Malaysia

Author: | Published: 2 Feb 2000
Email a friend

Please enter a maximum of 5 recipients. Use ; to separate more than one email address.

ByBy Julian Ding of Zaid Ibrahim & Co, Kuala Lumpur

The Communications and Multimedia Act 1998, which came into force on April 1 1999 regulates all forms of communications and provides a generic set of regulatory provisions with sufficient flexibility to cater for advances in technology. The Act is extra territorial but, obviously, its enforcement would be difficult. It covers the following activities:

  • network facilities providers, ie owners of physical infrastructure such as satellite earth stations, telecommunications exchanges, broadcasting transmission towers and equipment;
  • network services providers, ie the carrier of communications by means of guided and/or unguided electromagnetic radiation;
  • applications service providers, ie the provider of among other things, voice services, data services, content-based services, and other transmission services while using a network; and
  • content applications service providers ie traditional broadcast on-line publishing and information services.

The responsible minister is the minister of energy, communications and multimedia. The Communications and Multimedia Commission (CMC) is the regulator and is an independent body.

Some unique features of the Act are the promotion of transparency, the periodical review by the CMC of rules and regulations, the introduction of competition rules and the dispute resolution powers of the CMC.

Regulatory Framework

In addition to subsidiary legislation, new and flexible legal instruments, which may be modified or revoked by the issuer, are introduced. These are directions, determinations and declarations by the minister, or the CMC's directions and determinations to licensees.

These instruments may have defined validity periods which enable a certain act to be undertaken or omission rectified. Licensees are permitted by law to give undertakings for certain activities, and different industry fora are established to publish codes which encourage industry self regulation. Compliance with these codes affords a statutory defence to any action brought against the licensees. However if these codes are ineffective then the CMC can determine mandatory codes which must be complied with.

Aggrieved persons may appeal to an appeal tribunal against directions or determinations of the CMC, and thereafter seek further recourse to the courts. The Commission

Unlike its predecessor, the CMC has a statutory duty to undertake public inquiries, resolve disputes between licensees and third parties, register access agreements, and designate fora. The findings of these inquiries are public. The CMC also has extensive powers of investigation if a civil or criminal misfeasance has or will occur.

Self Regulation

To promote self regulation, and in addition to compliance with the industry codes, undertakings in respect of matters in these code may be given by licensees. Undertakings are enforceable by a Court, once registered, and are valid for three years. Third parties can rely on the undertaking and if they suffer loss may have a cause of action against the giver.

Licensing Regime

The activities set out earlier must be licensed as an individual or class license, the breach of which is an offence punishable by a fine or imprisonment. However the licensing regime does not apply to matters on the customer side of the "network boundary" which is defined as the first equipment socket in a residence, the main distribution frame in a building, or a point agreed by the customer and the network facility provider.

Individual licences must be applied for, except when a class licence is issued, and are granted by the minister. Special or additional license conditions may be imposed or once imposed, modified, varied or revoked by the minister but affected licensees are notified before the imposition or changes are made to enable them to make submissions.

All licenses are limited in time, and may be renewed. Renewal is a matter of course unless the licensee has breached the license conditions, the act or its rules. Licenses may be suspended or cancelled on the same basis as non-renewal.

Class licence

Class licences are available for such activity as specified by the minister. Unlike an individual license, mere registration is required. The registration process is an administrative one. However de-registration is possible on the same grounds as non-renewal of an individual license.

Specific issues

The manner of the regulatory framework set up by the act, enables any activity which satisfies the concepts used — for example, network service provider — to be licensed. Hence activities such as resale, broadcasting, and VOIP may be licensed either on an individual or class basis. While domestic resale activities are now permitted as a licensed activity, call-back services are prohibited. Foreign investment into existing licensees are permitted up to 61% but with a sell down obligation to 49% within five years.

Competition

Under the Act, anti-competitive behaviour includes:

  • conduct which has the purpose of substantially lessening competition;
  • entering into collusive agreements;
  • linking of sale of products or services to services or products (eg bundling and tying); and
  • conduct which has the effect of substantially lessening competition while being in a dominant position

Contravention results in either a civil suit or a criminal prosecution. Civil suits other than by the CMC require the CMC's permission, except where an injunction is sought.

Prohibition from entering into collusive agreements

Collusive arrangements are:

Rate fixing; in our opinion this covers the creation of a cartel amongst licensees in respect of a particular service.

Market sharing; this could be where licensees divide the market so that no other licensee would provide services in another's sector (eg exclusive service provider arrangements). It is unclear how market control is to be considered and whether licensing of IPRs contravenes this.

Boycotting an apparatus supplier or another competitor; the inability of consumers to have a choice of service provider when purchasing an apparatus from a supplier.

Dominant position

The CMC must determine that a licensee is in a dominant position in a communications market before this prohibition can apply. If so determined then if its conduct has the effect (as opposed to the purpose) of substantially lessening competition, then the Commission may direct them to cease the conduct and/or implement appropriate corrective remedies. Mere abuse of a dominant position is not required. Avoidance of such a determination requires prior authorization by the CMC if either:

  • it is in the national interest; or
  • such other grounds which satisfies the Commission.

Undertakings may be offered prior to grant of authorization.

