ByBy Julian Ding of Zaid Ibrahim & Co, Kuala
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
- applications service providers, ie the provider of among
other things, voice services, data services, content-based
services, and other transmission services while using a
- 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
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.
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
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.
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
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
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 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.
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.
Under the Act, anti-competitive behaviour includes:
- conduct which has the purpose of substantially lessening
- 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
Collusive arrangements are:
Rate fixing; in our opinion this covers the creation of a
cartel amongst licensees in respect of a particular
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.
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
- it is in the national interest; or
- such other grounds which satisfies the Commission.
Undertakings may be offered prior to grant of
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 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
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;
- number portability.
The Commission has appointed MyNIC (under MIMOS Berhad) to
manage the electronic addresses. Numbering is managed by the
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.
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
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.
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
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
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.
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
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.
Zaid Ibrahim & Co
Level 19 Menara Mlenium
Pusat Bandar Damansara
50490 Kuala Lumpur
Tel: +60 3 257 9999
Fax: +60 3 254 4888