Sarawak Government To Operate Mobile Internet Service Company, Another Castle Built In The Air

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Will Abang Jo’s proposal for Sarawak Government to operate a mobile internet service provider company be another one of his “hot-air” projects or another white elephant project wasting Sarawakians’ money in the millions or even hundreds of millions?

Since taking the helm of Sarawak, there is no shortage of “hot-air” proposals by the Chief Minister, just to name a few of such proposals:

• LRT stretching all the way from Kuching to Santubong and to Serian;
• 5G/7G network in his keynote address in 2017 International ICT Infrastructure and DigitalEconomy Conference Sarawak (Idecs);
• building 5,000 telco towers in Sarawak;
• Sarawak government to own an airline company;
• hydrogen bus project with its inaugural bus that has gone into workshop for few monthsshortly after its launch; and
• chartering a plane to sell local farm products in Singapore.

The latest on the list of these hot-air projects will be Abang Jo’s suggestion a few days ago that the State Government to own and operate a mobile internet service provider company so as to provide internet services to the rural area.

Mobile internet service provider companies operate in a highly competitive market.  One of the key factors for any such provider company to succeed is the economy of scale.  At certain stage, even the market of the whole of Malaysia population of 32 million is considered not sufficient to achieve the optimal economy of scale to operate such services, let alone the Sarawak’s population of 3.2 million and sparsely scattered in the rural areas.

The main reason why telco companies do not want to venture into the rural area of Sarawak is that the costs factor far outweighs its potential revenue.  Therefore, for the State Government to own and run a mobile internet service provider company with the purpose to serve the rural sector, it is set to run on heavy government subsidy and grants to sustain its loss and that loss will run into hundreds of million or more.

Abang Jo’s proposal will involve all the following steps:

  1. Application to the MCMC for the issuance of licence;
  2. Engagement of consultants to study and compile a paper for the setting up of the company;
  3. Selection of the board of directors for the company
  4. Setting up of the proper management team and operational team
  5. Selecting a headquarter office and all the branch offices all over the state
  6. Rolling out of the packages of subscription, marketing and providing actual internet services on the ground.

All these will take at least 2 years to implement and the costs will run into millions. 

Moreover, looking at all these steps involved, it only opens up the opportunities for cronyism, corruption and kick-backs in the process.

In fact, to provide internet services for the rural community, there are other ways which is much more costs effective than owning and operating a mobile internet service providercompany.  What the State Government just needs to do which DAP Sarawak is now proposing are as follows:

  1. Sarawak Government to negotiate with the existing telco companies for internet coverage for all the targeted rural areas with the proposal that the State Government will absorb all the losses incurred by these companies due to the lack of economy of scales in these areas and even with some marginal profits for the telco companies; and
  2. Sarawak Government to direct Sacofa Sdn Bhd to stop charging high rental on these telco companies for the installation of signal transmitters on Sacofa’s telco towers.  As I was told, one of the key hindrances for the existing telco companies to provide services to the rural areas is the exorbitant rental charges by Sacofa for the use of the telco towers owned by
    Sacofa.

Compared to Abang Jo’s proposal to own and operate a mobile internet service provider company so as to provide internet services to the rural areas, the DAP Sarawak’s above proposal will only incur less than 10% of the costs and can be implemented immediately.

Abang Jo’s proposal to own a mobile internet service provider company so as to provide internet services in the rural area is analogous to the idea of buying a baby cow just because we want to drink a cup of milk, instead of going to a convenient store or supermarket to buy a packet of milk. 

Just because we want to drink a cup of milk, we buy a calf, feed it and let it grow and then we milk it to drink its milk.  It is just similar to Abang Jo’s suggestion that just because we want to provide internet services to the rural area, we set up a full-blown mobile internet service provider company.  It will take time and so much more costs.

If you want to drink a cup of milk, why not just go into a supermarket and select the type of milk you want and just pay for it?  Similarly, if you want to provide internet services to the rural people, why not approach and negotiate with the existing few telco companies?

Subsidise their operations in the rural area, or give them some government incentives and business advantage if they take up the venture. There are sufficient telco companies in the market to provide the necessary competition so that the State will get the best deal possible.

DAP Sarawak calls on Abang Jo to abandon the idea and take up our suggestion so that hundreds of millions of Sarawakians’ money will not be wasted and the rural people can enjoy internet services without any more delay.

19-7-2020
Chong Chieng Jen
DAP Sarawak Chairman