1.

0 Introduction to telecommunication service industry

In telecommunication, the meaning of telecommunication service is that any service
provided by a telecommunication service. It also can define that a specified set of user-
information transfer capabilities provided to a group of users by a telecommunication
system. There are many telecommunication companies in Malaysia such as TM Berhad,
Maxis, DiGi, Celcom and U-Mobile.

1.1 Introduction to DiGi telecommunication service company

DiGi Telecommunications Sdn Bhd also known as Mutiara Telecommunications Sdn
Bhd, is a telecommunication services provider in Malaysia. The company was founded
on 24 May 1995 and headquartered in Shah Alam, Malaysia. Besides that, DiGi is the
first telco to launch and operate a fully digital cellular network in Malaysia. DiGi has
provided much type of mobile communication services. These services are SMS, data
plan and services, international rooming, international call, WAP services and so on
(DiGi Corporation, 2010).

1.2 Introduction to PESTEL analysis

An analysis of the external environment is an attempt to understand the forces outside
organizational boundaries that are helping to shape the organization. The external
environment acts as an important role in providing both facilitating and inhibiting
influences on the performance in telecommunication service in Malaysia. Multiple
influences in the immediate or proximal environment form the boundaries within which
an organization is able to function. Therefore, these influences may shape how
telecommunication service define themselves and how they articulate what is good and
what is appreciate to achieve. The external environment forces that affect
telecommunication services industries include Political environment, Ecological
environment, Socio-cultural environment, Technological environment, Legal
Environment and Economic environment. These six forces are called as “PESTEL”.

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1.3 Introduction to scenario planning
Scenario planning is a combination of fact and possible changes of business environment.
It is a way to develop future plan for company. Scenario planning is very important for an
organisation because it help to develop a future plan and help to think of possible
variation for the organisation. The successes of an organisation in future are depending
on the quality of the scenario planning.

2.0 PESTEL analysis

2.1 Political
Mobile Number Portability(MNP)
On 15 October 2008, the implementation of Mobile Number Portability (MNP) by
Malaysia government is caused some effect to the telecommunication service industry.
MNP is a service that allows customers to retain their existing telephone number when
switching from one mobile service provider to another (MNP, n.d.). The implementation
of MNP caused more competition in telecommunication service industry, every
telecommunication service provider competes to attract more user switch to their service
and retain their existing customers. Therefore, it will cause increase aggressiveness in
advertising and promotion. For example, DiGi have to lower its price and provide
cheaper package and attractive advertisement to attract people to switch to their services.
Moreover, new innovative products and services will be offering to the market as service
providers seek to differentiate themselves in the market place.

National Telecommunication Policy (NTP)

The National Telecommunication Policy (NTP) is a policy that formulated by Malaysia
Government. This policy formulated is to ensure that the growth of telecommunication
services and its use of technology support national development, in line with national
aspirations (Malaysia Government, n.d.). It also encouraging competitiveness between
the telecommunication services provides in order to achieve efficiency and to provide
excellent and quality service. The objective of NTP on telecommunication service is
divided into macro and micro objectives. The macro objectives of NTP are to
encouraging interaction between the races and regions and creating an educated and

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information-rich society through telecommunication services. However, the micro
objectives are to ensure that the quality of telecommunication services is at reasonable
cost, expansion of telecommunication services to the rural and urban population and
encouraging research and development (R&D) for more advance technology.

2.2 Economic
Competitive Market
The implementation of government policy and encouraging competition on
telecommunication service industry has caused the industry under an aggressive
competitive market. The aggressive competitive market has created a competitive in
pricing between the telecommunication service providers. The competitive in pricing
between telecommunication service providers has bring huge benefit to consumer as it
will led to lower calling prices for consumers and more people will afford to get
telecommunication services. Moreover, the competitive market will caused innovation in
products and services, therefore, more new and innovative products and services will
introduce to the market (Kennard, 1999). In order to compete in the pricing competitive
market, telco such as DiGi will provide more cheaper services and improving on their
products and services to respond on the competitive market.

