Independant Oversight On DNB And 5G Is Necessary

In addition to maintaining the single wholesale network as the model for Malaysia’s 5G network rollout, Digital Nasional Berhad intends to offer 70% ownership in DNB to mobile network operators in the country.

The finance minister, Tengku Datuk Seri Zafrul Tengku Abdul Aziz also reportedly said that by doing this, DNB’s contract with Ericsson Malaysia Sdn Bhd—the appointed 5G Network Equipment Provider—will not be subjected to additional financial implications.

One might think that having a variety in board representation consisting of government and industry players would address potential governance issues. However, this is not so straightforward. 

The ownership composition is typical for special purpose vehicles (SPV) using the public-private partnerships model as their structure. Though it looks to be “industry-led” because of the higher majority share of MNOs, that is actually split between what could be up to nine MNOs.

No one industry player has the majority share unlike DNB, which holds the single biggest share at 30%.

Therefore, decision-making becomes tedious and sluggish as corporate interests (and their respective approval processes) compete with the interest of what is now presumably a joint-venture between the government and MNOs.

On the other hand, the non-singular voice among MNOs on the DNB issue in the past few months, at least from what we can see publicly, would indicate that different groups of MNOs would have different business views on how 5G should be rolled out.

After all, they are of different sizes owning a different share of infrastructure assets, focusing on different market segments and in different geographies.One might wonder if it’s worth doing all this. The short answer is yes.

DNB is a National Matter, but 5G is a Global Battle

Firstly, we are not simply dealing with “just another tender process”. Be well informed that 5G is a global battle, involving world superpowers and some of the biggest global companies.

As for Malaysia, one may get a glimpse of the exertion of foreign pressure when we recall back the recently reported expression of caution by envoys of some of Malaysia’s top trading partners regarding the potential review of existing DNB contracts.

Make no mistake. That was a warning.

Owning the “highway of the digital future” is akin (if not more or equally important) to the battle between for physical economic trade routes, for example, between China’s Belt & Road Initiative versus US-led Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) or its similar iterations.

Just like how owning significant oil reserves puts a country in a powerful position when the world discovered the combustion engine, owning the digital infrastructure and therefore, control over the limited bandwidth/spectrum (“digital oil”) would confer significant power and influence as the world shifts everything into the digital space.

Think of Metaverse, Neuralink, Neuro-Quantum Computing and other technologies of the near future that is the Fifth Industrial Revolution and beyond.

Countries and their leaders may not be aware of their raw digital assets (or they know but don’t care or are simply greedy enough to capitalise on the global battle), and would happily give it up for short term monetary gains from big projects, even if it means losing control of a figurative oil well in the long term, if not permanently.

Big 5G players battle for ownership of deep infrastructure wherever they can get it. How they go about doing that may differ from country to country.

Therefore, not only the global battle for 5G (and 6G) dominance might introduce the risk of foreign influence and pressure, but it is also exerted upon a fragile ecosystem.

DNB is government-led, with a government-linked ecosystem and beneficiaries. This does not provide sufficient independent oversight for something very critical for the nation.

It will be a matter of time before we know how DNB’s rollout of 5G would impact Malaysia.

What is clear is that now Malaysia needs a truly independent and empowered body to conduct oversight (financial, legal, technical), ensure proper checks and balances are in place and monitor DNB’s key performance indicators to prioritise and protect the interests of the people and the nation.

Dr Rais Hussin and Ameen Kamal are part of the research team of EMIR Research, an independent think tank focused on strategic policy recommendations based on rigorous research.

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