Evolving Networks, Evolving Models : IDC's Top Key Predictions for the Malaysian Telecommunication Market

24 January, 2007

Kuala Lumpur, January 24, 2007 – IDC predicts that 2007 will see the continuation of the Malaysia telecom market's evolution in numerous technologies and services. Investments in infrastructure, resources, licenses, as well as research and development (R&D) in 2006 will continue on into 2007 and will set the pace of movement for new telecom services such as next-generation network (NGN) type services and services as a result of fixed-mobile convergence (FMC) from both fixed and mobile SPs as well as the digitalization of the country's television (TV) broadcasting services will develop a renewed playing field for free-to-air TV owners against the country's leading satellite-based pay TV operator.

Among the IDC's Key Predictions for 2007 are :

Rising Stars in the Malaysia Telecommunications Industry

• Wireless Local Loop Revenue Set to Double

IDC expects the (Wireless local loop) WLL market to reach US$16.95 million in 2006. Paling in comparison with the US$1,291.11 million PSTN revenue in 2006, the WLL revenue is forecast to more than double in 2007, exhibiting a 121.7% revenue growth.

• Blazing Growth for IP VPN Services

Following the worldwide trend, enterprises are actively migrating from traditional data services such as frame relay, ATM, and X.25 to next-generation data services like IP VPN. In Malaysia, the IP VPN revenue grew 132.1% in 2006 alone and IDC forecasts that the IP VPN revenue will climb 149.7% in 2007

• Internet Growth Through Fixed Wireless Access

As wireless networking accelerates, the demand for bandwidth grows alongside it, representing a sizeable opportunity for many stakeholders with expertise in wireless technologies. A key point to note is the expanding potential for fixed wireless access (FWA) and other wireless broadband technologies like WiMAX, which in 2007, will see encouraging interest as the population becomes increasingly open to wireless technologies and their benefits.

• Non-Voice Revenue — Lucrative Money for Mobile Operators and lead to relatively untapped opportunistic areas such as mobile marketing and advertising

In a market, where competition amongst 3 players continually intensifies, operators are looking for new tricks to uplift the mobile market that is measured by ARPU. In the coming year, IDC expects non-voice portion of the mobile market to channel in as revenue growth generator for the nation's three mobile operators, with this segment expected to increase 15.7% in 2007. Aside from basic SMS and growth in MMS revenues, much of the contention will be in deriving revenues from Other Data services that not only comprises traditional ringtone, wallpaper content but also multimedia, streaming content via 3G, EDGE or GPRS/WAP services. As such content makes its way to rake in more interested from a wider audience as compared to the niche high data usage subscribers, IDC finds that these content will lead to relatively untapped opportunistic areas for growth in non-voice revenues such as mobile marketing and advertising.

Watershed Year for Content — Making It or Breaking It

With the potentially large growth of these next-generation services, IDC believes that one of the key drivers for sustained growth would be the efficient delivery of services to consumers. It is, without a doubt, that content will play a pivotal roll in developing these services up the product life cycle into the mass adoption arena. For example, there will be emphasis to aggregate and deliver content more efficiently and minimize revenue loss at the mobile operator's end and PC-based tools such as email that arises from the days of RIM- blackberry as other collaborative application vendor such as IBM Lotus that very recently announced their directions to bring collaborative applications to the mobile device using emoze's push messaging software. Going forward, this inevitably builds up requirements for content to be delivered seamlessly between devices, platforms and services.

The Bright Spot of Wireless Broadband in Malaysia

Wireless broadband in Malaysia started off in different footings, causing numerous types of hiccup throughout its commercial lifespan in Malaysia. Going forward, as the government and industry players recognizes the importance to iron out issues pertaining to licenses, spectrum allocation and management as well as wireless technology direction, IDC finds that in 2007, wireless broadband will find its place in the market as an alternative to the larger base and wider spread of wired broadband in Malaysia. Additionally, with the rise of fixed-mobile convergence, IDC believes that wireless broadband technologies will accelerate enterprise mobility and be a key driver for the mobile workforce. Wireless broadband SPs should target specific industries with their solutions to exhibit the utility of wireless broadband and act as a form of below-the-line marketing to start building awareness.

Fixed-Mobile Convergence Enables Mass-Market Consumer Mobility

The move to consumer FMC is occurring in Malaysia alongside with the Asia/Pacific region, with operators looking at strategies to leverage its development. After several years of discussion, technologies and products relating to FMC have progressed to the stage where initial deployments, either on a trial or commercial basis, are likely to be offered in 2007. This shift to FMC is going to trigger restructuring and changes in the business models as well as network infrastructure of carriers. While FMC will threaten some legacy services, it will also create new opportunities for fixed and mobile carriers to compete in each other's space.

The Next Mobile Collaboration Tool — Instant Messaging or Short Message Service?

In Malaysia, SMS has been ruling the mobile messaging world for consumers and enterprise users alike for several years now. On the wired side, instant messaging (IM) has become a useful business collaboration tool. IDC predicts that, in 2007, IM will emerge from the confines of the desktop to users' handsets. The real-time and conversational style of messaging makes for a user experience that is superior to that of SMS. Particularly in the enterprise mobility front, IDC expects prosumers or professional consumers to drive enterprises to deploy IM solutions initially and IM will progressively evolve from being a standalone product to a communication product that is well integrated with other business applications.

IT and Telecommunications Convergence Created a "Talent Recruitment War" Between IT and Telecommunications Service Providers

As managed service opportunities grow, the competition between telecom and IT SPs will also continue to grow even if, in some cases, both players choose to cooperate with each other. As the competition rises, the "talent recruitment war" will also continue and IT SPs need to take precautionary actions if they want to retain their valuable staff.

For more information, please contact Hazmi Yusof at +603-2169-7522 or hyusof@idc.com; or Stephen Chong at +603-2169-7521 or ckchong@idc.com

Contact

Chee-Kian Chong
Events & Marketing Executive
Tel: +603-2169-7521
Fax: +603-2163-5098
Email:ckchong@idc.com