Friday, January 29, 2010

Making effective use of USP fund

IT is a RM5bil question and the issue of contention is why the snail’s route is preferred in its distribution.
That figure is roughly what is sitting in the coffers of the telecoms industry regulator, Malaysian Communications and Multimedia Commission (MCMC).
As at end 2008, the amount was RM4.7bil but would have surpassed the RM5bil mark in 2009 given that about RM800mil is collected each year for the universal service provision (USP) fund. Telecom players in Malaysia part with 6% of their annual revenues to help bridge the digital divide in the country.
The fund was set up in 2003 as players were reluctant to go into non-profitable areas to offer telephony services. A lot has changed since and the fund can also now be used to deploy broadband and cellular services.
MCMC has identified over 350 underserved areas in the country that will have telephony/broadband/cellular access, but the pace of the entire process from tender to contract award is just far too slow and complex and creates uncertainties.
Players continue to wonder why so much money sits idle year after year when it could be put to better use to provide access to a bigger population. That would also mean players being able to recoup some of the investments they put into the USP fund every year.
What is really the problem here?
Last year, the regulator called for several tenders beginning May, July and August, and up to now only very few contracts to wire up the underserved areas have been given out. The reason for the delay is unclear but certainly it points to the evaluation process.
“There is lack of clarity even in the upfront briefing process and you can imagine what we have to go through to fill the tender documents, and when we cannot meet deadlines, we are penalised,’’ said one industry player.
One particular contract all the players are hoping for a part in is worth RM1.4bil to RM1.6bil and involves several parcels. The contract was to be awarded last year but nothing has come out of the tender.
The whole evaluation process aside, players have been waiting for two years for answers from the MCMC on the “clawback provision’’ where contributors are able to get back up to 50% of their contribution by applying to roll out their services in underserved areas. When is there going to be any communication from the MCMC on that?
To make matters worse, the pace at which payments are processed after jobs are completed can test even the most patient of the players.
About RM200mil of jobs have been completed but only RM30mil has been paid out, and this leaves doubts if players will receive timely payment if they were to take on more jobs from the regulator. Also, they are uncertain if the regulator checks on the completed jobs to see whether they follow the specs.
The delay raises more questions than answers at a time when our Prime Minister Datuk Seri Najib Tun Razak wants things to be done expeditiously.
So if things are not working out smoothly and the USP fund not being put to effective use, perhaps the model isn’t working out as planned. A review may be necessary to achieve the desired results or else ambiguity will continue to sow doubts in the minds of many.
Whatever the issues, the Government’s 50% broadband penetration rate by year-end must be met and the underserved areas should not be the stumbling block when there is RM5bil waiting to be put to work.
Deputy news editor B.K. Sidhu hopes for greater transparency, clarity and fairness in the RM5bil distribution issue.
(Published in The Star on January 29, 2010 - Friday Reflections by B.K. Sidhu)