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Sakmongkol ak 47

Monday 29 March 2010

The Age of HSBB -2 the empire strikes back!

A few months back, ASTRO was upgrading its services- offering high definition TV programs and all that. We were asked to upgrade with some hardware or something. It was called beyond pay TV or something like that. I wasn't paying attention, happy, with the current slew of watchable programs. I am not particularly discerning as long as my favourite programs are there- high definition or not. Who cares? But there are many more discerning watchers who have more refined tastes than I and who are willing to pay. One less undiscerning customer is all right.
I am sure many ASTRO watchers were then asking why? Probably people at ASTRO got wind of TM's plan to offer high definition programs and video on demand (VOD services). I hope TM will indeed offer these- otherwise the RM 149 –RM249 by which they empty our wallets is for nothing other than giving high earnings to TM.
In Fairfax County, Northern Virginia, these services are provided by a cable TV operator, Cox Communications. It has offered customers a wised range of products including broadband internet services. A cable TV operator can also do what TM is offering now. Can such an operator offer what TM can at lower prices? We shall never know probably assessment on TM's proposal wasn't done rigorously.
What do triple play networks offer? Perhaps we can learn more about them from countries where Triple-play networks are popular such as in the United States.
For telephone, Triple-play network telephone service offers standard options such as call waiting, call forwarding, caller ID (identification), call screening, selective call blocking and conference calling.
The TV portion of the service includes legacy network reception, a wide choice of cable channels and a diverse selection of music channels. Other TV-related services may include messaging, interactive viewing and gaming. Gaming? Hmm...this may interest Vincent Tan who is likely to lobby the government for rights to run gaming over TV. It's an open secret that he has done many favours to UMNO politics and could always call upon the Number One fighter for NEP kind of economics- Tun Dr Mahathir for help.
TM's HSBB named Unifi is offering up to 22 channels of TV programs. The TV arm is named IPTV I think- I Pay TV. I hope this will give stiff competition to ASTRO TV programs and comfort many of us who are fed up with ASTRO's arrogance towards customers. If TM's foray into the media world with HSBB, besides offering high speed internet services also include a conscious attempt to challenge ASTRO over the latter's pay TV programs, this step must be lauded.
I am betting, on hindsight, given ASTROS offensive, fiber optic based service (FIOS) will challenge ASTRO's current dominance. So, fiber optic suppliers and manufacturers are set to enjoy monopolistic business as vendors to TM. Why shouldn't TM create new business opportunities by appointing a group of fiber optic suppliers? Perhaps open up the import market allowing importers to bring in fibre optics at competitive prices?
Cables need to be installed. Who's the contractor? Not one of the companies belonging to some directors in TM? Why doesn't TM appoint a number of independent contractors on region basis? Split the country into 4 -6 regions and appoint one cable laying contractor for each region. Doing so, instead of monopolising the entire business, some contractors enjoy business spill-over.
As an internet user, as a blogger I am more interested in its internet speed. In the UK, broad band has been welcomed widely because it has empowered internet users via its speed and consistency and the volume of data broadband can handle. The key consideration in the Internet connection is adequate bandwidth, even during peak local usage hours.
Nominal Internet connection speeds are 3 megabits per second (Mbps) downstream and 512 kilobits per second (Kbps) upstream. Other important features of the Internet connection include screening of e-mail for viruses, content filtering options for connections to be used by children and reasonable guarantees of communications privacy and security.
No matter how advanced the technology may become, customer relationship management (CRM) remains an important factor in the success of any triple-play network. Home users who subscribe to triple-play networks enjoy the fact that they have to pay only one bill each month and can deal with a single entity to resolve problems with their telephone, TV or Internet connections. The ideal triple-play system functions 24/7 (24 hours a day, 7 days a week). The best triple-play services provide customer support on a 24/7 basis as well; when a customer calls for service, hold times are rarely long. Non-technical features such as these are crucial to maintaining customer loyalty.
Now tell me, how many of you get damn frustrated over the services provided by TM when your internet service breaks down? Your calls are answered much later, and you are given all sorts of excuses explaining why services are bad. Will the RM 149 per month chargeable by TM for this HSBB address these real shortcomings?
Allow me to get back to potential issues regarding broad band service. What's the pricing plan for its FIOS high-speed broadband service? In America for instance (don't convert the currency please) the entry-level service offers customers 5 Mbps downstream / 2 Mbps upstream (a "5/2 plan) for $34.95 to $39.95. That's below USD 100 folks. If you're a heavier user, you can get 15 Mbps / 2 Mbps service for $44.95 – $49.95. Still below USD 100. And if you're a serious broadband junkie and need even more bandwidth for home business purposes, or if you frequently have multiple family members online, Verizon also offers a whopping 30 Mbps / 5 Mbps plan for the much higher rate of $179.95 – $199.95. I can't figure out why anyone would need service above even 15 Mbps, and I doubt their computer's processors could even handle broadband speeds higher than that). That means in US of A, internet users get broadband services for less than100 Dollars their currency.
TM is charging between RM149-RM249 for its HSBB. But for how many Mbps?
The PM should challenge TM's business plan and ask them to offer Malaysians below RM 100 for its broadband services. As one perceptive commentator (Kuldeep) suggested:-
Sometimes I wonder if they (powers that be..TM) does a proper market study before deciding on pricing/offers? I have a suspicion that they are doing desk top pricing..i.e. equate all costs, add "risk" margins..then put in "price " that will yield their minimum hurdle rate? Then, if PM ask why price is all the cost plus inflated risks etc...And substantiate with lots of acronyms such as LoD,DemApp,BAU,ROTF Index etc..PM won't dare to ask too much cos it maybe a stupid question.
I remember Mr Sony wanted the smallest transistor radio...after months his tech guys came back with a very small radio. Mr Sony promptly requested for a bucket of water and deftly allowed the radio to be submerged. And he told the long as there are air bubbles..means there is still means to miniaturize..PM shld do same..THROW THE CEO INTO A POOL WITH A TON OF BRICKS TIED TO HIS ANKLES..AND LEAVE HIM DOWN THERE UNTIL HE GETS THE PRICES DOWN TO BE AS LOW OR AT PAR WITH OUR NEIGHBOURS JUST TO TEACH HIM THE LESSON THAT NO ONE CAN LIVE IN A VACUUM.