Economic recession
The continuous of economic recession in Malaysia nowadays is bringing enormous effect
on telecommunication service industry. Due to the economic recession, the investment to
telecommunication service is reducing and it has lead to decreasing in the demand for
telecommunication services because people income has been affected by the economic
recession. Besides that, it may lead to increasing in competitiveness between the
telecommunication services providers because they want to gain the market share during
the economic recession, therefore, more cheaper package of services will be introduce to
the market to attract more consumer, such as DiGi Friend & Family package.

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2.3 Socio-cultural
Trend of lifestyle
Nowadays, telecommunication services have becomes a necessity for many people as the
cell phone has become a necessity for many people. This is very common in society
today as one people using many different type of telecommunication service. Therefore,
it created saturation in telecommunication service market because telecommunication
service has becomes a necessity by many people. In such saturated market, the
competitive in telecommunication service market will be more aggressive and it may
cause difficulty for telcos to achieve high rate of growth unless they are upgrade they
product and services. For example, DiGi has upgraded the new package which is called
DiGi Campus to follow the trend of lifestyle nowadays.

Demographic changes
Population changes in a country can lead to big influence on telecommunication service
industry. According to the statistic from Central Intelligence Agency (CIA) (2009), the
1.723% population growth rate of Malaysia in 2009 est. and 3% annual rate of change in
urbanization had lead more people expose to technology. Besides, it created higher
telecommunication network coverage in urban area as mobile phone had become very
important in urban area. The increasing in population and urbanization in Malaysia had
lead to increasing number of people using telecommunication service. Therefore,
telecommunication service providers such as DiGi will increase their telecommunication
network coverage in urban and rural area and provide cheaper services to respond the
increasing in competition due to the increasing of population.

2.4 Technology
Speeding up and modernization of technology
Technology is widely recognized as a part of organization and industry. Nowadays,
technology significantly improved many industries with their facility and simplicity. It
gives various facilities to their users. Technology is the most important aspect in
telecommunication industry, technology playing a vital role in this industry. It helps the
industry to attract customer with many technological facilities. The most recent

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technology is 3G or third generation, such as DiGi broadband, which provides users with
mobile internet which able to upload pictures, watch videos, and video conference on
their mobile phone.

The National Telecommunication Policy (1994-2020)

Moreover, government also influences the industry in developing the new technology. In
order to support the plan of Vision 2020, Malaysia’s government had issued “The
National Telecommunications Policy” for the 1994-2020 periods. According to Pusat
Maklumat Rakyat (2010) states that the policy formulated to ensure that the growth of
telecommunications services and its use of technology support national development as
well as national aspirations. The telecommunications sector in Malaysia is the fastest
growing sector and it growing rapidly with the invention of the latest equipment and
technology. The national telecommunications policy provide guidelines for the
development of the telecommunications sector in Malaysia as it faces future challenges
and support the attainment of the objectives of Vision 2020 (Malaysia government, n.d.).

2.5 Ecological
Global Warming
Global warming is the greatest environmental challenge that the world is facing today
and everyone has a responsibility to address this issue, whether on an individual,
corporation or industry level. The major factors that cause increasing in global warming
are due to the burning fossil fuels to generate electricity for mobile networks. In fact,
70% of the total energy used by telcos to provide uninterrupted network coverage to all
its subscribers Therefore, as a telecommunication service provider, DiGi is undertaking
Corporate Social Responsibility (CSR) to conserve environment by encouraging e-billing
and 4Rs, which is refuse, reduce, reuse and recycle (DiGi Corporation, 2010).

Climate Change
Climate change is the one of the big major factor that will affect the telecommunication
services. First of all, the phenomenon of climate change happened is due to the changed
in weather patterns which is cause by the rising in global temperatures. The changed in

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weather patterns, such as windstorm or lightning storm will directly affect the quality of
telecommunication network, thus, it cause influences on DiGi telecommunication signal
and resulting in hardness to connect to the telecommunication network. Moreover, due to
the environmental problem, DiGi telecommunication services are lacking in much of the
rural areas in the country, especially in East Malaysia (Asia Pacific Telecom Research,
2009).

