This article first appeared in The Edge Financial Daily, on May 3, 2016.

KUALA LUMPUR: The upcoming launch of mobile network services by Packet One Networks (M) Sdn Bhd (P1), which has recently rebranded itself as “Webe”, will have a business model that is “similar, yet different” from United Kingdom-based mobile virtual network operator (MVNO) Giffgaff Ltd.

“We have some similarities in terms of [being] community-driven, but [we will be] different in lots [of] areas,” said P1 chief executive officer (CEO) Puan Chan Cheong in a text messaging response when contacted by The Edge Financial Daily last week.

“Webe is more than a telco (telecommunication company) with a higher purpose [of] making positive changes for our community, and we own and operate our networks as a platform, [unlike an] MVNO,” he added.

Giffgaff, known as a “SIM card-only operator” that launched its services in November 2009, is an MVNO wholly-owned by Telefónica UK Ltd, which is in turn wholly owned by Spanish multinational telco Telefónica SA.

Interestingly, Giffgaff’s subscribers are also its front-line customer support. Via an Internet community, subscribers or members run part of its business operations, including answering questions by other members, help troubleshoot technical issues, attract new members or help in promoting the company.

In return, the operator rewards these subscribers with virtual points that can be applied for monthly mobile services or be taken as cash rewards. One can also choose to have the rewards take the form of a donation to a charitable cause.

The business model helps Giffgaff keep its costs low, while passing the savings it achieves directly back to subscribers.

But as Puan said, Webe, unlike Giffgaff, is not an MVNO and has access to the largest pool of fourth-generation (4G) Long-Term Evolution (LTE) spectrum.

“We are not an MVNO and we have the largest pool of 4G spectrum: 20MHz of 850MHz, 20MHz of 2,600MHz and 30MHz of 2,300MHz,” he explained.

“We have more than [a] 50% population coverage on 2,300MHz using WiMAX, [which was] started in 2008, and we are upgrading all of them to LTE using both 850MHz and 2,600MHz. We do have plans to provide coverage nationwide over time,” he added.

P1 is 72.9% owned by Telekom Malaysia Bhd (TM), a local broadband and fixed-line telecommunication service provider.

Earlier this year, P1 and TM entered into a domestic roaming services and facilities agreement with Celcom Axiata Bhd to gain access to the latter’s domestic roaming services. In return, Celcom, via a memorandum of agreement for the next phase of infrastructure collaboration, gets access to TM’s enhanced network facilities and infrastructure.

Celcom is the Malaysian unit of Axiata Group Bhd, which also has operations in countries including Indonesia, Sri Lanka and Bangladesh.

On top of this collaboration, Puan also noted that Webe will be rolling out its own infrastructure in phases.

“We are rolling out our own 4G LTE networks in phases and will [be] roaming into Celcom networks in the areas [that are] yet to have coverage,” he said.

Asked if a community-driven business model would be equally effective in Malaysia, given the differences in the demographic profile of both countries, Puan said his team is confident that it will be well received, judging by not only Giffgaff’s success, but also the popularity of certain Internet forums.

“Giffgaff has done a tremendous job as a new market entrant in [the] UK. We are confident [that] the same community-driven services can work well in this part of the world. For example, you can get your best help either commercially or technically on Lowyat.NET,” he said.

Nevertheless, Puan remains tight-lipped when pressed for further details of the progress of launching Webe’s services.

Last week, TM CEO confirmed that Webe was undergoing certain testing with a closed group of users, and that its services are slated to be introduced by the middle of this year.

When contacted, JF Apex Securities Bhd senior analyst Lee Cherng Wee said in order for Webe to succeed, it is crucial for the operator to first design a set of systems that could reward users satisfactorily, with a screening process that can ascertain and filter the quality of feedback provided in the Internet community.

“We can’t tell whether it (Webe’s business model) works in Malaysia or not. It really depends on how they reward members that provide feedback, and how they screen the quality of comments,” he said.

Another analyst who declined to be named, however, doubted that the business model is viable here.

“In urban areas like Kuala Lumpur and Penang, Webe may get users to participate. But I doubt users in rural areas would share the same interest,” he said.

Last Friday, TM’s share price fell three sen or 0.45% to RM6.65, valuing it at RM24.99 billion. Axiata gained nine sen or 1.62% to RM5.65, giving it a market capitalisation of RM49.85 billion.