Anonymous,  29 March 2010 at 07:37  

waa... bravo kuldeep,

wa caya lu bro. Baru boleh ganti karam singh walia.. Erkk boleh kasi satu dua nama yang boleh kita percayai untuk menasihati Najib? Public Relation yang pandai advise camne "Rakyat Didahulukan, Pencapaian Diutamakan" tak mo la yang perot MAhathir & co. jerr ysng penting. Kalau dia ada masalah tu dia punya pasal. Sendiri create sendiri la tanggung, pehal nak suruh rakyat @ gomen tanggung, ye tak.. Lagi pun dia sendiri yang cakap, buang semua kroni, walaupun anak isteri sendiri... hehehe Mahathir, lu sendiri cakap, lu sendiri ingat arrr....


Quiet Despair,  29 March 2010 at 09:19  

I just want Astro to ensure we get uninterrupted services when there is heavy rain and thunder.
Is that too much to ask for, Astro???
No point to have high-definition this and that or other advanced tech when there's no service during thunder storm.

Anonymous,  29 March 2010 at 09:37  

Datuk, its all about monopoly and loby. these people will do all they can to protect their turf. I don't expect to see changes in upcoming years. its crappy back then, its still crappy right now and will stay crappy in the future.

walla 29 March 2010 at 11:29  


Broadband penetration has an impact on GDP.

"...a study of 120 nations between 1980 and 2006... estimates that each 10 percentage point increase in broadband penetration adds 1.3 percent to a high income country’s gross domestic product and 1.21 percent for low to middle-income nations..."

and no one is naive not to understand what providers will look at only:

"The killer application of the Internet is speed....and the money is in the pipes."

We must therefore be cognizant of one fact. We are not one of those advanced high-income economies which can extract high subscription rates. Furthermore, their rates are lower than ours while their QoS are higher. How come?

