Over technological advancement that could have possibly got from

the last two decades, the information technology and communications industries
have seen a tremendous boom fuelled by technological advances. The high returns
that these industries offer have attracted the attention of the businesses
sector, which resulted in substantial investment. However this attention was
not confined to the business world alone. Economist also interested in learning
more about information technology and telecommunications and their effect on
economic productivity and growth.

is the exchange of information in electronic and electricity over long
distances. The composition of the complete telecommunications made for two or
more stations that are in transmitter and receiver devices. The
arrangement with transmitter and receiver has been called transceiver. It may
also be used in many telecommunication stations. Telecommunication device are
including telephone, telegraph, radio, optical fiber, satellite and Internet
and also known as telecom. Telecommunications is a universal term used for a
variety of information transmission technology such as cell phones, land-line
and broadcast networks. In telecommunications, data is transmitted in the form
of an electrical signal known as a carrier wave, modulated into analog or
digital signals to transmit information. Analog modulation such as that used in radio broadcasting
is an amplitude modulation. Digital modulation is just an updated form of this.

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simplest form of telecommunications takes place between two stations, but it is
common for multiple transmitting and receiving stations to exchange data among
them. Telecommunication industry has probably the highest level of direct
network effects. Direct externalities are related to the number of consumers
using the same service, and indirect externalities stem from the availability
of supporting services. Apart from network externalities, in telecommunication
call externalities also exist when user of one network benefits from receiving
free calls from users of other networks.

world without telecommunications would not be possible; society has made itself
so used to this type of technology that the world would end up collapsing if it
was taken away. The reason for the tremendous growth of telecommunications is
because as people and cities throughout the planet grew a better way to relay
messages between one another are needed. The greatest technological advancement
that could have possibly got from this is the creation of phone and the
Internet. The phone was a major piece of communication, whereby you could
instantly communicate with another person that was on the other side of the
world. Almost every household now has at least one phone.

telecommunications services sector slots into the national economy through the
financial flows it sets up with other economic players. The macroeconomic role
can be assessed by demand it generates from the rest of the economy. In
addition, the global effects of this demand for the goods and services needed
for current operation and extension of the telecommunications network. There is
the impact of the spending patterns of the economic players receiving the
telecommunications service especially for the increases in purchasing power
that everyone enjoys following tariff reductions. The
existence of a powerful telecommunications network helps the development of the

contribution of telecommunications infrastructure to the country’s economic
growth can be seen from many aspects as a tool for delivering information
efficiently, lower transaction costs, create network externalities, increase
efficiency, productivity living standards and create job opportunities. Telecommunication
infrastructure can reduce transaction costs and enable more information to be obtained
faster. There are two effects on low transaction costs resulting from
infrastructure modern telecommunications.

can enhance implementation activities and administration more quickly and effectively.
Because the information presented in a timely manner can avoid the
problem of information uncertainty and help the organization make decisions and
directly improve organizational productivity.

is the importance of modern telecommunications infrastructure in rural areas. The
development of telecommunications infrastructure in rural areas could lower the
transaction costs and increase market efficiency and growth in the agriculture
sector. This is because agricultural products can be marketed out of the rural
areas and the agricultural goods market becomes wider. The buyer and seller can
communicate easily no matter where they are using the modern

 Apart from reducing transaction costs in
delivering information fast and efficient, modern telecommunications
infrastructure can also replace production input functions such as labor in the
production process. The rapid development of telecommunications
infrastructure technology has changed universal life, especially after the
existence of a mobile phone.

than that, the criteria that make telecommunication infrastructure different
from other infrastructure are network externalities. Network
externalities exist when more and more users enjoy the benefits. This
means usage of telephone service by a user gives a benefit to other users with a
telephone line. Therefore, telecommunications infrastructure can indirectly
generate economic growth as a result of network externalities. The investment
generated in telecommunications industry is not only for benefited but
also sparked the overwhelming effect of the services and administration of
other sectors such as banking, finance, manufacturing and agriculture.

if a country has a broad telecommunications network, it will give a big impact
on economic growth. However, the contribution of telecommunications
infrastructure development in improving the economic growth of a country
depends on the critical mass of the telecommunications infrastructure. This
means that prior to the development of telecommunication infrastructure of the
country reached the level of critical mass. In most countries, the first
historical figure and developed telecommunication infrastructure is
concentrated in urban areas and ports. This is because both areas have a rapid
economic activity.

