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This article first appeared in Corporate, The Edge Malaysia Weekly, on June 27 - July 3, 2016.

COME June 30, YTL Power International Bhd will be launching YES’ new 4G LTE network for mobile devices. Since LTE is a term that has been constantly bandied about by incumbent telecommunications companies, it may not seem like a big deal to most consumers.

But for YES, the difference is huge.

YES will finally be akin to a full-fledged telco with a network for smartphone users. This is completely different from the 4G WiMAX network that YES has been using for the past six years.

In hindsight, the venture into WiMAX can be seen as a costly technological misstep. WiMAX’s biggest problem is the lack of affordable mobile devices in the market as phone manufacturers favoured LTE devices due to economies of scale.

To be fair to YTL, the US and South Korea were investing in WiMAX networks at the time, but the technology simply failed to gain traction, compared with LTE. YES tried to introduce own-brand WiMAX phones but failed as the cost was simply too high.

Today, however, YES boasts a 4G-only network. YTL Power executive director and major shareholder Datuk Yeoh Seok Hong says this is the network’s strength.

“They (the incumbent telcos) are still relying on their 2G and 3G networks,” he points out.

Even U Mobile, which has been highly disruptive to the incumbents, still has to rely on roaming on Maxis Bhd’s network. Since 2G and 3G networks are circuit-based, as opposed to the IP-based 4G networks, the telcos still have legacy costs.

That said, migrating to LTE does not put YES in the clear completely. Some users will be surprised to find that their devices do not work on YES’ network.

This is because YES operates a time division duplex (TDD) network while the other telcos operate a frequency division duplex (FDD) network. This is because the 2,300MHz and 2,600MHz spectrums that the YTL group secured come with the condition that the network operates on TDD.

The problem for YES is that a large proportion of existing smartphones only support FDD networks. They include top-shelf devices like Apple’s iPhone.

While some Android phones can support TDD, it is not entirely common at the moment. Hence, YES is once again forced to bring devices into the market in order to get users for its network.

However, there is a big difference this time.

“China Mobile, with 850 million customers, has adopted LTE-TDD technology. India has done the same. These are the biggest markets in the world for smartphones. So phone makers have to follow and build LTE-TDD devices. Samsung is already doing it. Hence, we are able to bring in LTE-TDD-enabled devices at very low prices that even low-income Malaysians can afford,” says Yeoh.

With this in mind, YES will be focusing its efforts on attracting consumers in the mass-market segment with highly competitive data plans and low-cost phones that can be bundled with the plans. YES is partnering Samsung to launch affordable 4G phones in the country.

A key difference from the WiMAX days is that the new phones will be able to run on both FDD and TDD networks. Previously, YES’ WiMAX phones could not be used on other networks, making them undesirable.

“Everyone should be able to have access to LTE data and at affordable rates, especially consumers in the rural areas. These places don’t even have high-speed broadband, but they will have YES,” says Yeoh.

Recall that YES has coverage of 85% of the population, with its network in Peninsular Malaysia and Sabah.

Another interesting strategy that YES will employ is the use of dual-SIM-card phones. While YES has coverage of 85% of the population (except for Sarawak), the network’s total geographic coverage is simply not as wide as that of incumbents with 2G and 3G spectrums.

Hence, consumers can use the incumbents’ networks for voice, which has become very cheap, and use YES’ network for data. At face value, it is a convoluted solution to a technological problem (YES having to use TDD) and only time will tell if consumers will buy into it.

 However, there is certainly a market for 4G LTE phones to be tapped.

“Right now, only 20% of the phones in Malaysia are LTE-enabled. What about the remaining 80%? We will bring 4G to the mass market with the introduction of affordable LTE-enabled devices,” says Yeoh.

Put it all together and how much traction YES will get will simply come down to the price of its data. The timing may be less than ideal, given the ongoing price war that broke out about six months ago.

But Yeoh is not fazed by the intense competition. “Competition is good. Now, consumers are more aware of what is out there. And when they see what we have to offer, I’m confident they will come to us,” he says.

Having invested RM4 billion in the telecommunications venture in the past six years, will the new strategy bear fruit and capture a share of the highly competitive market? For YTL Power, the answer needs to be yes. 

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