RM 2.4 Billion Subsidy for Telekom HSBB

The RM 2.4 billion Telekom HSBB (High Speed Broadband) subsidy

Please take note that in my previous posting title
RM 11.31 Billion High Speed Broadband (HSBB) awarded without Tender
dated 4th Sept 2008.

I have highlighted that there are 2 other Tenderer interested in the HSBB Project and has submitted with a much lower bid i.e
(1) HSBT presented a lower-cost proposal on Aug 21, but it was told to submit a detailed proposal to CCB in a week. It was said to have presented a concept paper and the committee chaired by Deputy Prime Minister Datuk Seri Najib Razak wanted to look at its detailed proposal before making a decision. (3 Aug 2008)

(2) A third proposal to wire up the country with high-speed broadband (HSBB) infrastructure at only RM5bil has surfaced, compared with Telekom Malaysia Bhd’s (TM) RM11.3bil and High Speed Broadband Sdn Bhd’s (HSBT) RM18bil proposals (The Star Biz : 4 Aug 2008)

".....However, some industry players are questioning why HSBT was rejected just on this technicality as its proposal would save RM2.4 billion in taxpayers’ money."

Now the Opposition YB Lim Kit Siang has raised the issued of RM 2.4 Billion Subsidy by the Government in Parliemen on 14 October 2008. Read the following extracted of his speech in Parlimen on 14 Oct 2008.

Speech (2) by Lim Kit Siang on the 2009 Budget in Parliament on Tuesday, 14th October 2008:
Extracted from DAP Website.


Why is Telekom subsidised with RM2.4 billion of tax payer’s money for the HSBB project when an alternative proposal do not require subsidy?

Why wasn’t there an open tender to choose the best proposal? Why does the government think Telekom is the best company to role out HSBB in spite of the fact that Telekom failed to achieve the national objective of high internet penetration after more than 10 years?

Simple economics will tell that a competitive environment will produce the results the country wants.

Besides failure to deliver the numbers (high internet and broadband penetration) and despite the fact that Telekom is a laughing stock because TMnet is well known for bad quality of service, the government persist to award the next generation broadband project to Telekom.

HSBT (High Speed Broadband Technology Sdn Bhd) has offered to build a similar network without subsidy. Even if the government deems HSBT inexperienced to carry out such a large project, wouldn’t the fact that their not requiring a subsidy tell them a subsidy may not be required?

Why then does the government need to provide public funds especially in this financially troubled time? The money will be better spent on the rakyat.

Since public money is involved, why wasn’t there an open tender? The govt should justify the rationale and provide details.

To make it worse, Telekom’s HSBB network is only a partially open network when it is known globally that such an infrastructure should be open and accessible to other broadband providers such as in S’pore.

Furthermore, the government did not have specific terms for the sharing of the HSBB network with other service providers.

Telekom has said screening will be done to allow competition that adds value to the industry, country and consumer. The term ’screening’ is bad enough while the part on adding value is open to interpretation.

A similar initiative, “Equal access plan for fixed line phone” introduced a decade ago supposedly to encourage competition in the ISP industry failed miserably. It played to Telekom’s hand to stunt the rise of serious competitors.

It is amazing that the government continued to allow Telekom to use vague words when Telekom has shown this bad faith previously. Doesn’t the government learn?

In spite of openly talking about increasing internet penetration and quality, the failure of Telekom to deliver still encourages the government to dish out the same and to support Telekom further.

There is no real competition for broadband in the country. Can anyone say that Telekom’s 95% share of the market shows Malaysia has liberalised the broadband service provider industry effectively?

What the country needs to propel itself forward in the information age is true liberalisation and not simply pay lip service to it. The HSBB project awarded to Telekom will only strengthen their already dominant position.

Will the government force Telekom to adopt open access where any service provider can use the HSBB network to reach their customers when it is constructed? This is the way to create competition to provide the best service at reasonable prices, vital in order to develop the content and IT industry here.

A few questions to conclude:

• Isn’t the RM2.4 billion subsidy unfair, Telekom is already too dominant?

• Why allow Telekom to defer third party full access to the HSBB network for 7 years when Telekom is already the dominant player? It will be their right if they funded it 100% themselves but with public funds, there should be no delay at all.

• Will the government listen to all stakeholders – the public, IT industry and broadband industry as to the best way forward for the HSBB project through a study because it is now a public project with public funds involved?

• Why is the government protecting the revenue of one entity Telekom when true liberalisation will develop the industry, potentially returning revenue many times more for the country?

• Will the government put in a proviso in the agreement with Telekom HSBB project to ensure open access to all service providers at reasonable price that includes annual audit by a third party? Failing this, will the govt ensure since there is interest, for at least one more HSSB provider within a year?

Competition must be created.


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* Lim Kit Siang, DAP Parliamentary leader & MP for Ipoh Timor