We must also be aware of the user equalization factor. As more and more people subscribe to the broad pipe service, the speed of access and upload/download performances will drop. In other words, more users, less user experience. So since it is going to happen anyway, why not reflect that limitation upfront with lower entry prices?

And if they can't do that, allow healthier competition by unbundling the service while enlarging inter-provider connectivity. Enable market forces to find the best yield for the consumer.

When we take a step back and look ahead, we will see the larger picture. The first impressionable sign of a high-income economy and a progressive society is fast and rich connectivity. And that comes from things like cheap highspeed broadband and mobile.


'....governments in less developed countries can promote the deployment of
broadband networks by both fostering competition and requiring unbundling
of local loops. Unbundling will allow other carriers to enter the market and
pressure from competition should force them to provide advanced services.'

Now the govt is caught in a bind. How to subsidize more HSBB when the beneficiary is a private concern, even GLC at that?

It has to answer this question in the light of rethinking what HSBB and other privatized functions are to the strategic future of this country and how it and other growth drivers can be made more affordable to already beleaguered households and enterprises.

And, the fact even a small fry like me can find these weighty but relevant links from the web should be ample testimony that the policy-makers are missing that big picture. However, the reason for being so slow these days is because this is not 20Mbps; in fact the connection has been hanging/dropping off more and more often.

This post, for the tapper's children in their small dimly lit shed at the outskirts of Tampin, huddled together before one jurassic laptop, looking for knowledge to supplement their school lessons, in the middle of a breeze-less night, drawing sub-516kBps...drip by drip by drip.

Do the policy people even care about data transmission volume, transaction latency, service reach and price?

Putrajaya, you have these:

now analyze these:

While at it, let the rakyat know how come doctors in Sabah have to run from one hospital to another owing to lack of beds for patients while you have another new and big hospital in Shah Alam...deemed unfit for use?

walla 29 March 2010 at 11:29  

The empire may strike back....but sakmongkol ak47 has a battalion of jedi knights...notable are comments from anomie and kuldeep....

When the govt privatized some of its functions, it privatized two fundamental growth drivers: electricity and telecommunications.

In the case of electricity, we are stuck because apparently the Perkasa patron didn't bother to ask about the key terms of the IPP agreements that had cornered TNB. No one in his right mind would on the one hand wax eloquent about national patriotism but on the other hand uncharacteristically overlook a ruinous term that requires the state to buy electricity even when it doesn't need the surplus ...which is why every household, school, office and factory today is paying for power which it didn't use. In some enterprises, the excess electricity bill equals additional incomes for staff. In one case, an entire family toasted from using candles because it couldn't afford to pay the electricity bill.

What for privatization of power (sic) you can see parallels in APs for the automotive industry and concessions for road tolls.

Likewise, in the case of telecommunications, the social and strategic objectives of privatization seem to have been conveniently overlooked. Social because we are still a low-income and small population economy compared to those we aspire to. Strategic because, like electricity, telecommunications is a key high-income growth driver, what more an investment attractor, what more the only tool for the future of this 21st century which, in a word, is - convergence.

In fact, highspeed broadband of telecoms has become the focus of all the major economies, as the links herein will attest.

So if we are to compete to climb another rung in global rankings, at the least we must have cheap, easy and wide access to highspeed broadband.

And by wide, one can envision rural folks being able to enjoy channel entertainment from the world, not the versions that have been sanitised by raisification until their IQ drops to the official level.

The rakyat ask, if you want us to change our mindset, give us an affordable tool as a first step. As we on the screen and get an avalanche of sights and insights, we will then be motivated to proceed to the next step - to learn the languages used in the content of the web - and that will expand our mental horizons so that we can do more real money-earning things - and that will contribute to reducing your treasury deficit while helping us become higher income earners and so, free us from the pathetic zealots who are constantly trying to send us back to their stone age. Now, how?

Now, how are we going to do all that if such broadband access is officially bundled under one provider which is a public-listed company which thus means its first loyalty is to its shareholders who are unlikely to be concerned about national strategic and social objectives because they only want their ROIs multiplied? Especially at this critical juncture when 1Malaysia is trying to soar with high-income 1Enterprises? Or soon face economic extinction in a middle-income 1Trap?

