[ UPDATE 31/07/2023 11:45 ] TM has issued a response and it insists that all fibre broadband players will enjoy lower HSBB rates across the board as the new RAO offers cheaper rates across all tiers versus 2018.
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As announced by Communications and Digital Minister Fahmi Fadzil, the new Mandatory Standard on Access Pricing (MSAP) issued by the Malaysian Communications and Multimedia Commission (MCMC) in March is aimed at reducing broadband prices in the country. After four months, the MCMC said the price reduction is only expected to happen after September 2023 after access agreements have been concluded between the service providers.
On Friday, TM released its new Reference Access Offer (RAO) which outlines the wholesale pricing of its High-Speed Broadband (HSBB) network. With lower HSBB wholesale prices, consumers can expect to enjoy cheaper retail prices for fibre broadband as TM’s HSBB network is the largest and currently utilised by various broadband players including TM’s own Unifi, CelcomDigi, Maxis, Astro and ViewQwest.
TM lowers wholesale charges but only high-volume access seekers get the most reduction
According to TM’s new RAO, they have set tiered pricing and the wholesale charges is only cheaper with higher monthly volume. On the lowest tier of 0-499,999Mbps, TM is charging RM8 per Mbps/month versus RM2.55 per Mbps for the highest tier of 9,000,000Mbps and above. That means providers with low monthly volume (less than 500Gbps) would have to pay RM800 for 100Mbps, while providers that can commit to a minimum of 9Tbps per month will only need to pay RM255/month for 100Mbps.
Take note that the wholesale price per Mbps is not the same as the retail broadband price due to the contention ratio, which we will explain at the bottom of this post. In short, a provider will only subscribe to wholesale bandwidth based on actual bandwidth required at any one time for the entire network as not all users will maximise their subscribed bandwidth at all times.
New MSAP should cut wholesale HSBB prices by half regardless of volume
Under the new MSAP issued by the MCMC in February 2023, this year’s mandatory HSBB wholesale price for 100Mbps is RM254.64/month and it is a 50.5% reduction from RM515/month under the 2020 MSAP rate which is still applicable today. According to MCMC’s schedule, the wholesale rates will continue to decline with 100Mbps costing RM217.65/month in 2024 and RM186.21/month in 2025. There’s no minimum volume stated under the MSAP and the price should be applicable to all access seekers including smaller players.
As we’ve highlighted from TM’s new RAO, the wholesale rate of RM255/month is only applicable to access seekers that can commit to a whopping 9Tbps a month. If an existing access seeker is utilising less than 4Tbps a month (e.g. 1.5 to 3.99Tbps), 100Mbps would cost them RM585/month, which is higher than the current MSAP 2020 rate of RM515/month.
Why is TM introducing a tiered pricing structure?
We’ve reached out to TM to seek clarity on the new RAO and how it complies with MCMC’s new MSAP. According to TM, the tiered pricing structure is economically reasonable as it differentiates charges based on volume utilised by access seekers. It added that this will incentivise access seekers to offer innovative solutions to end users and drive higher traffic utilisation to remain competitive in the market.
When we asked them if the pricing is the same across 2023 to 2025, TM said the tiered RAO is in accordance with MSAP 2023 at the highest volume as reflected on page 268 of the document. It confirmed that the rates are the same for 2023 to 2025 and the access seekers will enjoy better rates as they achieve higher volume in the years ahead.
As we’ve illustrated above, it appears that access seekers with lower monthly volume will have to pay more than before. E.g. 100Mbps for RM585 (1.5 to 3.99Tbps) for 2023 vs 100Mbps for RM515 for 2020. Access seekers would need to commit at least 4Tbps and above to enjoy 100Mbps for RM475, which is the minimum tier for any potential price reduction.
When we asked TM if this would result in an increase in broadband prices for consumers, they said the new RAO will bring positive price reductions across all its HSBB Layer 3 service gateway and it marks an improvement over the previous RAO rates. It added that the favourable wholesale rates will lead to vibrancy in the market and encourages competitive retail broadband offerings to Malaysian consumers.
Looks like Unifi will gain the most from the new RAO
With the new RAO, consumers can only expect a significant price reduction for broadband if their provider can commit 4Tbps to 9Tbps a month for TM HSBB. With this tiered structure, it seems that TM’s retail brand Unifi has the upper hand when it comes to pricing as it has the largest volume among all providers in Malaysia. Based on Q1 2023 figures, Unifi has over 3 million fibre broadband subscriptions, followed by Maxis with 600,000 fibre subscriptions and CelcomDigi with 107,000 fibre subscriptions.
We asked TM for the average monthly commitment for each provider, however, they are restricted from providing such information. However, it said there’s no average monthly commitment imposed onto the access seeker for HSBB.
What’s next? Will TM reduce Unifi pricing?
After publishing its RAO, TM says it will continue to engage access seekers to ensure their offerings are tailored to meet their specific requirements and conclude the necessary service agreements as soon as possible. TM says the RAO doesn’t need approval from MCMC for publication and it was published based on the guidance provided by MSA 2022. The RAO will take effect retrospectively on 1st March 2023.
At the time of writing, we don’t know if Unifi will be offering any price reduction or free turbo upgrade as it did in 2018. According to TM, they are currently unable to divulge any details regarding future price reductions or speed upgrades, and such information will be announced in due course.
Wholesale pricing vs retail pricing
In case you’re wondering why the wholesale 100Mbps cost is higher than what retail customers are paying at the moment (e.g. 100Mbps for RM99/month or RM129/month), you’re not alone. Take note that broadband providers will only subscribe to the required HSBB wholesale bandwidth according to their average total utilisation. For example, if a provider has just ten 100Mbps customers, they will not subscribe 1Gbps bandwidth as not all customers will be fully utilising their bandwidth at all times. If the peak concurrent utilisation is only 300Mbps, they would only need 300Mbps with slightly more headroom as an extra buffer.
With the new RAO by TM, we are not convinced that consumers will get to enjoy significantly cheaper broadband prices on TM’s HSBB network. The smaller broadband players will be the biggest losers as they won’t be able to enjoy reduced rates as the more established players with larger volume. That’s partly one of the reasons why several players such as CelcomDigi, Astro and even Maxis are offering different rates if customers are covered by alternative fibre networks such as Celcom Timur, TNB’s Allo and Maxis own-build fibre network.
