As the government reconsiders Digital Nasional Berhad’s current model to deploy 5G, GSMA has shared more insights about single wholesale networks (SWNs) and its implication to Malaysia. While network sharing can help to address concerns of deployment cost and speed up deployment, Malaysia’s approach of deploying 5G through a state-owned SWN is viewed as risky and may threaten Malaysia’s digital competitiveness.
Digital Nasional Berhad is a state-owned company under the Ministry of Finance that has been mandated to roll out a national network. They have been assigned the 700MHz, 3.5GHz and 26/28GHz spectrum to offer access to telcos via a wholesale agreement.
GSMA Head of Asia Pacific Julian Gorman reiterates that Malaysia has a thriving mobile sector but the current 5G rollout plan remains unproven. He said the existing licensing framework provides a competitive dynamic, with a landscape of four national mobile network operators (MNOs) as well as mobile virtual network operators (MVNOs) that have resulted in significant growth and innovation in mobile applications and services over the years.
He added that telcos have made significant investments in building up 5G capabilities in anticipation of regulators making the 5G spectrum available to switch on their networks. At the moment, there are 172 live 5G networks in 68 countries worldwide which show that the technology is ready and can be deployed rapidly.
The latest GSMA Intelligence report highlighted a steady rise in the development of network sharing deals among operators over the past 20 years. The network sharing agreements allow telcos to leverage common network assets to reduce cost, expand coverage, and improve quality.
Single wholesale networks are government-initiated network monopolies
The report described SWNs as government-initiated network monopolies that compel telcos to rely on SWN-delivered wholesale services to serve and compete for customers. Unlike the usual network sharing agreements, SWNs are not voluntary and they don’t give telcos the flexibility to determine the best arrangement for sharing.
Some of the theoretical downsides for the non-market-based approach taken by SWNs include insufficient investment allocation, lengthy commercial negotiations with operators, reduced innovation, complex wholesale price setting, and a slower transition to new technology generations.
As highlighted by GSMA Intelligence’s report in September, there’s a clear history of risks associated with monopoly service provision. During 4G deployment, some countries have considered a move to SWN with the expectation that it could achieve greater coverage compared to traditional network deployment, however, this has not been the case.
GSMA said evidence has shown that SWNs have not been successful in delivering the promised “better and cheaper” network. It added that there are currently 3 SWNs that are operational – Mexico, Belarus and Rwanda, each having its own challenges affecting rollout speed, service quality and profitability. The SWN in Mexico has sought bankruptcy protection while Russia, Kenya and South Africa have abandoned their SWN projects.
GSMA believes that a pragmatic approach is needed by all parties to ensure that DNB delivers the next-generation connectivity that Malaysia needs. It said Ericsson, DNB’s appointed vendor for the 5G rollout, is an established partner with a proven track record of delivering best-in-class 5G services.
As highlighted in a DT Economics report that’s commissioned by GSMA, there’s a lack of clarity on DNB’s mandate and the regulatory framework under which it will be governed. To mitigate the risks associated with the current 5G model, it said Malaysia has to focus on three things:
- Clarity of DNB’s mandate and regular monitoring of its performance against its strategic objectives
- Introduce a fit for purpose wholesale regulatory regime at the same time as the DNB starts its commercial operations
- Retain flexibility to allow alternative delivery options for 5G networks and services in Malaysia
Malaysia to decide on DNB’s single wholesale model by January 2022
Communications and Multimedia Minister Tan Sri Annuar Musa has shared that the government is reconsidering the single wholesale model for the national 5G network. To gather feedback, he has instructed DNB to conduct engagement sessions with Members of Parliament including the opposition.
DT Economics mengemukakan 8 risiko berkait dengan Digital National Berhad (DNB), berdasarkan pembelajaran daripada 4 ‘case study’ termasuk cadangan strategi untuk mengurangkan risiko. InshAllah saya dan warga KKMM akan meneliti secara menyeluruh. pic.twitter.com/PDppRZCHDj— Annuar Musa (@AnnuarMusa) September 3, 2021
The Minister acknowledges the concerns about the SWN model and said the government has taken the stand to revisit the issue without siding any parties. Both Communications and Finance Ministries will issue a joint paper that will be brought forward to the cabinet. The government aims to make a decision by next month.
Lembah Pantai MP Fahmi Fadzil recently asked the minister about the technology neutrality aspect of the existing spectrum. Annuar explained that the telcos technically could roll out 5G using their existing spectrum but they were not permitted as it will affect DNB’s wholesale model. The Malaysian Communications and Multimedia Commission (MCMC) had recently removed the technology neutrality aspect of the current spectrum which prevents telcos from rolling out their own 5G network. Annuar said this is something that can be relooked at in depth.
At the moment, DNB has yet to secure a commercial wholesale deal with telcos but it has assured that its network is ready for service on the 15th December 2021. Before the Reference Access Offer (RAO) is finalised, DNB is offering free 5G access to telcos until 31st March 2022. So far, only TM has committed to offering 5G user trial which will be offered to Unifi Mobile postpaid users.
Even before DNB was announced, local telcos including Celcom, Maxis, TM, Digi and U Mobile have announced collaborations to share their networks to enable the cost-effective and efficient rollout of 5G in Malaysia. Early this year, Celcom, Digi and Maxis have also signed an agreement to develop and share fibre infrastructure to deploy fibre backhaul to mobile base stations to improve 4G connectivity.
Under the previous Pakatan Harapan administration, Malaysia was supposed to launch 5G services in Q3 2020 through a private-led consortium. Malaysia currently lags behind its neighbours in the 5G race and it appears that commercial availability will be delayed further if telcos are reluctant to sign with DNB.
- DNB aims to seal 5G agreement with telcos by end-March 2022 but users can “experience” 5G this month
- After govt delays 5G for over a year, Tengku Zafrul says telcos failed to deliver 5G under a private-led consortium
- Malaysia govt may consider allowing telcos to rollout 5G with existing 4G spectrum
- Before Malaysia decides on 5G single wholesale model, DNB told to engage with opposition MPs
- Govt might scrap DNB’s single 5G wholesale network model