Anonymous,  29 March 2010 at 11:53  

Dato AK47

TM and ASRO are all taking us gullible consumers for a ride.

In the first place take ASTRO. Do we get uninterupted viewing even during storms as in other countries down south? We dont. why? Because our satellite dishes are "cheapos", thrown like garbage at us who will take anything given without a whimper!

In the case of TM's so called UNIFI, this service is already available for take up by consumers. There are private sector companies offering "Triple Play that is, Internet Pay TV IPTV of hundreds of channels from all over the world; data streaming of over 5 gps or gigs per second; and VOI or voice over internet phones. All at a price taht we are currently paying for TM's streamyx or Maxis Iphone!! How much investment is needed for this last mile service? Merely over a couple of hundred million with a network stretching over the whole Penisnsula. compare this with the RM11 billion touted fro the TM project, nearly 30 times the cost which the private sector can do it at!!! We can use the rest of the billions for other useful development needs. Why do we need to spend so much for this montrous project whcih can never be viable for TM?

the private company I am talking about has been in operation for the last 5 years and has grown quietly since despite all financial the handicaps and bureacratic attempts to stopm them.

walla 29 March 2010 at 12:30  

Sanford Bernstein (an ex-equity firm in California) and Mckinsey jointly came out with a report called Broadband! during the dotcom heydays. It's off the matrix. But while surfing for it, the following popped up (the Force is strong with this one, Obiwan). TM may be interested in them:

Anonymous,  29 March 2010 at 14:32  

This is all BN and their cronies at work.

All these fibre optic crap is to enrich mukhriz

He is already living in a palace and yet his greed is insatiable. same as khir toyol.

Najib is under the thumb of Mahathir and the TM Head is a crony of Mahathir.

So, u can see the link. The dictator Mahathir is still pulling the strings in this country. Najib is just a puppet. It is not just Rosmah who has the strings to this puppet.

The country's economy is not growing, prices are going up and the Rakyat's salary has not increased. How can the majority of the Rakyat afford to pay for such broadband service? Fortunately, GST is buried in the kolam for the time being.

Celaka betul BN/UMNO!!

Motto mereka :
BN/UMNO di dahulukan, anak2 dan kroni2 kita di utamakan.

Orang kampung

Anonymous,  29 March 2010 at 14:52  

Unifi needs compelling content for the IPTV to work...but can they get the big ones such as MTV,ESPN,StarSports,ESPN,CNN,Geographic etc or are they TIED exclusively to ASTRO?

ASTRO can and will provide fast internet..they got lots of fiber already in the ground thru their sister company but they will FOCUS only in the high density,high value markets instead of TM promised nationwide coverage.

The nationwide coverage mandate will be less profitable thus the govt RM 2.4 billion.

And all the fast hiways unfortunately leads to the rather small narrow bridges to USA and other global destinations >>which maybe the spectre that haunts Dato Z to decide on FU policy (not that FU but Fair Usage..altho there's a bit of the spicier FU in the decision).

All in all TM is in a bind.IPTV content thats still very kindergatenish,Hi-speed Internet that can quickly get out of control..its a tough one indeed.

But...many REAL telecoms guys have the answers but they never got into the CEO's inner circle.Its unfortunate that our leadership thinks that number crunching backroom boys should be leading "technology & engineering" companies.Thus we now see the stagnancy of Tenaga,UEM,Telekoms...and MAS too.

However,I still want 10Mbps internet thus I have no choice but to be victim of someone's ignorance and greed.

They will eventually have to answer to someone..if not in this will come too.

Rob and pillage at your pleasure now.

Donplaypuks® 29 March 2010 at 15:05  

While cost + pricing may work for entities such as say, a one off nuclear power station or Mars landing mission, it is a no no for a consumer oriented biz entity like TM.

But TM's monopoly encourages predatory pricing which steals blind from the consumer while a cost + pricing policy will hide much internal inefficiency at the expense of the consumer. This is why monopolies must be broken up. Competition must be encouraged.

Even then we have to careful that price-fixing cartels do not appear such as is blatant among our local banks and chip manufacturers!

It's not as though the lessons from anti-trust legislation in breaking up behemoths such as AT & T in USA are unknown here. But the mind is weak!

