installation and access of network facilities, which involves the FTTH. This chapter, among others, streamlines the installation of network facilities under section 215 of the CMA 1998 and provides a network facilities provider with non-discriminatory access to any post, network facilities or right-of-way under section 228, which significantly simplifies the process of deploying FTTH infrastructure by reducing bureaucratic hurdles and ensuring smooth rollout. In ensuring accountability on part of the FTTH network and service providers, section 218 of the CMA 1998 requires a network facilities provider to take all reasonable steps to act in accordance with good engineering practice, to protect the safety of persons and property, to ensure that the activity interferes as little as practicable with the operations of a public utility, public roads and paths, the movement of traffic and the use of land, as well as to protect the environment.
Access to Services:
In Malaysia, access framework is developed to ensure that access to network facilities and network services are offered on reasonable terms and conditions and an equitable and non-discriminatory basis, and this includes access to FTTH networks. There are three (3) regulatory instruments issued that govern the access framework namely Access List, Mandatory Standard on Access and Mandatory Standard on Access Pricing. These instruments are reviewed from time to time to ensure that the instruments are up to date and remain relevant. Through the standard access obligations for facilities and services under section 149 of the CMA 1998, the said statute promotes fair and non-discriminatory access to network facilities and services that are listed in the legal instrument issued by the Commission under the CMA 1998 (at present, the applicable instrument would be the Commission Determination on Access List, Determination No. 6 of 2021). In this respect, an access provider is obliged to provide the access to an access seeker who makes a written request for such access. The access provided by the first provider to another provider shall be of at least the same or more favourable technical standard and quality as the technical standard and quality provided by the first provider’s network facilities or services.
Universal Service Provision:
The CMA 1998 outlines the provisions for universal service provision requiring service providers to provide a minimum level of communication services to underserved or remote areas. For the purposes of the same, section 204 of the CMA 1998 establishes a fund to be known as the Universal Service Provision Fund, which is controlled and operated by the Commission, and contributed mandatorily by licensees that exceeded a certain minimum revenue threshold under regulation 27 of the Communications and Multimedia (Universal Service Provision) Regulations 2002. This encourages the extension of FTTH networks to regions that may otherwise be underserved, thus bridging the digital gap and promoting equitable access to high-speed internet across Malaysia.
Consumer Protection:
The CMA 1998 includes provisions to safeguard the interests of consumers, ensuring reliable communication services with acceptable quality. These protections extend to broadband services delivered through FTTH networks, encouraging more consumers to adopt and utilise these FTTH networks. To that end, section 188 of the CMA 1998 requires providers of network facilities and services to deal reasonably with consumers and adequately address consumer complaints. The Commission is also empowered under section 195 of the CMA 1998 to resolve disputes between consumers and licensees which would include providers of FTTH networks and services, in relation to matters of customer service and consumer protection. The consumer protection mechanism in Malaysia is also supported by mandatory standards issued by the Commission, voluntary industry code and technical codes developed by the industry players, which among others, seek to ensure the quality of services provided to consumers meet a certain standard.
Technical Standard:
Chapter 3 of Part VII of the CMA 1998 provides the relevant provisions regarding the development of technical standards to promote network interoperability and safety of the network facilities in the industry including the FTTH networks. Section 184 of the CMA 1998 provides the Commission the power to designate an industry body to be a forum for technical standards to serve this purpose. Hence, the Malaysian Technical Standards Forum Bhd (MTSFB) was designated and registered by the Commission as the Technical Standards Forum on 27 October 2004. Its primary role is to develop technical codes which shall include, but is not limited to, the requirements for network interoperability and the promotion of safety of network facilities as well as maintaining the technical codes to ensure that they continue to be relevant to the industry needs and up to date with the technology development. In relation to the technical standards, the Commission is also empowered under section 186 of the CMA 1998 to register certifying agencies or classes of certifying agencies, for the purposes of certifying compliance with the registered technical codes or standards. In this regard, the Communications and Multimedia (Technical Standards) Regulations 2000 require that communications equipment and any person who undertakes activities in the designated skill areas such as cabling providers to be certified by a registered certifying agency.
Deployment Targets
Evaluate to what level the governments set targets for the deployment of FTTH networks. Particular attention could be on underserved or rural areas. These targets could be based on the percentage of households or businesses that have access to FTTH networks.
The government of Malaysia in collaboration with the main industry players has formulated Pelan Jalinan Digital Negara or JENDELA in September 2020 to improve the connectivity and quality of communication experience for both mobile and fixed broadband across the country. JENDELA is a five (5) year-plan and implemented in phases i.e. Phase 1 (2020 – 2022) and Phase 2 (2023 – 2025).
The expansion of fixed broadband coverage with fiber connectivity to the premises across the country is one of the key initiatives under JENDELA with the target to achieve 7.5 million premises passed under JENDELA Phase 1. Meanwhile, the target has been stretched further to achieve 9 million or 95% premises passed by the end of 2025 under JENDELA Phase 2. JENDELA Phase 1 was completed at the end of 2022 and achieved 7.74 million premises passed with fiber connectivity, exceeding its initial target of 7.5 million premises passed.
For more information on JENDELA Phase 1 performances, please refer to:
https://myjendela.my/Sitejendela/media/Doc/JENDELA-Phase-1-Concluding-Report.pdf
Funding and incentives
Evaluate to what extent the governments provide funding and incentives to encourage the deployment of FTTH networks, particularly in underserved or rural areas. These incentives could include tax credits, grants, low-interest loans, or other financial support to network operators.
Pelan Jalinan Digital Negara or JENDELA is a collaborative plan between industries and the Government to improve the connectivity and quality of communication experience for both mobile and fixed broadband across the country. JENDELA is five (5)-year plan and implemented in phases i.e. Phase 1 (2020 – 2022) and Phase 2 (2023 – 2025)
JENDELA Phase 1 focused on providing wider coverage and enhanced quality of experience by constructing new 4G towers, upgrading existing base stations to 4G technology, connecting more premises with fiber connectivity and extending internet coverage in rural and remote areas via satellite connectivity. Catering for the needs, JENDELA Phase 1 investment is estimated at RM28 billion of which comes from Malaysian Communications and Multimedia Commission (MCMC) through Universal Service Provision (USP) Fund and commercial investment funded by the industry players.
The investment from USP Fund includes Capital Expenditure (CAPEX) and Operational Expenditure (OPEX) for 5 years. The Government of Malaysia also provides its support by providing several incentives that can be leveraged by the industry. Amongst the incentives are:
- Import duty and sale tax exemption incentive under the Malaysian Investment Development Authority (MIDA)
- Pioneer status incentive under MIDA
- Income tax exemption and double deduction for the export program under the Inland Revenue Board of Malaysia (LHDN); and
4. Reinvestment tax allowances under LHDN
APAC Policy Perspectives Series 2 is coming next month.
Stay tuned !
