Giorgio Migliarina: There is a connection between the
competitiveness of a country and its information and
communications technology. Governments see that their
countries will develop faster if they have much better infrastructure
Malaysia is ambitious: it wants to rival its south-east Asian neighbours in building a knowledge economy to boost the standard of living of its citizens. It has looked around and seen countries such as Japan, Singapore and South Korea where the level of internet penetration is high. They have already become knowledge economies.
“Malaysia sees that there is a connection between the competitiveness of a country and its information and communications technology,” says Giorgio Migliarina, the chief technology and information officer of Telekom Malaysia, the incumbent operator.
The company is most of the way through a national broadband project that is bringing up to 20 megabits a second through fibre to millions of homes. By the end of 2012, most of the homes in the most densely populated part of the country will be able to connect to fibre.
Unlike the national broadband projects in Australia and other countries, most of the funding has come from Telekom Malaysia itself. Under an agreement with the government, other operators can use TM’s fibre via wholesale deals.
Before going ahead with the project, the government looked at models from around the world. They vary, says Migliarina, from the non-interventionist highly competitive and unbundled US model and the European strategy of promoting competition but requiring incumbents to unbundle their local loops at one extreme, to the “much more interventionist” policy in Asia, “where governments are willing to invest or co-invest”, he says.
Migliarina, who has worked at Telekom Malaysia for more than three years after beginning his career at Olivetti and Italian broadband operator Infostrada, points to the significant government investment in networks in Japan and Korea. “Governments see that their countries will develop faster if they have much better infrastructure.”
The government of Malaysia decided to restrict its contribution to broadband investment to 20%, says Migliarina, with TM contributing the other 80%.
There is a practical difference, he notes. “In Asia, governments pay to ensure coverage.” But in Malaysia, the self-funded approach means that coverage is focused on areas that will produce higher returns.
“If you want to cover the whole of the country you will need much higher investment from the government,” he adds. “We have sophisticated coverage in urban areas. There is no difference between Kuala Lumpur and London in terms of the needs of customers.” But much of Malaysia is rural, even jungle, “and reaching there with high-speed broadband would be disproportionately expensive”, says Migliarina.
The population of Malaysia, a constitutional monarchy, is almost 30 million, and around two thirds live on the Malayan peninsula — the stretch of land that runs south of Thailand and ends with the independent republic of Singapore at the tip. The rest are scattered around Malaysia’s territory on the island of Borneo, including Sarawak and Sabah.
High income knowledge economy
In September 2008 the nation as a whole formulated a strategy to become a high income knowledge economy by 2020, and TM is seeking to play its part in that national policy by helping to develop broadband rollout.
Within 18 months of the strategy being set — and including a nine-month period for tendering — TM set about its fibre-to-the-home project. There were three sides to the investment plan, says Migliarina: the FTTH, the core network including international connectivity, and a completely new set of IT systems, covering a range of functions from billing and customer relationship management to fault management and installation.
The third part of the project used Oracle software, used by the systems integrator to build a triple-play system in nine months.
Meanwhile “we went ahead with the rest of the plans — and we achieved them to cost and to time”, says Migliarina.
Fibre is now available to two million homes in Malaysia, and 300,000 of TM’s customers have already subscribed.
“The initial phase has been assured. By the end of this year we will achieve most of the coverage that we want to have. Meanwhile we are just continuing on the process of adding features into the IT systems — and adding customers.”
The successful completion of this phase means, says Migliarina, “that Malaysia is one of the three fastest countries to roll out fibre”. He says the company won independent certification from BT “that our architecture is the most cost effective that they found. They carried out a technological audit.”
Most of the hardware is dual-sourced. “We took a multi-vendor approach for most of the network layers,” says Migliarina, who is reluctant to pick out any names. “It’s a Who’s Who of vendors.”
The IT was approached differently, with Oracle responsible for providing most of the software. “Over time Oracle has become one of the most important strategy partners in IT. They’ve done a good job.”
The first three-year main phase of this public-private partnership will be complete by the end of 2012. By the end of this part of the project there will be 1.3 million ports. “We don’t really talk about homes covered,” says Migliarina. “We talk about ports installed.” The current number is 1.2 million, “so we are already close to completion.”
Core network investment
The investment will continue beyond 2012, focusing on international connections and the core network, rather than the access network. “We’ve built the access part of the project. We will continue to work on our international connectivity and our core network to address the capacity.”
Because the project is being carried out with the backing of the Malaysian government, the architecture is designed “to include the needs of other operators to access the network on a wholesale basis”, he says. “Our main approach is a bitstream strategy rather than a full physical unbundling,” says Migliarina.
As a result, other operators in Malaysia have signed agreements with the company “and are selling their own versions of high-speed broadband”. These include the four of the other operators in the country, Maxis, Axiata’s Celcom, P1 — a WiMax operator — and Redtone. Axiata is the former TM International, demerged from the TM group in early 2008.
There are inevitable comparisons with Australia’s National Broadband Network, a hugely expensive government-funded project to build fibre to most homes in the country, replacing Telstra and other operators’ fixed connections.
“We have a simpler structure than the Australian project,” says Migliarina. “TM is the main fixed line operator in the country.” So it runs the broadband network and allows other operators to use it. Australia’s NBN is a carrier-neutral operation that is legally and structurally separate from Telstra, Optus and the others.
“That approach has enabled us to achieve a fast rollout,” Migliarina says. “And it is more cost-effective for Malaysia, which is a middle-sized country.” With proper scrutiny from the regulator, the solution of allowing the incumbent to build the national broadband network is more efficient, he says.
The three-year project will make broadband available to two million of Malaysia’s six million households. “Yes, four million will not be covered, but for them copper is still a good offer,” says Migliarina. Over the next few years, “technologies will allow us to sweat the assets”, he adds. “For example, vectoring will allow faster and more reliable bandwidth over copper.”
There are still many customers using copper in the area of the country covered by the new fibre network. TM will not be forcing them to move to fibre, says Migliarina. “Forced migration is too expensive. Look at Japan, where NTT still has copper after many years of fibre rollout.”
There are synergies in retaining separate fibre and copper networks, he believes, if the process is managed well.
Meanwhile the core network is being migrated from asynchronous transfer mode to internet protocol, matching a trend in the rest of the world. “We’re phasing out our ATM frame relay platforms.”
At the same time there is a gradual process to move all the IT systems over. The Oracle suite operation runs the fibre-based network, “but the copper network has old legacy systems that we are phasing out and transferring to the new stack.” This is “a great lesson for other operators” for migrating from old IT to new, says Migliarina.
What problems has TM experienced, or was it all smooth? “We paid a lot of attention to other operators’ and vendors’ experience and we tried to learn from their experience and not to make the same mistakes.”
There were some “small hiccups”, he admits. Some part of the outside network were affected by Malaysia’s extreme weather. “We had to change the design of some of the outside drop points, because when it rains it rains very hard, and it rains every day. Rubber joints were not enough to keep the water out. You only discover that when you are rolling the network out. But that was less than one-tenth of the network, so it was manageable,” he says.
“We learned to avoid underground drop points because the ducts would fill up with water. It’s very difficult to troubleshoot a manhole that’s full of water.” So underground connection points were avoided where possible, and cabinets were mounted on 20-30 centimetre plinths to keep them well clear of water.
But, glitches aside, the investment has seen Telekom Malaysia build a significant national broadband network for its customers and those of its rivals. GTB
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