Malaysia’s 5G conflict explained

Free Malaysia Today

Malaysia's 5G journey has been full of twists and turns, with billions at stake as the country navigates its complex rollout. Explore how the shift to a dual network system could reshape competition, infrastructure, and consumer benefits, and discover why getting it right is crucial for the nation’s digital future.   Read More: https://www.freemalaysiatoday.com/category/nation/2024/08/27/malaysias-5g-conflict-explained/   Free Malaysia Today is an independent, bi-lingual news portal with a focus on Malaysian current affairs.    Subscribe to our channel - http://bit.ly/2Qo08ry   ------------------------------------------------------------------------------------------------------------------------------------------------------  Check us out at https://www.freemalaysiatoday.com  Follow FMT on Facebook: https://bit.ly/49JJoo5  Follow FMT on Dailymotion: https://bit.ly/2WGITHM  Follow FMT on X: https://bit.ly/48zARSW  Follow FMT on Instagram: https://bit.ly/48Cq76h  Follow FMT on TikTok : https://bit.ly/3uKuQFp  Follow FMT Berita on TikTok: https://bit.ly/48vpnQG  Follow FMT Telegram - https://bit.ly/42VyzMX  Follow FMT LinkedIn - https://bit.ly/42YytEb  Follow FMT Lifestyle on Instagram: https://bit.ly/42WrsUj  Follow FMT on WhatsApp: https://bit.ly/49GMbxW  ------------------------------------------------------------------------------------------------------------------------------------------------------  Download FMT News App:  Google Play – http://bit.ly/2YSuV46  App Store – https://apple.co/2HNH7gZ  Huawei AppGallery - https://bit.ly/2D2OpNP   #FMTBusiness #5G #DNB #Network #Telco

Transcript

00:005G has the capability to transform our lives.

00:09Like 4G, which brought us social media, e-commerce, gaming, streaming services, and e-learning,

00:165G is poised to create trillion-dollar industries and unlock unprecedented opportunities.

00:29This next-generation network promises to be a game-changer, revolutionizing industries

00:34such as healthcare, business, manufacturing, and smart infrastructure, and potentially

00:39being a catalyst for economic growth and improving income levels.

00:44But for Malaysia, the path to 5G isn't just about technology.

00:48It's also about navigating complex policies and market dynamics.

00:53The story of Malaysia's 5G rollout began in 2021, when the government established Digital

00:58Nasional Berhad, or DNB.

01:01Tasked with leading the rollout, DNB was created as a Single Wholesale Network, or SWN.

01:07But what exactly does that mean?

01:09In an SWN model, DNB, with the help of Ericsson, will build and own the nation's 5G infrastructure,

01:17and then sell access to this network to telecommunication companies, who will then compete to offer

01:235G services to consumers.

01:25This model aims to reduce costs, ensure widespread coverage by avoiding redundant infrastructure

01:30development, and create a level playing field for all telcos.

01:34However, the establishment of an SWN also raised concerns about creating a monopoly.

01:41Critics worried that having one company control the entire 5G infrastructure could stifle

01:45competition, limit innovation, and give DNB and Ericsson too much power over the market.

01:52In 2022, as a response, the government decided to divest 70% of its shares in DNB to telco

01:59companies under a shared subscription agreement.

02:02This move made the telcos both shareholders and customers, which raised concerns about

02:07potential conflicts of interest.

02:10In 2023, Prime Minister Anwar Ibrahim announced a review of DNB's 5G rollout strategy.

02:16The government proposed introducing a second 5G network, transitioning from an SWN model

02:21to a dual-network model run by telecommunication companies selected through a bidding process.

02:28The goal was to break DNB's monopoly and foster competition for better prices and better services.

02:34We want to have healthy competition.

02:37When there's healthy competition in the market, it's the end-users that will benefit.

02:40It's the rakyat that will benefit.

02:42The government also hinted at a strategic partnership with Huawei from China for the

02:46second network, aiming to balance geopolitical relationships with the West's Ericsson.

02:52And I believe rightly that once we get the best from the West, we also benefit the best

03:00from the East.

03:02Despite concerns about monopolistic practices, DNB seems to have delivered on its targets.

03:08Malaysia now has the fastest 5G speed in Southeast Asia and has achieved 80% coverage in just

03:13two years.

03:15This success raises a critical question.

