1. © Malaysian Communications and Multimedia Commission, 2002 MALAYSIAN COMMUNICATIONS AND MULTIMEDIA COMMISSION - A Malaysian Experience in USP 17 March 2003

2. © Malaysian Communications and Multimedia Commission, 2002 2 AGENDA 1.The Malaysian initiative on convergence 2.The Commission and Licensing Framework 3.Universal Service Provision

3. © Malaysian Communications and Multimedia Commission, 2002 Malaysian Initiative on Convergence

4. © Malaysian Communications and Multimedia Commission, 2002 4 Institutional changes to facilitate convergence 1 Apr 99 Redefinition of the Ministrys functions and formation of CMC Ministry of Energy, Telecommunications & Post 1 Nov 98 Ministry of Energy, Communications & Multimedia Malaysian Communications and Multimedia Commission formed Replacement of sectoral regulators by a convergence regulator JTM MOI (Licensing Division) Malaysian Communications and Multimedia Commission Replacement of sectoral Acts by a convergence Act Telecommunications Act 1950 Broadcasting Act 1988 Malaysian Communications and Multimedia Act 1998

5. © Malaysian Communications and Multimedia Commission, 2002 The Commission and Licensing Framework

6. © Malaysian Communications and Multimedia Commission, 2002 6 The Commission has a dual role in the C&M sector Regulatory (Conformance) Managing for conformance Developmental (Performance) Planning for Performance In fulfilling its role, the Commission is guided by the 10 National Policy objectives for communications and multimedia

7. © Malaysian Communications and Multimedia Commission, 2002 7 10 National Policy Objectives for the Communications & Multimedia sector 1.Creating a global hub: To establish Malaysia as a major global centre and hub for communications and multimedia information and content services; 2.Building a civil society: To promote a civil society where information-based services will provide the basis of continuing enhancements to quality of work and life; 3.Nurturing local content and culture: To grow and nurture local information resources and cultural representation that facilitate the national identity and global diversity; 4.Ensuring long-term benefits for end-users: To regulate for the long- term benefit of the end user; 5.Nurturing user confidence: To promote a high level of consumer confidence in service delivery from the industry; 6.Promoting access and equity: To ensure an equitable provision of affordable services over ubiquitous national infrastructure; 7.Creating a robust applications environment: To create a robust applications environment for end users; 8.Facilitating efficient allocation of resources: To facilitate the efficient allocation of resources such as skilled labour, capital, knowledge and national assets; 9.Developing industry capabilities: To promote the development of capabilities and skills within Malaysias convergence industries, and 10.Promoting secure and safe networking: To ensure information security and network reliability and integrity. Source: Section 3(2) of the Communications and Multimedia Act 1998 (Act 588)

8. © Malaysian Communications and Multimedia Commission, 2002 8 Licensing for convergence Telecommunication licence Broadcasting licence ISP licence VAN licence Network Facilities Network Services Applications Services Content Services The old licenses that were issued were based on specific technologies, and specific services Licenses issued under CMA 98 are technology-neutral and service-neutral The new licensing framework promotes vertical separation between facilities, network, applications, and content Under the old licensing framework all activities related to the provision of a particular service are vertically integrated for the provision of that service

9. © Malaysian Communications and Multimedia Commission, 2002 9 Industry Participants under CMA Network Facilities Provider (NFP) Owners of facilities such as satellite earth stations, broadband fibre optic cables, telecommunications lines and exchanges, radio communications transmission equipment, mobile communications base stations, and broadcasting transmission towers and equipment Network Service Providers (NSP) Provides the basic connectivity and bandwidth to support a variety of applications Applications Service Providers (ASP) Provides particular functions such as voice services, data services, content-based services, electronic commerce and other transmission services Content Application Service Providers (CASP) A special subset of applications service providers including traditional broadcast services and newer services such as online publishing and information services

10. © Malaysian Communications and Multimedia Commission, 2002 Universal Service Provision (USP)

11. © Malaysian Communications and Multimedia Commission, 2002 11 Household penetration rates of various services Television sets 95% Mobile phones 54% 22% Fixed lines 75% 59% PC 24% 9% Urban households Rural households Total households

12. © Malaysian Communications and Multimedia Commission, 2002 12 The two prong strategy for bridging the digital divide Multimedia services Broadband access Competitive rates Basic services Basic access Affordable rates Provide Catch-up to reduce the digital divide within the country % PSTN penetration GDP per capita Ramp up to capture the digital opportunities