As for pay TV, it's nothing new in this country or region. Berjaya Group failed miserably with MiTV while S'pore had a S$39 monthly sub deal that's still floundering.

The basic problem with pay TV in this region is poor content. Few want movies from Korea, Iran, Kerala and Ulan Bator. There is also a flaw in the assumption that consumers want to spend most of their free time couch potatoing doing nothing else but watching endless movies and variety shows on TV.

Going to the cinema is still a much better experience and desired social activity!

We are all of 1 race, the Human race

kuldeep 29 March 2010 at 17:18  

Walla...IPPs isn't all bad.

IPPs..capacity charges have been bandied around as the reason for the high electricity cost.This is convenient for Tenaga as they have an easy answer for their own weaknesses.

The fact is that Tenaga generating costs is not much better then the IPPs ; if not worse.Tenaga is also protective of taking on balance sheet disruptive capex cos it impacts their gearing,ROA etc KPI measures.

And as to the so called over another 5 years the nation will face a supply crunch if no new capacity is planted by next year.

And before that we will face the gas supply crunch..

And is Tenaga looking at this in a holistic long term basis?I guess not cos KPIs is a short term measure.Thus a decision that will give rewards over 21 years but crunches profitability over the next two years is not a good option.Better one that provides a two year profit up tick followed by 19 years of pure misery.

We need a Minister/KSU team that has no fear of numbers to unveil the 30 year scenario...and without any axe hanging over their necks.

Like Tun Mahathir says..don't just say..lets get the data.

kuldeep 29 March 2010 at 17:30  

And eventually..what matters is to get the right people running the key organisations and in a competitive and real world environment.

PM have to in a certain way dictate what the output should be..and challenge the managers until one survives.

For example..

>HSBB 10% lower on PPP basis then any Asean country?
>Electricity>>innovation to absorb excess capacity during low peak by "right pricing"
>water>Opex on par with mexico
etc etc

Will that happen?

Thats why Khazanah have to date failed with MAS i.e they just can't set their own rules on the market and their weak and inefficient THOUGHT PROCESSES will be shown for what it is.

Thus,Tenaga CEO "IPP crybaby sloganeering"is just so distasteful to hear esp cos it comes from someone who gets more than a million bucks salary.Surely ,we can get lots and lots of babies to cry for that sum.

walla 29 March 2010 at 17:32  

danke, Kuldeep

kuldeep 29 March 2010 at 17:54  

Exhaustive research by a group of academics and semi academics have shown a clear correlation between the increase in Nasi Lemak consumption per capita NLC and the reduction in foreign direct investment.

In the eighties , whilst FDI increased,NLC was pretty static.However,in the nineties NLC outpaced GDP trendlines initiating the beginnings of the FDI dip.
NEP was consistent and did not parallel any of the above thus imposing its neutrality to FDI.

Thus the previous assumption of NEP being the culprit is now officially proven to be wrong.

As such,the NEM to be unveiled tomorrow must take the drastic step of making Nasi Lemak an illegal substance whilst continuing with the NEP.

Without such drastic steps we will continue to lag behind other countries with their markedly lower NLC.

kuldeep 29 March 2010 at 18:14  

thanks walla for the article..

great to have a "person" who hv so much knowledge n research.I hv read that one and its a pretty good refresher.

The first gen IPPs was good>> but even then they had a tough time getting their financing and that probably saved them cos they had to borrow "local" cos foreigners didn't like the risk and nyet nyet their proposals..So,when the currency debacle was in full force YTL looked pretty smart.

Anyway...good to see the ownership of the 5 to understand NEP implementation?

My point >>is tenaga own generation i.e about 40% or so of total demand more efficient and cheaper then the IPPS?

And I believe the new Coal IPPs can save GOVT (not Tenaga cos of skewed subsidy) lots of money.

Donplaypuks® 29 March 2010 at 20:36  

"Walla...IPPs isn't all bad. ....IPPs..capacity charges have been bandied around."

Kuldeep, do you know anything about the Tenaga situation or are you just shooting from the hip?

At present, Tenaga has in excess of 50% reserve capacity due mainly to being arm twisted into giving out to IPP's many generous "take or pay" 100% cost pass through contracts.