2.6 Legal
The Communications and Multimedia Act 1998
The Communications and Multimedia Act 1998 or called CMA98 is a Act that provide
licensing and regulatory framework for telecommunication service industries, and
regulate the converging telecommunication service industries (Sivalingam, 2010). In fact,
DiGi has been licensing by CMA98 to provide telecommunication service. The purpose
of this act is to oversee the development of DiGi telecommunication service industry and
encourage more competition between DiGi and other telecommunication service provider
to provide more reasonable price for our consumers. Furthermore, CMA98 also having a
legislation on Personal Data Protection which is to provide protection to an individual’s
personal data to prevent hacker to access their data. Moreover, the CMA98 sections 223
are established to prevent any abuse on the mobile communication services, such as
indecent and offensive message (Leong, 2001).

3.0 Alternative Scenario

3.1 Scenario 1 - 4G Innovation Network
In future, the 4G network will be bring to Malaysia telecommunication network. 4G is
fourth generation of cellular wireless standards. It is a successor to 3G and 2G standards
which is increased in transmission rates and expected to provide universal access and
device portability by allowing different wireless network to interoperate (Hewitt, 2009).
In economic view on 4G innovation network, 4G will provide affordable services to
attract more consumers to try the 4G. Therefore, it will cause growth in
telecommunication services market and create aggressive competitive in
telecommunication services market. Moreover, in social-cultural view, the innovation of

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4G networks will give people in Malaysia a truly connected lifestyle and new levels of
communication freedom. It will also cause increasing in social networking because more
will be attracted to try the new 4G networks. Besides, in technology view on 4G.
Nowadays, 4G is the most advanced wireless technology which will help to expanding
the innovation of the telecommunication product and services in Malaysia and providing
new opportunities for mobile applications. Furthermore, in environment view on 4G. The
extensive of 4G network will allow Malaysian in both urban and rural areas to live the
connected life and enjoy converged services (YTL, 2009).

Impact of scenario 1
Positive Impact
The innovation of 4G network brings more reliable network connection speed and 6
times faster than today’s wireless network to telecommunication services industry and
consumers. Moreover, the cost of innovate 4G network is lower than the previous
generations of cellular wireless standards, which is 1G, 2G and 3G. Because of new
technology of 4G, it will increase in regulation likely such as no driving and using a cell
phone (Ahmad et al., 2003).

Negative Impact
The implementation of 4G network is barriers to progress than previous version because
the market place for 4G maybe not good than previous version if less people make the
conversion to 4G. Therefore, no telecommunication service provider has incentive to
move to 4G unless all providers move to 4G. Besides that, the increase of social
networking will increase the invasion of privacy as more people join the 4G network
(Ahmad et al., 2003).. Thus, it will increase people security concerns about the network
crime. Due to the innovation of 4G network, more people may have the decision on
conversion to 4G. Therefore, it will decrease the sales of 3G products, such as DiGi
iPhone 3G package.

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Recommendation to scenario 1
Before implement the 4G network, DiGi should do the research on the number of users
intend to makes the conversion to 4G in order to prevent any loss in 4G innovation
network. Besides, DiGi should establish a website by providing information to educate
users to prevent invasion of privacy. DiGi also should develop the security system
technology to handle security problem that cause by the new 4G network. In order to
prevent any loss in 3G market value, DiGi should provide more promotion to increase the
sales of 3G product.

3.2 Scenario 2 - Continuous growth in population in future

According to the statistic from The World Bank (2009), in year 2000, the total Malaysia
population is only 23million, but now the population is increased to 27million. Therefore,
there is no doubt that the population of Malaysia in future will continuous growing in the
future. In order to support the increasing of demand for telecommunication services due
to the growth in population, more telecommunication tower is needed in future. As a
result, the telecommunication network coverage will increase. In social-cultural view, the
increase in telecommunication network coverage will increase the living standard of
people. However, more people will concern the effect of telecommunication tower and
increase of public awareness to the radiation by telecommunication tower. In economic
view, the growth of population will create more aggressive in pricing competitive
between telcos as the demand of telecommunication services increase. The more demand
for telecommunication services, the more investor will be interesting to develop the
telecommunication industry. Therefore, it will lead to increase in investment to
telecommunication service industry.

