MCMC insists govt entity approach for 5G will be transparent, private sector will be involved

The Malaysian Communications and Multimedia Commission (MCMC) has issued a statement to provide greater clarity on the recent briefing of the proposed Special Purpose Vehicle (SPV) for 5G rollout. As announced during the launch of MyDigital, Malaysia aims to launch full range of commercial 5G services by Q4 2021.

According to the MCMC, they will be focused on encouraging the right investments in the right areas to enable services that are innovative and truly game-changing for consumers, enterprises and the country, while minimising the digital divide.

As announced earlier, the 5G spectrum and the role of building the infrastructure will be handled by a government entity which will be regulated by the MCMC. This is to remove the burden of 5G investments from the existing telcos and to ensure that they can continue to roll out fibre and improve existing 4G coverage and quality.

The MCMC also said that the private sector will be involved in the 5G roll out and more details will be provided by the SPV in due course. It also iterated that the spectrum will be assigned directly to the SPV to build the 5G network and they will offer capacity to telcos via a wholesale agreement. It also mentioned that existing available network elements will be used and not laid new.

The statement also mentioned that the SPV’s service offering via wholesale will be done in a transparent and regulated manner to ensure that all service providers will have an open, fair and equal access to the new network. It aims to reduce infrastructure-based competition and to enhance a service-based competition that will benefit consumers. This is done while reducing foreign outflow for the purchase of new equipment compared to having multiple telcos building out their networks.

The MCMC said that with this approach, the retail service providers can invest into more innovative services that will help them generate better income while end users are able to access new services to boost the digital economy.

The move to bring forward 5G rollout to the end of this year has surprised a lot of industry players in Malaysia. The approach of forming a government entity had caught a lot of people by surprise especially when the previous administration had proposed awarding the spectrum to a single consortium that consists of private companies to deploy 5G.

MCMC’s latest statement came after Fitch Solutions had issued a commentary claiming that the government-driven approach would drive wholesale costs up, hurt operator margins and hamper the development of 5G services in Malaysia. It mentioned that a similar government-led infrastructure project such as Australia’s National Broadband Network (NBN) had shown cost overruns and operators had to invest heavily on their own 5G fixed-wireless networks to reduce its reliance on the NBN wholesale capacity.

Fitch foresees a similar scenario for Malaysia and telcos would have to focus in other areas to grow their revenues, such as unlicensed private 5G networks. It also added that the current administration would face a political test when snap elections are held after Malaysia’s state of emergency is lifted later this year. If there’s another change of administration, it predicts that the current proposed policy might be withdrawn in favour for a spectrum auction which is practiced by most countries.

Under MyDigital, the 5G rollout will involve an investment of RM15 billion over a period of 10 years. That’s double the estimated RM7.5 billion required investment to deploy 5G according to MCMC’s national 5G Task Force report released in January 2020. The Ministry of Finance has yet to provide details on the formation of the SPV and the parties that would be involved in deployment of infrastructure.

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