[711] Of Lim Keng Yaik says you must lower your fee or we’ll give you market power?

I might have heard the news wrongly and I’m neither a Malaysian telcos industry expert nor a not-so-casual observer. Nevertheless, while I was lying on my stomach and effortlessly switching channels, I came across a news report over TV3 about broadband infrastructures owners charging users exorbitant fee (access fee maybe?). These users, I presume, in context anyway, are broadband internet service providers,

The relevant minister, Lim Keng Yaik, through the clip, was almost angry and visibly frustrated at the owners. These owners, judging from excerpt of Keng Yaik’s speech, sound like monopolies. So, it’s safe to assume they act as monopolies too. Monopoly leads to inefficient pricing which in turn leads to inefficient outcome and, in this case, prevents greater broadband penetration in Malaysia. Current Malaysian broadband penetration rate is low and the government wants to change that. As Lim Keng Yaik’s ministry is responsible for telecommunication sectors in Malaysia, I understand his frustration.

I felt a sort of empathy for him until I heard – think I heard, rather – he said, if the owners refuse to cooperate with the government in lowering the fee, the government will stop issuing more broadband licenses. Now, I’m not sure what kind of license he was talking about. But it seems, through context again, he was referring to the permits for laying down broadband infrastuctures like fiber optics and stuff. If what I heard is true, then this is bad economics (tag).

The problem is monopoly and a monopoly charges higher price for its good compared to a competitive firm. If the government stop issuing the licenses, wouldn’t that would actually reward the monopolies instead of punishing them?

I mean, halting the license issuance would effectively guarantee the existing infrastructures owners of market power.

If license doesn’t refer to the owners but instead refers to ISPs however, then maybe the punishing plan might work. Stoppage of the license issuance to ISPs would deprive owners of broadband infrastructure of revenue. But then, that wouldn’t help broadband penetration in Malaysia at all.

And if what he said actually meant stopping issuing licenses to existing owners, then that might make better sense. In fact, I think, this is the case.

Right now, I hope I heard it all wrong. I can’t find anything off the internet yet. So, I can’t confirm what Lim Keng Yaik said or meant but I’m sure a report will pop up somewhere within the next 24 hours. I’ll do a postscript entry here once the report is out. Stay tuned.

p/s – wow. 3,000 tonnes at all three sites. Sounds like Malaysia needs to bring down the cost of safely dumping waste legally fast.