Planning for affordable access nationwide

About 4.9 million people in Malaysia connected to the internet for the first time between the years 1995 and 2000 – roughly a fifth of society. As more of life moved online, so did Malaysia’s laws and institutions.

Much of the legal foundation for Malaysia’s digital economy comes from the second half of the 1990s. The country opened up its market to additional service providers and adopted new laws, from its telecommunications law, the Communications & Multimedia Act, to related, smaller laws on telemedicine, cybercrime, and other issues. Its telecommunications regulator, the Malaysian Communications & Multimedia Commission (MCMC), was founded in 1998. These initial steps allowed the internet to become part of everyday life for millions.

Through the 2000s, the Malaysian government began to identify information and communications technology (ICTs) as essential drivers of the country’s economy and as potential avenues for newly-generated wealth. Internet access was incorporated into the Ninth Malaysia Plan as part of the government’s overall mission for 2006-2010. This high-level commitment trickled through layers of the government’s bureaucracy and included a national public policy workshop that reaffirmed the public’s interest in affordable and accessible internet services in all parts of the country through overall expansion of access and by closing the emerging digital divide between urban and rural communities. These messages became defining characteristics for broadband policymaking in Malaysia.

The National Broadband Initiative (NBI) was announced by the Malaysian government in 2010 as an overarching, multi-year plan for the country’s digital development. It, as a public-private partnership, combines the efforts of the telecommunications regulator and Telekom Malaysia, a network operator in the country.

The National Broadband Initiative (NBI) includes six main initiatives, many of them backed by the Universal Service & Access Fund:

1. The first is the implementation of Broadband Community Centres, where broadband services were provided for 615,000 users in 246 locations.

2. The second was the setting up of Citizens Internet Centres or Mini Broadband Community Centres in 138 premises of the Information Department throughout the country, which were established to provide broadband coverage for 400,000 users.

3. Third, the establishment of e-kiosks, which were to be set up at community centres and district offices in 1,100 districts all across Malaysia.

4. The fourth was the expansion of the public cellular coverage, in which 873 new telecommunication towers were to be built all across Malaysia.

5. Fifth, the distribution of 1 million netbooks to underprivileged students from poor families, a key strategic move designed to provide a conduit to access.

6. Last and sixth, Telekom Malaysia agreed to introduce a broadband package inclusive of a netbook at a reduced rate.

The objective of Malaysia’s NBI is to improve both the demand and supply of broadband using a clear timeline and set of targets to expand coverage and use throughout the country.

On the supply side, the NBI comprises Broadband for the General Population (BBGP) and High Speed Broadband (HSBB). The first program, focused on the national population, sets a target of an average speed of 2Mbps, motivated by competitive incentives in the 3G market and is focused on connecting the under-resourced and rural areas by focusing on infrastructure deployment and expanding broadband coverage using the Universal Service & Access Fund (in Malaysia, the USP). The second program, around high speed broadband, aimed for average speeds of at least 10 Mbps in target capital cities and industrial areas.

The demand side strategy to increase broadband penetration was built on three main pillars – awareness, attractiveness and affordability. In awareness, the Malaysian government undertook a number of public education exercises to inform new potential users about the benefits of internet access. In attractiveness, plans prioritised e-government, e-education and e-commerce initiatives through programs like the My1Content portal to encourage content development and commercialization.

The regulator encouraged greater affordability with infrastructure sharing regulations such as the mandatory standard on access pricing in 2018. This regulation helps set fair terms for smaller ISPs to access the larger incumbent’s wholesale broadband capacity. This regulatory measure enabled ISPs to then offer cheaper and improved services to their subscribers.

There have been numerous other policy incentives from the Malaysian government to promote the growth of broadband. To incentivize investors, the government extended an investment allowance incentive on capital expenditure for Broadband Last Mile Service Providers. Additionally, an exemption for sales tax and import duty for products not locally manufactured was implemented. Not forgetting the individual users, the government of Malaysia also allowed for a tax rebate for individual broadband subscriptions.

In part because of the Malaysian government’s leadership, the country now enjoys widespread affordable access to the internet. In the past twenty years, it has quadrupled internet access from 21% to 81% and has one of the world’s most competitive mobile broadband markets today. In addition, the country has been lauded for its achievements in rolling out fixed broadband connections. It has consistently met the international ‘1 for 2’ affordability standard, with 1GB of mobile broadband costing just 0.41% of the average monthly income in 2019.

By using good telecommunications policy practices, Malaysia has increased broadband availability by both increasing industry competition and fostering public private partnerships to roll out infrastructure. The country has also increased demand by offering a government-backed rebate for the purchase of a 3G smartphone. This package was implemented on 1st January 2013 and estimated to have benefited 1.5 million young people in Malaysia.

The policy programme also included supply-side interventions, such as the access pricing regulation. Within three months of that regulation in 2018, many local service providers announced new broadband subscription plans with faster speeds at lower prices. The average price of plans for speeds in excess of 1 Gbps (the emerging speed target for high-income economies) fell by 40%.

The NBI would not be complete without its universal service objectives throughout the policy programme. Through 2013 – 2015, 657 1Malaysia Internet Centres have been setup across the country with 549,000 registered members, with a focus on rural communities. In this program, netbooks were distributed to low-income students. The regulator also backed programs to support e-entrepreneurship, with explicit goals around supporting women’s entrepreneurship.

The implementation of the NBI is estimated to have helped grow the country’s overall GDP. It also significantly improved the penetration of broadband and generated economic dividends in other sectors, such as engineering, creative industries, and broadcasting. Broadband also now plays a major role in the economy, with government estimates projecting 135,000 high-income jobs in the ICT sector.

Suggested Citation: Alliance for Affordable Internet (2020). “Malaysia: Planning for affordable access nationwide.” Good Practices Database. Washington DC: Web Foundation.