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History is being made, says Yeoh

   
Tan Sri (Dr) Francis Yeoh

The Edge Malaysia, October 25, 2010

By Karamjit Singh

Last week, YTL communications executive chairman Tan Sri Francis Yeoh spoke to netv@lue2.0 about his desire to up the ante in the broadband services market in Malaysia.

Yeoh, who is also YTL Corp Bhd managing director, said he was looking beyond broadband and at an eventual quad play by the end of  next year when YTL will offer consumers voice, data, mobile TV and fixed TV services.

The services will be delivered via a combination of two networks. YTL will officially launch its 4G network on Nov18, with the services offered focusing on the wireless dual play of broadband and voice. Mobile and TV services will come into play through an end-to-end delivery platform that will be built by US-based Sezmi Corp, which Yeoh says is a Google-like company with a niche. It delivers hybrid TV viewing by combining traditional TV content, movies and Internet video in a single service.

For the moment, all Yeoh is saying about YTL's relationship with Sezmi is that it is strategic. He is reluctant to reveal if YTL has plans to take up equity interest in Sezmi, although this has been reported in the media. However, he was more than happy to talk about YTL's investment in 4G.

When we Invest in 4G we are forcing the other operators to invest in 4G, which is great for the country, Then our broadband penetration will shoot up to 70% to 75%, even 100%, in a short period. Malaysia will then become a very investible country, Can you imagine the whole country being like the Silicon Valley?

An excerpt of the interview follows.

netv@lue2.0:I understand that you plan to offer an Asian-wide content service aided by your partnership with Sezmi. Is there equity involved?

Yeoh: well, we are a strategic partnership. I want you to look up Sezmi. It has appeared on the cover of BusinessWeek and is considered to be a Google-like company in its area.

And for it to come to KL, you have to ask yourself, why? And even why our YTL Communications CEO Wing K Lee came to Malaysia. Because despite the technology being available there [in the US], it is difficult to find companies to undertake this initiative. Here, Sezmi has a clear field in which to launch the service. And have a look at this [shows an article on The Malay Mail website on Astro being sued]. About 70% of those who left comments feel that they are not getting a fair deal. Why this monopoly? I think it is a good time for Sezmi to come here. I think people are screaming for an alternative. At the end of the day, it is a fantastic opportunity for us to launch such a service [hybrid TV].

But is Sezmi an acquisition or will it be a strategic partnership?

For us, it is a strategic partnership. It is confidential and we have non- disclosure agreements in place to protect Sezmi in the US. We cannot say more than what has been said.

Sezmi is like Google in the US. It has many people behind it, including venture capitalists. We have to be sensitive. We don't want to beat our chests and say something out of turn. I think Sezmi has also been courageous to move its team here and partner with us.

[Using our hybrid TV service] the best teachers need not go to the kampungs. They can teach and train teachers and give students tutoring from their own living rooms through the power of this converged network we will build, which will deliver the best of television and the Internet.
We can link two things that people hope for. TV programmes on their mobiles while certain portions of the TV audiences would like to access Internet video and surf the web on their TV. With our service, they can have just one number and enjoy services on multiple platforms.

You know, we are making Malaysians pay too much for too many things. You want voice, video or data, you have to put money down. You can see that people are quite tired of that. With YTL Comms, there will be no strings. It will be like a utility. Just pay as you like. Give the people a chance. They will vote with their purse. Let's see how this goes. But from the little that I know from the projects that we have done so far, I think this will work. I remember the scepticism when we launched the ERL. Many said customers won't pay RM35 for a trip to the city but I said that was cheaper than a taxi. Why won't they use the service? Today, about 20 million people have taken the train.

Today, people will be up in arms if you took that service away. So, just think about it. Reflecting on that project, the Malaysian government was building an airport and a railway hub and in history, the railways were built in advance of airports simply because it was an industrial-era technology.

But to connect railways to an airport later is very difficult and costs a lot, as in the case of the Heathrow Airport. So, I told the government that if it connected the two, I would be able to charge a cheaper fare than a taxi. You know what was offered to the government? A particular consortium was asking the government to subsidise a RM200 round-trip taxi service from the airport. We said, they must be kidding! The taxpayer will not subsidise that. I asked to be given a chance at RM35.

