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34 | June 2008 |
REDtone waits for
green light on price
Malaysian operator is pushing for much cheaper WiMAX kit
ahead of commercial launch.
By Ken Wieland
t was back in March 2007 when the Malaysian But REDtone is not without a presence in Penin- licences were awarded in March 2007, the MCMC
Communications and Multimedia Commission sular Malaysia. Via its associate company EB Capital was asking the licence winners for 25 percent cover-
(MCMC) awarded REDtone, along with three (in which it holds a 23 percent stake), REDtone age by the end of that year and 40 percent coverage
other companies, a WiMAX licence in the 2.3GHz fre- has access to 2.5GHz and 3.5GHz spectrum assets. within three years. Th e 25 percent target has now
quency band. More than one year later and REDtone, WiMAX trials are underway in these bands, al- been shift ed to the end of 2008 but Zainal feels it is
which targets SME and enterprise customers with though REDtone has yet to set a date for commercial still unlikely REDtone will meet it.
voice and data services, is still in WiMAX trial mode. deployment. Th e Malaysian government intends to “MCMC has not made it clear whether coverage
Commercial launch is not scheduled until 3Q 2008. re-farm this spectrum, currently used by the coun- refers to population or geography but, either way,
“Th e challenge for WiMAX technology is that try’s mobile operators, which means that WiMAX due to a lack of equipment availability, it is unlikely
the eco-system hasn’t yet reached full maturity,” ex- commercial rollout in 2.5GHz has been put on hold. we will be able to do it,” says Zainal. “We’re trying
plains REDtone Group CEO, Zainal Amanshah. He REDtone and EB Capital have also more than 100 to educate the regulator on these issues.”
points out that the absence of WiMAX economies base stations in the unlicensed bands of 2.4GHz and Other than the coverage targets, MCMC stipu-
of scale and limited equipment availability have led 5.8GHz. Originally used for proprietary broadband lates that the 2.3GHz licence holders must invest
to high prices for base stations and CPE units. Th is wireless systems, Zainal says that WiMAX is now between RM250m ($78m) and RM300m ($93m)
is putting a strain on the WiMAX business case for being trialled to “relieve congestion” in those fre- in WiMAX technology during the fi rst three years
large-scale rollout. quencies. (REDtone and EB Capital use unlicensed from the licence award. Th is is part of the Malay-
“In the unlicensed bands, the price of a spectrum both for backhaul and in the last mile.) sian government’s programme, dubbed MyICM
WiMAX base station is quite reasonable at about For WiMAX CPE equipment, Zainal says that 886, to connect 75 percent of households with
$30,000 to $40,000, or sometimes even less needs to come down to below $100 per unit, broadband by 2010.
than that with bigger volumes,” says Zainal. “In although he would not be drawn on what prices the At the end of 2007, broadband penetration stood at
licensed bands, however, we are talking about vendors he is negotiating with are quoting. a lowly 5 percent in Malaysia. Given that the country’s
$60,000 to $70,000 per WiMAX base station, One way to reduce CPE costs would be to place GDP per capita was a reasonable $6,500 in 2006 (ac-
which is far too high. We want to drive down one WiMAX antenna on multi-tenanted buildings cording to data from the World Bank), the country
the price to the levels of base stations using unli- and then run cable through to individual PC- seems fertile ground for broadband growth, which
censed spectrum.” connected customers. In East Malaysia, however, gives WiMAX a fi ghting chance to make its mark.
In East Malaysia, REDtone holds a 25MHz slice of the placing of antennas on buildings is prohibited.
spectrum in the 2.3GHz band covering the cities of “Th is makes CPE pricing even more critical to A hybrid data strategy
Sabah and Sarawak. Th e other three operators who Malaysia’s WiMAX players, as each customer needs Founded in 1996, REDtone built up its subscriber
were awarded 2.3GHz licences by MCMC—Bizsurf, to have an indoor CPE,” says Zainal. base (15,000 business customers) on the back of
Asiaspace Dotcom and MIB Comm—each hold Th e high prices for WiMAX kit (at least for the discount voice calls. Despite success in this space (it
30MHz chunks of spectrum and serve Peninsular Ma- moment) and lack of certifi ed WiMAX base stations has a 35 percent share in Malaysia’s discount voice
laysia, although none has yet to launch a commercial have contributed to a delay in MCMC’s original call market), price competition has meant lower
WiMAX service. schedule for WiMAX rollout. When the 2.3GHz prices and thinner margins.
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