I wonder if you are aware of the startling revelations that Ani Arope made in a Star interview a few years ago about how the EPU and Dr.M forced them to kowtow to the IPP's despite Tenaga's firm stance that it did not need the IPP mafia?

Before 1998 we were told by Dr.M that if we didn't have Bakun the nation would be plunged into the dark changes. Ten years on, Bakun has yet to be completed and we will still be ok if the IPP's did not exist!!

This sort of self serving scaremongering is now again being used so that naive people continue to believe that "in another 5 years the nation will face a supply crunch if no new capacity is planted by next year."

IPP's cost to Tenaga is 45% of Tenaga's operating cost; that's a staggering billions of $ annually that could be used to make Tenaga more efficient and fund ALL its capex costs without taking on huge debt! Go read their Annual Reports. IPP contracts cost Tenaga anywhere from 14 cents to 28 cents pkw, while Tenaga can produce electricity at about 8 cents.

Tenaga (and for the matter many GLC's like MAS, Telekom etc.,) can reduce their operating costs further if they were/are not forced to carry the "social cost" of massive overstaffing. Remember how Dr.M refused to allow retrenchments in the restructuring of debt-laden MAS?

Amidst all this we are told Sarawak is planning 12 new dams which will all demand Tenaga give them a mandatory Power Purchasing Agreemen. This is how biz has been done in M'sia - milk the whipping horse dry till it keels over!

Please Kuldeep, know your facts or cease and desist!!

We are a small country where infrastructure is concerned, we do not need more than 1 player, i.e. the Govt, in Power, Water and Roads/Highways!!

We are all of 1 race, the Human Race

Anonymous,  29 March 2010 at 20:55  

Dato AK47
I stated that the private should be allowed to UNIFI the country not just TM or the cronies. Actually Astro is purely a service provider ie internet pay TV only. There is a lot of space to encourage Malaysian service providers as part of the new drive for greater economic growth. If the govt takes the trouble to study the South Korean & Japanese examples they can learn a lot. But we need to revamp our educational structure for such a future. The potential is there

kuldeep 29 March 2010 at 22:40  

sorry dpp..we can argue whole day lah.But I am an ancient slide rule era engineer..not an accountant. But I do have thermodynamics,Carnot cycle and all that stuff still embedded somewhere in my head.And as far as I know thermal values of fuels have remained quite unchanged and heat/mass balances still constrained by same rules.

Tenaga generating cost is 8 sens?

Wat fuel source and at wat price per MJ cos it certainly does not fit coal or gas profile?Have they created the perpetual energy machine?

Would this 8 sens include the capex component too?Power plants cost about a million USD per MW thus factoring finance etc..capex component is oredi 3 to 4 sens.

And IPP is 45% of Tenaga cost because it supplies 53 % of the total energy..if I am not mistaken lah.

And capacity charge ( or % utilisation as we call in the old pre IPP days) is a necessary evil if you want standby capacity as Ani Arope found out to his detriment.Unfortunately electricity demand is kind of irregular hour to hour so at peak myb 120% of average.And Power Plants needs lots of time to plant up..4 to 5 years is norm from greenlight to power on?Somebody got to bear the fixed cost..right?

But lets not argue..ok?Lets hope Govt will give us the answer tomorrow.

kuldeep 29 March 2010 at 22:51  

Oh Yes..btw the 14 to 28 sens is not the complete picture too cos Petronas sells Gas to Tenaga much lower then 75% discount.

Accounting is fantastic..but the Engineering Sciences places too much physical limits such as Mr Carnot's Second Law.

I think PM will tell us more as he develops his NEM..cos it seems subsidies is a big big problem.

kuldeep 30 March 2010 at 01:18  

This is quite a good article on generation costs>>tho some of the assumed fuel prices are lower then current..

The para titled "Comparative costs data: Lazard analysis (June 2008)"


* Gas peaking: 22.1 - 33.4
* IGCC: 10.4 - 13.4
* Nuclear: 9.8 - 12.6
* Gas combined cycle: 7.3-10.0

Tenaga costs of 8 sens is definitely lower then any of these?

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