Why and Why Not Telco pass through the 6% service tax?

Since the very first second the announcement was made, every quarters are fuming on the extra burden they should bare if it goes through. Here, it involves everyone in Malaysia, even foreign workers who are mostly prepaid subscribers. On this topic, Finance Malaysia has some words to say.

Picture taken from bigmacky.wordpress.com

In this modern world, mobile phones has become a necessity to us. Some may say: "I can sleep without pillow, or lost my wallet, but I cannot separate from my mobile phone". As such, does it mean that telcos can held you "ransom" on using their services? Since this is called "service tax", did telcos do their part in providing the good services (if not the best)?

3 Reasons why Telcos should not pass through the 6% service tax?

1. Coverage is suck in certain areas, still. There are rounds of complaints on line-dropping issues. Yup. They fixed it after that. But, the same old problems come back to haunt consumers after awhile.
2. Customer service is suck. At least, I am using the largest telco's service in Malaysia. But, I did not proud to say that either. Because, the respond to solve my issue is suck.
3. Crazily high charges. Comparing with neighbor countries, you will found out why Malaysian are labeled as "rich". Even with the "Value Plans" offered, consumers here are still paying high charges, whereby the really rich telcos boost their profit margin by squeezing consumers.

But...

Does telcos need to get the approval from MCMC first? No.

Does telcos obliged to absorb the 6% service tax at the first place? No.

Then, why not telcos pass the extra burden to end users like us? Emm...

Service tax is imposed by government on all services being offered in Malaysia. No sector constrain. No industry constrain. If we're paying 6% service tax on food outlets or shopping malls, why not prepaid or post-paid mobile services? Who is the main beneficiaries from the 6% service tax? Government or Telcos?

Hey Malaysians, YOU got the answer?

English Premier League from Maxis?

Recently, TM and Maxis concluded a 10-year agreement for TM to provide High Speed Broadband (HSBB) Access Services to Maxis. According to RHB research, Maxis with the agreement, can instantly roll out fixed home services to a potential pool of higher ARPU customers with last mile access via TM’s HSBB network to 700k premises, and up to 1.3m premises by end-2012.

Currently, Maxis’ fixed home services is limited to Bandar Utama, Sierramas, Bangsar and Sri Hartamas via its own fibre-to-the-home (FTTH) network. And, as Finance Malaysia know, Maxis is targeting to launch its service in the newly popular township of Puchong.

Maxis's secret weapon - Content
All in one, Maxis plans to roll out are IPTV, VoIP, video-on-demand (VoD) and high speed Internet. In fact, TM itself already offers some form of IPTV and VoD bundled in together with its core service of high speed Internet in its UniFi packages. Hence, content is indeed a very important element for Maxis to stand out. It is very likely that Maxis will leverage off its sister company, Astro especially for the Astro's exclusive rights of English Premier League.

A Win-Win situation 

For Maxis, it can save on its capex by riding on TM's HSBB network, without the need to build its own fibre network which could cost billions of ringgit. For TM, it could benefits from more wholesale revenue arising from a higher utilisation rate of its HSBB network.

What Malaysians really want from Telcos?

Recently, a little bit of whirlwind is happening in the local telecommunication industry, when Malaysian Communications and Multimedia Commission (MCMC) awarding the 2.6GHz spectrum to mobile telcos.

Why battling for the spectrum?

Without spectrum, mobile telcos will not be able to expand their digital business. That's why many quarters are lobbying hard for the precious spectrum allocations. The latest one is the 2.6GHz spectrum.

Who is the winner?

Surprisingly, all the 8 existing wireless players and 1 newcomer (see picture below) get 20Mhz block each. The only newcomer is a company linked to tycoon Tan Sri Syed Mokhtar Albukhary.

Controversial part...

Unlike practices did by other global governments, there is NO tendering process being called. No tender, No contest, No transparent, No competition. In the end, No benefit to rakyat.

All these years, Rakyat has been suffering from high telephone bills comparing to other nations. Furthermore, the service and coverage is not up to international standard. To name it specifically, our broadband and Internet connections is suck given the price we are paying for. Achieving high-income nation status with current speed and price? Sure will failed...

What Malaysians want is better coverage, lower price, higher speed of Internet services to connect with the world out there. How are we going to do business online with the world? Dear telcos and MCMC, please think about it, for the benefit of Rakyat (YOU and Me).