Malaysia’s 5G Saga: Is DNB Facing A Premature End?

Communication and Multimedia Minister, Tan Sri Annuar Musa has postponed the discussion with the cabinet on whether to continue with the Single Wholesale Network model or other options for the country’s 5G rollout. Scheduled for March 11 the date has now been pushed to 16 March, supposedly due to his busy schedule.

For those who have been clued in, Malaysia has been on a roller-coaster journey on its 5G rollout plans. With discussions and pilot testing in 2019, the Government at that time (Pakatan Harapan) aimed to have 5G in selected cities by the end of 2020. This gave hope and enthusiasm to telco operators, vendors, businesses, and the public on the country’s progress in terms of technology adoption. But things have gone topsy turvy for 5G in Malaysia with the change of government and Ministers in the Communication Ministry, and 5G is still a pipe dream in 2022.

In 2021, the government decided to hand over the country’s 5G program to the Ministry of Finance, which in turn formed a corporation under its purview to study the best possible method in launching the infrastructure that will ensure every nook and corner of the nation has accessibility. Digital Nasional Berhad, which was the named entity, returned with a study claiming the most effective rollout will be by deploying the Single Wholesale Network (SWN) system. A term, alien to the public but very familiar to network operators, vendors, and international regulators.

In simple terms with SWN, DNB will be the sole entity managing the 5G spectrum and will lease out bandwidth to network operators for a certain fee. Now, this format has never been practiced before since mobile networks became available in the country and it’s bewildering why take the risk with this new model. Agreed that auctions have led to gaps in a deployment where many areas are still poorly covered, but these are pockets that can be easily resolved with some conviction. Arguing that the whole auction model failed is quite far-fetched as according to Statista as of 2020, 93.5% of the population had access to 4G-LTE while 95.3% had 3G access, stated an industry expert BT spoke with.

After resisting for a year, the telcos have now proposed the Dual Wholesale Network model to the ministry, a format that will allow operators to co-operate the 5G spectrums alongside DNB, hence giving them full autonomy over the infrastructure. While the news on the street points to the government having selected this model over DNB’s SWN, CEO Ralph Marshall was once quoted as saying that if the government goes ahead with the DWN model, DNB will not survive in its current form.

Adding to the failure of DNB, the second wholesale provider will then eventually become a private SWN monopoly. There are also be financial, legal, and reputational implications for the country and the Government should DNB be discontinued. The Malaysian Government will be subjected to pay substantial amounts of claims and compensation, including early termination penalties of various types of contracts, for the entire operations of DNB. Furthermore, the reversal of the SWN decision will have a serious impact on the credibility of the Government and the inflow of FDI especially investments in the high-impact technology sector.

However ex MDEC Chairman Dato Rais Husni claims both SWN and DWN are detrimental to the nation as both models lead to a highly undesirable monopolistic effect on the telecom industry leading to low competition and, as a result, low innovation and quality of the internet. He suggests for DNB to be a neutral entity that solely focuses on expanding passive network infrastructure to the underserved rural areas which is the primary reason for the SWN model. While Mobile Network Operators can have a full spectrum in designated areas, and domestic roaming, if they don’t perform in the designated area, they should be penalised.

With reports alluding to the government opting for the DWN model over SWN, the big question is will DNB continue to exist or will there be a new partnership model devised? Could the government and stakeholders be too quick to jump to the conclusion that SWN will fail?

Whatever the outcome it’s evident that the public is once again to pay the price for flip-flop policies and delays.

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