Impact of scenario 2
Positive impact
The continuous growth of populations will lead to improvement in telecommunication
services, more cheaper service will be intro to market because of the pricing competition
between the telcos. Moreover, more advance telecommunication services will be provide
to people in underserved area as the increasing in telecommunication tower in future. For

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example, DiGi has further broadened its network and made its mobile internet services
available in Ipoh, Perak and Kuching, Sarawak to fulfil the increasing in demand of
mobile internet services due to growth in population (DiGi Corporation, 2010).

Negative impact
However, there is not easy to build a telecommunication tower. First of all, there is time
consuming in building telecommunication tower, before build a telecommunication tower
need to do a lot of research on place or land. In addition, there is quite costly in building a
telecommunication tower. Besides that, the more telecommunication tower is builded, the
more energy consumption is needed as the telecommunication service industry consume
huge amount of energy which had been explain in environment factor above.

Recommendation to scenario 2
In order to overcome the impact of scenario 2, more Research and Development (R&D)
should implement by DiGi to improve the technology of telecommunication services,
such as more advance technology that provide wide range of mobile service coverage.
DiGi also should improve their strategy planning to gain more market share in the
competitive market. Moreover, DiGi should move toward to environmental friendly
company by using solar power to reduce the huge amount of energy consumption by
telecommunication service industry.

3.3 Scenario 3 - Electronic Wallets (eWallets)

Electronic Wallets (eWallets) allows users to make electronic commerce transactions,
such as e-cash services. eWallets has been developed by Near-Field Communications
(NFC) to enabled smart-phone to make point-of-sale payments worldwide. In japan,
people can already use their smart-phone to make payment, such as paying meals in
restaurant. Therefore, there is no doubt that telecommunication industry in future will
implement the eWallets system. In fact, telecommunication service provider plays a very
important role in implement eWallet because eWallets is using telecommunication
services to make payment (Johnson, 2010). In economic view, the eWallet lead to new
business models and new entrants to the market. More new thing and innovation of

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product and services will be coming out due to the new payment system. Therefore, it
will increase in competition in the market. Moreover, in socio-cultural view, the eWallet
system will bring new trends to the society; more people will be using the new system as
the system is very convenient for people to make payment. Thus, it will change people
buying behaviour. However, it will also increase public security concerns about their own
smart-phone.

Impact of scenario 3
Positive impact
By implement this eWallet system, telecommunication service industry and other
industry will gain increasing in revenue because new payment system will lead to
increasing in consumer consumption as eWallet is a convenience tools to make payment.
Another positive impact is we can save the environment by using eWallet because make
payment without receipt paper will save a lot of paper. As a result, it will reduce the
deforestation in the world.

Negative impact
However, the crime rate of smart-phone and telecommunication service will increase.
The smart-phone robber and hacker of telecommunication will increase because smart-
phone is equal our wallet as we use the smart-phone to make payment.

Recommendation to scenario 3
DiGi should increase the security system to prevent any hacker to inbreak consumer data.
For example, make a system to enter password when making payment with smart-phone.
Every new system may have many potential problem or bug inside, therefore, DiGi
should take more concentrate to the development in eWallet in order to make more
efficient and securely in transaction

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4.0 Conclusion
The impact of each environment is impact for telecommunication service industry in
Malaysia. It plays an essential role in a country’s economy. Therefore,
telecommunication service industry needs to improve itself for the development of a
country. Scenario planning is also very important for telecommunication service industry.
It may help to develop future plan and think of possible variation in telecommunication
service industry. With these planning, telecommunication service industry may be more
flourishing among other industries.

(2988 words)

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