Interconnection

Access is to be in accordance with the Standard Access Obligation (SAO). The SAO must be published, which at this moment, it is not. An access list is to be determined and managed by the CMC which identifies certain network facilities or services, which others may have access to. Once facilities are on the access list then other licensees can request for access which cannot be refused. However, the terms and conditions for access are determined by a forum, called the access forum. The Act specifies that the access is to be of the same standard and quality as the owner enjoys, while the access should be on a non-discriminatory and equitable basis.

Interconnection is governed by each licensee registering an access undertaking which sets out the terms and conditions for interconnection. Nevertheless the access undertaking will only be registered if it is consistent with the SAO interconnection costs, currently computed using the long-run incremental cost methodology, may be provided by the access code.

The access forum is to design the access code, which provides for, among other things, model terms, the sharing of technical information, rates for interconnection and protection of intellectual property rights. The access code will be registered if the CMC is satisfied that the code is consistent with the SAO.

The spectrum

The provisions in the Act which deal with this are not enforced. Therefore the Radiocommunication Regulations 1995 still apply. In essence a licensee would still require to have a radiocommunication licence which would be valid for up to five years. There is no exclusivity of use of spectrum nor is there any compensation for compulsory acquisition by the regulator.

Any disputes relating to interference caused by the use of a spectrum are to be resolved by the Commission.

Numbering and Electronic Addressing

A publicly available numbering and electronic addressing plan is to be developed which sets out rules relating to:

  • use of different numbers for different services;
  • assignment of numbers and addresses;
  • transfer of assigned numbers and electronic addresses; and
  • number portability.

The Commission has appointed MyNIC (under MIMOS Berhad) to manage the electronic addresses. Numbering is managed by the Commission.

Technical Standards

A voluntary forum is to set up the applicable standards for the use of any equipment or systems, in a technical code. This code covers, among other things, the promotion of safety of network facilities, network interoperability, the provision of calling line identification capability and pre-selection capability, the adoption of technical standards promulgated by international bodies and the promotion of electromagnetic compatibility. Type-approval activity is performed by registered certifying agencies (whether domestic or foreign). The domestic agency currently registered is SIRIM Berhad. Registration is granted by the CMC.

Equipment of systems which hinder network interoperability, or which compromises public safety3 is prohibited and is an offence. Standards are set by industry unless it is ineffective whereupon a mandatory standard can be issued by the CMC.

Consumer Protection

Consumers' rights are given sufficient protection, while a consumer code is yet to be developed. The code will deal with, among other things, procedures for consumer complaints and privacy. Compliance with the code is mandatory as it is a licence condition. The emergency services, directory and operator assistance and services for disabled customers are mandatory, but only a person determined by the minister is to provide this service.

Tariffs and Rates

The chargeable rates are left to licensees to set, but are subject to market forces, publication and must be fair and reasonable. If the rates charged amount to predatory pricing then the anti-competition prohibitions would apply. The minister may intervene and set the rates for good cause or in the public interest. Rates are currently regulated by the Telephone Regulations.

Universal Service Provision

All licensees are obligated to provide universal service to underserved groups or areas. A Universal Service Provision Fund is established which is controlled and operated by CMC. All licensees contribute to the USP Fund an amount set out in the regulations, which are not yet issued.

Content

The provision of content whether on-line or by way of a broadcast is a licensed activity, unless it falls within defined exemptions such as incidental content to the service provided. Content provided which is obscene, false, menacing or offensive in character with intent to annoy, abuse, threaten or harass any person is a criminal offence. However the provision of content is subject to the content code which would, among other things, restrict the provision of unsuitable content; provide methods of classifying content, and set out procedures for handling public complaints. The code is yet to be published.

National Interest Matters

If there is an emergency as certified by the King, then expropriation with compensation may be undertaken, communications intercepted and customer equipment repossessed. The CMC may direct a licensee to develop a disaster plan with other governmental agencies for the survivability or recoverability of the activities mentioned earlier.

Installation & Access to Network Facilities

To undertake installation activities or access to facilities a network installation permit needs to be obtained from the CMC. Other network facilities provider or public utilities are now required to provide "non-discriminatory access" to any post or right of way owned or controlled by them, subject to the CMC regulating the terms and conditions of such access. In addition a licensee requires local authority permission to install facilities in public areas.

Offences

These are highlights of new offences created by the Act, namely phone cloning, selling counterfeit decoders, spamming and marketing such devices. Investigators now have access to computerized data including passwords and encryption software.

Transitional Provisions

The Telecommunications Act 1950 and the Broadcasting Act 1988 are repealed. However all subsidiary legislation made continues to be effective.

All licences issued under the old regime are to be registered by March 31 2000 and licensees may indicate if one intends to migrate or not. Failure to register causes the old licences to expire on March 31 2000. If licensees choose to remain then their licences remain valid for its current duration, but if class licences are issued which overlap with their existing licences, the new licences prevail.

Contact Details:

Zaid Ibrahim & Co

Level 19 Menara Mlenium

Pusat Bandar Damansara

Jalan Damanlela

50490 Kuala Lumpur

Malaysia

Tel: +60 3 257 9999

Fax: +60 3 254 4888