03:17Is a second network necessary to achieve better services?

03:20More importantly, how can we make sure it complies with the law?

03:24The introduction of a second network could potentially violate Section 133 of the Communications

03:29and Multimedia Act 1998, which prohibits actions that diminish competition.

03:34Currently, the government owns 30% of DNB, with the rest held by telcos.

03:40These telcos have seats on DNB's board, positioning them as both shareholders and

03:45customers.

03:46This dual role raises conflict of interest concerns, especially when it comes to the

03:50government's decision on which telco to award the second network.

04:10There are also concerns that the second network would play by different rules.

04:19Under the SWN model, DNB must go through telcos before reaching consumers.

04:25In contrast, a second network owned by a private telco could sell directly to consumers.

04:41To proceed with a second operator with different rules, that is not right.

04:47So I think whatever is not right, we have to say it's not right.

04:52Experts have called for a re-evaluation of the move to dismantle DNB's monopoly.

04:56Of course, a strategic pause will allow time to reassess the financial implications and

05:03also to ensure the cost-effectiveness of the deployment.

05:07And definitely it also ensures that infrastructure investments are aligned with, of course, national

05:13interest and economic stability.

05:16It also facilitates better coordination between different stakeholders, including government,

05:21network providers, consumer groups, and ensuring that the rollout meets the needs of all consumers

05:27equitably.

05:29Now that things are turning out well for DNB, and they're performing with high speeds and

05:33Maybe it's time to reconsider sticking to the initial plan of the SWN model.

05:38To understand why some are advocating for a single network, let's take a look at how

05:42the telco industry worked in the past.

05:45Imagine the industry only needs four towers.

05:48No more, no less.

05:51Say each tower costs one ringgit.

05:53However, in the 4G model, each telco builds four towers because they're competing.

06:00This results in duplication, meaning you'd end up with 16 towers in total, costing the

06:05entire industry 16 ringgit.

06:08Now in the 5G model, since the industry only needs four towers, DNB would build those four

06:14towers at a cost of 4 ringgit.

06:17Then they'd rent out 5G services to the telcos for 2 ringgit each.

06:22So DNB would make 8 ringgit.

06:25Taking away the costs for building the towers, we're left with an extra 4 ringgit, which

06:30could be reinvested in improving infrastructure, especially in rural areas.

06:35Now consider the impact on consumers.

06:38In the 4G scenario, each individual telco would spend 4 ringgit on towers.

06:43Say to make a 2 ringgit profit, they'd have to charge consumers 6 ringgit.

06:50But with the 5G model, telcos only need to rent the service from DNB for 2 ringgit.

06:56If they still want to make that 2 ringgit profit, they'd only need to charge consumers

07:004 ringgit.

07:02So you can see that in the 4G model, consumers get charged 6 ringgit, while in the 5G model,

07:09they get charged 4 ringgit.

07:13It's clear that with 5G, consumers end up paying less.

07:17While DNB's success demonstrates the potential benefits of a unified network, the call for

07:21competition highlights the desire for innovation and consumer choice.

07:26The challenge lies in balancing these priorities to ensure the best outcome for Malaysians.

07:31The ideal situation might involve maintaining the SWN model's efficiency, while introducing

07:36measures to enhance transparency and governance.

07:40This could involve having an independent body run DNB's operations, without telcos having

07:45a share, to ensure neutrality and a level playing field.

07:49If DNB wants to stay as is, then there should not be any second operator, just one operator.

07:56The service provider, the MNOs, should not be the shareholders of DNB.

08:01DNB should stand alone, be neutral.

08:04To recap, the 5G rollout in Malaysia, led by DNB, aimed to provide widespread coverage

08:10and lower costs through a single wholesale network model.

08:13However, the government's plan to introduce a second network raises questions about competition

08:18conflicts of interest, and legal compliance.

08:215G's potential to transform our lives and society is immense, making it crucial to get

08:27this rollout right.

08:29As Malaysia navigates the complexities of this digital leap, striking the right balance

08:33between innovation, competition, and equitable access will be key.

08:39Ensuring a clear, systematic deployment and fostering robust use cases will be essential

08:44to unlocking 5G's full potential for everyone.

08:48The right approach will not only drive economic growth, but also ensure that all Malaysians

08:53reap the benefits of this transformative technology.

08:58Danish Radjah Reza, FMT Business.

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