So, people must know YTL. We always say we build world-class infrastructure at Third World prices.So, why can't we do this for the Internet too? This is my passion, as you can see.

I know we cannot live without the mobile phone today. For instance, my sons cannot live without mobile Internet and I know my grandchildren will blame and curse me if I did not at least have a hand in pushing mobile Internet, directly or indirectly into their laps. How can people do business today without mobile Internet? Those who are using it are clearly winning too as the world is changing. Things are moving faster. Remember Moore's law. The Internet is all about speed and not like the slow pace of change in industrial-type technology.

Nobody waits for you. The first trains in England were built for a speed of 26mph. Some thought people would die moving at this speed compared with horse carriages!

You say nobody will wait for you. So, will your 4G service be a game changer?

You know I am engaging with the game changers of this country [YTL has a programme to give university students 300MB of data for free], I want to give all the universities the power and I want their students to taste it. These are students and opinion makers, the brightest and the best who will likely change the nation's direction and we are going to engage with them. We are going to introduce many programmes to enhance their entrepreneurship and thinking capabilities. For example, MyPrize, which offers Malaysians up to RM100,000 for coming up with great apps for our 4G network. I am engaging 400,000 students already. Not many people will do that, let alone offer them free connectivity.

Let's step away from your grand vision and plans. Do you have a sustainable business model that can be wrapped around all these things that you want to do? You will be competing with existing players that also offer voice and data.

No, no. I mean today, can you watch a CNN programme on your 3G? Can you inter-conference with multiple parties? please do not be satisfied with this level. But you ask if I can be sustainable? I can tell you that the 3G model of voice is not sustainable. So, our model is definitely more sustainable than the old telco model.

What about the pricing of the 4G service? I get the sense that it will be a lot cheaper than what is out there.

I can't comment on that yet but we will be competitive. If you see our history with Extiva [YTL's VoIP service launched in 2000], I can be very competitive.

What is your biggest fear about launching on Nov 18?

I have no fear about the consumer not wanting this. It is like a fast train or a highway. When they built a fast train in Taiwan between Kaoshing and Taipeh, they thought three million people would use it. Some 33 million actually did. Same with this. Why would people not want this service? There is no doubt in my mind. I do not fear the demand.

I only fear for my people and the vision and courage they have to move on with this vision and not make compromises. That is probably an internal thing which we have addressed. I do not think they fear anymore. They get it now. They are like Apple, part of a positive revolution for good. They are evangelists promoting Internet for all.

Otherwise, you would have a telco mentality. Spend and advertise like a telco. This is not a Red Ocean strategy, getting market share from the telcos. There is no comparison. I have said many times that 4G is almost like colour TV while 3G is black and white. Once you have tasted it, you will never go back.

But people have tasted 4G with Packet One and REDtone. Yet their subscriber numbers do not reflect any first mover advantage.

That is correct but that is because they are doing it in spots which we never believed in. This is an unsustainable model. Where people want mobility, you cannot tell them they can only get it in KL. From your PC to your phone to your TV, we will give you one number only wake up. It will be the first time in this country that your computer rings.

The smartest people are now in YTL Comms and YTL group always uses the smartest people in the world. We believe in using the best global brains to run our business. We never compromise on that.

Your cost of leasing sites to set up your base stations has got to be huge. How are you managing this?

Well, we will have 65% coverage of populated areas when we launch and this is better than when Maxis first launched its service. We have around 1,000 sites. But the cost of WiMAX is cheaper because it is a more modern technology. This has been to our advantage.

How does the 2.6GHz spectrum change the dynamics of your business model?

It does not. Like I said, we are a 4G network. I do not say we are a WiMAX or LTE network. To re-emphasise my open system, we welcome the best technology at any point. That is our whole culture. We are open and welcome anything. If  LTE catches up and moves ahead of WiMAX, no problem.

With a few upgrades, we can use LTE. But for now, you cannot deny WiMAX is a few years ahead of LTE. But WiMAX will continue to evolve. It is Moore's Law. The good news is, 4G has come.

What have you learnt from the failure of U Mobile to gain meaningful market traction thus far?

Theirs is a voice play. I have always said that that market is not sustainable. I am not in that space. There are no competitors out there for me.

Are you going to have YTL-branded phones when you launch next month?

They will be Samsung phones but with our brand.

How will that work?

You will see. Follow our progress. History is being made.





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