13. © Malaysian Communications and Multimedia Commission, 2002 13 The Overall objectives for Universal Service Provision To promote the widespread availability and usage of network services and/or applications services throughout Malaysia by encouraging the installation of network facilities and the provision of network services and/or applications services in underserved areas or for underserved groups within the community

14. © Malaysian Communications and Multimedia Commission, 2002 14 Definition of underserved Underserved area means an area where the penetration rate for PSTN is 20% below the national penetration rate Underserved group within the community means a group of people linked by similar characteristics from a socio-cultural or economic perspective, within a served area, who do not have collective or individual access

15. © Malaysian Communications and Multimedia Commission, 2002 15 System of USP set in the CMA Public Inquiry Ministerial Direction Commission Determination Communications and Multimedia (Universal Service Provision) Regulations 2002 Latest Regulation

16. © Malaysian Communications and Multimedia Commission, 2002 16 System of USP in the CMA Section 202(1) - The Minister may direct the Commission to determine a system to promote the widespread availability and usage of network services and/or applications services throughout Malaysia by encouraging the installation of network facilities and the provision for network services and/or application services in underserved groups within the community Section 203(1) – A determination by the Commission under subsection 202(1) shall include definitions of underserved areas and underserved groups within the community Section 204(1) - For the purposes of this Act, a fund to be known as the Universal Service Provision Fund (USP Fund) is established and it shall be controlled and operated by the Commission Section 204(2) – The Minister may make regulations regarding contributions by licensees, under this Act, to the USP Fund and any other matters related to or incidental to the establishment and operation of the USP Fund

17. © Malaysian Communications and Multimedia Commission, 2002 17 USP Objectives Notification of universal service targets Universal Service Plan and Designation of Universal Service Provider Implementation of the Universal Service Plan Costing of USP USP Fund Communications and Multimedia (Universal Service Provision) Regulations 2002

18. © Malaysian Communications and Multimedia Commission, 2002 18 Graphical representation of the Four USP objectives Objective 1: Collective access to basic telephony and public payphone services Objective 3: Collective access to Internet access services Objective 2: Individual access to basic telephony services Objective 4: Individual access to Internet access services Collective access Individual access Basic telephony The Internet SERVICES TYPE OF ACCESS

19. © Malaysian Communications and Multimedia Commission, 2002 19 C&M (USP) Regulations - Graphical Points Notification of universal service targets USP Fund Progress Report Designation of the universal service provider Draft universal service plan Costing USP Claims Compliance with QOS standards Licensees Implementation of universal service plan Underserved Connected

20. © Malaysian Communications and Multimedia Commission, 2002 20 Universal Service Plan and Designation of Universal Service Provider Request licensee to submit draft of universal service plan in respect of universal service target identified Licensee draft universal service plan contain Location details within the universal service target Network facilities to be installed Technology deployed Timetable for provision of application services Capital cost for installation Estimates of operating costs Approval of Plan & designation of Universal Service Provider Selected Highlights Implementation of the Universal Service Plan Progress report – first report not later than 3 months from notification of approval of Plan and thereafter once every 2 months

21. © Malaysian Communications and Multimedia Commission, 2002 21 Costing of universal service provision Commission shall pay the designated universal service provider from the USP Fund the cost incurred in implementing the approved universal service plan in a universal service target The net cost in implementing the approved universal service plan is computed as: Net USP cost = avoidable cost - revenue forgone Selected Highlights USP Fund Contribution - By licensee of 6% of its weighted net revenue. Only by those whose net revenue > RM500,000. Commission shall maintain proper accounts of the USP Fund - Annual report and statement of accounts

22. © Malaysian Communications and Multimedia Commission, 2002 22 Register of USP (a)non-confidential summaries of the approved universal service plans (b)designated universal service providers (c)universal service target (d)a list of licensees contributing to the USP Fund General Penalty Any person who commits an offence under these Regulations shall on conviction be liable to a fine not exceeding RM300,000 or to imprisonment for a term not exceeding 3 years or to both Selected Highlights

23. © Malaysian Communications and Multimedia Commission, 2002 23 Digital Divide recognition measurement Implementation monitoring review Service Providers Cooperation Key Issues and Resolution for Way Forward

24. © Malaysian Communications and Multimedia Commission, 2002 24 THANK YOU Main Office: Malaysian Communications and Multimedia Commission Level 11, Menara Dato Onn, Putra World Trade Centre, 45 Jalan Tun Ismail, 50480 Kuala Lumpur, MALAYSIA Tel: +603 4047 7000 Fax: +603 2693 4881 Website: www.cmc.gov.my