As Malaysia aims to launch 5G by the end of this year, the commercial rollout via Digital Nasional Berhad was discussed briefly in Parliament on Monday. Based on the responses to questions from MPs, it appears that Deputy Communications and Multimedia Minister Datuk Zahidi Zainul Abidin is clueless about the role of the Malaysian Communications and Multimedia Commission (MCMC) and why the current administration decided on forming Digital Nasional Berhad, a special purpose vehicle (SPV) under the Ministry of Finance (MoF), to operate as a single-wholesale-network.
Responding to Kuala Langat MP, Dr. Xavier Jayakumar, Zahidi said DNB was established by the MoF as an SPV to handle the 5G project and they took over the powers of the MCMC to deploy 5G. He added that the board of directors (of DNB) are mostly from MoF while the top management are mostly foreigners and they negotiate with Ericsson. He said that MoF and Ericsson have taken over the project but the MCMC will continue to control the pricing so that Malaysians won’t be burdened by the pricing.
On the question of why Telekom Malaysia is not handling 5G, Zahidi said this was the strategy by the Ministry of Finance because there’s no “backbone” and we will have to rely on companies such as Maxis and TM.
Interestingly, Zahidi also brought up revenues made by other countries when 5G spectrum is auctioned out. He said Germany was making over RM35 billion, Thailand around RM25 billion and some other countries were making about RM12 billion. For Malaysia, he estimated that Malaysia could be making about RM10 billion if it were to auction out the spectrum. However, he said the spectrum is handled by DNB and Ericsson, not the MCMC.
When Muar MP Syed Saddiq called for further scrutinity on DNB’s RM11 billion funding, Zahidi responded by also asking why the 5G spectrum was “sold” to DNB when it was supposed to be given to the Malaysian Communications and Multimedia Commission (MCMC). He said MCMC has the power under the Act and not DNB. Therefore, MCMC should have full control and if Maxis wants to request for spectrum, they can request from them and TM could also do the same.
Zahidi added because of the conditions by the MoF, which probably due to their financial strategy or certain 5G technology which we do not know, it is handed over to them. He emphasised that his ministry wants to know about the pricing because it is within their jurisdiction. Zahidi said if the 5G pricing goes up, they will take necessary action but any other questions must be directed to DNB.
Ledang MP Syed Ibrahim also asked the Deputy Minister why 700MHz, 3.5GHz, 26GHz and 28GHz were the only spectrum bands identified for 5G use in Malaysia and what is the ministry’s preparation to solve any issues that may occur on the C-band frequency. Zahidi simply replied that the Ledang MP should direct his questions to DNB as the spectrum has been handed over to them.
He also said DNB has the expertise to answer because some of them are formerly from the MCMC.
Things that don’t make sense
It is surprising that the Deputy Minister of the Communications and Multimedia does not know why the current administration has decided on rolling out 5G through a single-wholesale-network and why DNB was formed in the first place. This is a worrying sign that the decision makers in the ministry are not on the same page. His claims that the 5G spectrum was “sold” to DNB is not true as the spectrum was assigned through a direct award. On top of that, the spectrum doesn’t need to be assigned to the MCMC, as it is a regulator and not a telco.
The direct award of the spectrum to DNB has been a talking point by the opposition. Pejuang Youth issued a statement last month claiming that the Malaysian government could lose a potential profit of RM5 billion if the spectrum was given out through an open tender. Meanwhile, Pakatan Harapan said the direct award of the spectrum to DNB poses a loss of RM7 billion to 12 billion in revenue to the government.
Even with the spectrum awarded to DNB, the MCMC still has the authority over the spectrum and it is weird for Zahidi to push the responsibility to DNB which is merely a licensee.
Zahidi Zainul is no stranger to making gaffes inside and outside Parliament. Last year he faced public backlash for calling Veveonah a fraud. Shortly after that, he told reporters that the government is introducing an eCommerce tax which his own ministry has denied. He even blamed voters for causing political instability in October last year.
What took the cake was Zahidi blaming the MCMC, a regulatory under his own ministry, for not doing anything to improve internet connectivity in underserved areas while responding to a question in Parliament.
MCMC’s role in managing 5G spectrum and services
During our earlier interview with MCMC Chairman Dr Fadhlullah Suhaimi, he explained that the SPV approach would forgo the auction process. Typically, the government would get funds out of the auction, but the cost of the auction is be borned by the telcos which would eventually be passed down to consumers. By forgoing the spectrum auction through a direct award to DNB, it would reduce cost but Dr Fadhlullah emphassised that the spectrum still belongs to the country as it is a national resource.
DNB as a licensee would still be subjected to the regulatory oversight of the MCMC and they will be treated like any other licensed telco in Malaysia. Under the Communications and Multimedia Act 1998, the MCMC can take action against licensed telcos if they do not adhere to the requirements of the licence.
As mentioned by the Chairman, there will be mandatory standard access pricing for the 5G wholesale service but they won’t regulate the retail prices. He said it won’t be wise for MCMC to regulate the retail pricing as it would be ideal to have an open market where consumers can benefit from high competition. The MCMC is looking at reducing big ticket items on cost so that the wholesale price is low and this help ensure that the retail products are priced favourably for the end user consumers.
According to DNB, it aims to turn on a total of 500 sites in Cyberjaya, Putrajaya and selected areas of Kuala Lumpur by the end of this year. It claims that its 5G network will deliver 100Mbps at the cell-edge and it targets to hit 80% population coverage in 2024.