Can telcos subsidise rural Internet services with city profits?

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Telcos Can Consider Subsidising Rural Internet Services With City Profits

Telecommunication companies (telcos) can consider subsidising the cost of providing equally good Internet services to rural subscribers by utilising profits generated from urban areas. This suggestion was put forth by the Minister of Telecommunication and Multimedia, Tan Sri Annuar Musa, who stressed that rural populations are entitled to quality Internet access, irrespective of commercial viability. He acknowledged that areas with low population concentration are often not commercially attractive for telcos, leading them to prioritise investments in densely populated urban locations.
Rationale for Rural Internet Subsidisation

The minister's proposal stems from the principle that all citizens, including those in rural areas, deserve access to quality Internet services. He highlighted that telcos operate within a regulated environment, with the government controlling licensing, which protects their business interests. Therefore, it is reasonable to expect these companies to demonstrate a degree of corporate social responsibility by contributing to the equitable distribution of digital services.
Commercial Viability and Subsidy Basis

Annuar Musa explained that the lower population density in rural areas makes them less commercially appealing for telecommunication companies compared to cities. However, he suggested that telcos could adopt a subsidy model, where profits earned from their urban operations are used to offset the expenses of extending high-quality services to less profitable rural regions. This approach aims to bridge the digital divide by ensuring that geographical location does not prevent access to essential communication infrastructure.
Government's Role in Infrastructure Development

The federal government is actively involved in improving Internet infrastructure, particularly in Sarawak. A sum of RM4 billion has been allocated to upgrade existing telecommunication towers and construct new ones across the state by the end of the following year. These upgrades are intended to bring connectivity speeds up to 4G. Additionally, the state government is contributing by building approximately 300 towers to support areas not covered by federal funding, thereby accelerating the rollout of 4G Internet access.

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Can telcos subsidise rural Internet services with city profits?

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