that, the development of telecommunication infrastructure is needed to
facilitate administrative matters, support economic activities and increase
efficiency and productivity. However, the development of
telecommunications infrastructure in rural areas is also needed in order to
develop rural areas alongside urban areas. The development of
telecommunications infrastructure can connect rural areas with cities, increase
rural economic activity and increase their contribution to national economic
growth. This situation can indirectly improve the living standard of rural

the rapid development of telecommunications infrastructure can reduce transportation
and transaction costs. It also will increase market information and increase
the efficiency of production of the agriculture, manufacturing and services
sectors. In addition to reducing transaction costs, telecommunications
infrastructure also creates job opportunities, narrowing the gap between the
rural and urban areas and improving the living standards of the population.

modernization of the telecommunications infrastructure in the era of
technological developments and the emergence of the Internet makes the
acquisition and achievement information is limitless. The
industries are able to apply and utilize telecommunications infrastructure in
administrative or production affairs. It also enables the industry to enjoy
cost-saving which creates job opportunities and raises economic growth. These
cost savings will be transferred to customers, employees and shareholders.

Telecommunications industry
development in Malaysia

telecommunications industry in Malaysia has been in existence since 1946 and
the Telecommunication Department of Malaysia is a pioneer company. The
name of the Telekom Malaysia Department was changed to the Company Telekom
Malaysia Berhad when it was privatized in 1987. When the Company Telekom
Malaysia Berhad was incorporated and listed on the Kuala Lumpur Stock Exchange
in 1990, its name was changed again to Telekom Malaysia Berhad. Since the
establishment, Telekom Malaysia Berhad has been offering various services
including fixed line services, international lines such as International Direct
Dialing, mobile phone service (TMTouch) and Internet services (TMNet).

1985, the government broke the monopoly status Syarikat Telekom Malaysia Berhad
to offer licenses to private telecommunications companies to encourage
competition in the industry with the progress of information technology.
move has witnessed the entry of eleven private telecommunications companies
namely Celcom (M) Sendirian Berhad, Malaysian Resources Corporations Berhad,
DiGi Telecommunications Limited, Sapura Holdings Limited, Electronic and
Telematique (M) Limited, Maxis Communications Limited, Mobikom Sendirian
Berhad, Time dotCom Berhad, PrismaNet (M) Berhad, MIMOS (Malaysian Institute of
Microelectronic Systems) Berhad and NTT MSC (Nippon Telegraph and Telephone and
Multimedia Super Corridor).

 However, fierce competition among
telecommunications companies involved the problem of duplication and
inefficient use of resources. Followed by the recession of 1997-1998, it has
led up to now only three companies that still operate in providing mobile
service. These companies are Celcom (M). Maxis Communications
Berhad, and DiGi Telecommunications Sendirian Berhad. At the end of May 2002,
Telekom Malaysia Berhad acquired Celcom (M) Limited to expand and expand its
mobile service and coverage.

telecommunications industry is experiencing rapid growth especially in mobile
service. The rapid growth of mobile lines is due to the tendency
of customers to prioritize mobile lines over fixed lines. This is because the
physical features of the small, portable, multifunctional mobile phones have
multiple functions at affordable prices, making mobile phones very important
for their day-to-day business over a fixed line. In addition, the introduction of
systems that are increasingly popular prepaid customers and the quality of
services is increasing with the range of products that meet the needs of
customers has managed to raise the penetration rate of mobile service.



effect of telecommunications development and investment on productivity growth
in the telecommunications sector has not been extensively explored unlike its
effect on economic growth. However, findings from this area of inquiry have
major policy implications as governments especially those from developing
countries grapple over decisions regarding the efficiency effects of

is positively and significantly associated with growth in teledensity when attempted
to study the effects of privatization and competition on network expansion and
efficiency. Invariably, as teledensity grows due to the increase in
telecommunications investment, efficiency improvements are expected to go hand
in hand. In effect, telecommunications investment may as well deliver requisite
and significant resources in terms of communication technologies and revenues,
yet the level of economic growth with its associated distributional impacts may
be suboptimal because of the way governments harness and allocate these resources.

this regard we hypothesize that the impact telecommunications operations may
have on economic growth is a factor of host country-specific factors and
policies. Revenues that are generated from telecommunications provision can
contribute significantly to economic growth but there are arguments about
whether developing countries really benefit from them. The low levels of
economic growth in these countries have partly been attributed to this
development. Indeed, the role of telecommunications infrastructure
should be taken into account in empirical studies pertaining to the economic
growth of a country.

infrastructure investment affects economic growth similar to other
infrastructure investment. However, the impact of telecommunications
infrastructure on economic growth is greater than other infrastructure
investments. This is because the benefits derived from investment in
telecommunications infrastructure are much higher if the quality of
telecommunications infrastructure services is enhanced due to the development
of information and information technology era. The investment
contribution of telecommunications infrastructure to the country’s economic
growth can be seen from various aspects as efficient delivery of information,
providing network externalities, lowering transaction costs, increasing
efficiency, productivity, living standards and creating job opportunities.