KUALA LUMPUR – Local think tank Emir Research’s proposal to recalibrate the nation’s 5G broadband roll-out would be four to five times more costly at the wholesale level compared to the government’s single wholesale network (SWN) model, an independent British firm has said.
In a recent report, Plum Consulting London LLP refuted Emir’s claims that Digital Nasional Bhd (DNB), a special-purpose vehicle implementing the roll-out, would need more than 10,000 cell sites to provide 90% population coverage by 2027.
The report, produced by its consultants Grant Forsyth, David Lewin, and Prof William Webb, noted that Emir’s assumption is beyond the 7,500 cell sites that DNB requires for 80% population coverage.
Plum also stressed that DNB’s estimates of around 10,000 cell sites are sufficient.
“There is no evidence to suggest that these estimates (by DNB) are faulty,” the firm said in the report.
“Emir’s conclusion may have validity if, as it assumes, 5G spectrum is not available at 700 MHz.
“But it is and will be used extensively by DNB to provide coverage as its network is expanded from 80% to 90% population coverage.”
The British firm was referring to a recent article penned by Emir Research president and chief executive Rais Hussin titled Reviewing Contentious DNB’s 5G, which was published on various news sites on December 6.
Among others, Plum refuted Rais’ claims that there would be an “industry with low competition, innovation and, as a result, low quality and no reduction in price” with the deployment of the SWN model instead of deploying several 5G access networks.
Plum also said that rolling out six 5G networks – one for each major telecommunications company – would require six times as many 5G base stations.
“The unit cost per base station may be marginally lower under the six network option. But we estimate that the overall 10-year cost of 5G network ownership under this option will be four to five times greater than under an SWN,” it said.
“This means that the end-user prices under the SWN are expected to be around 60% lower than with a deployment of six 5G networks.”
Plum specialises in advising governments, regulators, and operators around the world on telecommunications policy, regulation, market, and technology issues. The firm has said that over the past 15 years it has worked on hundreds of such projects including extensive work on the deployment of 4G and 5G mobile services.
Costing issues
In his article, Rais casts doubt on the reliability of DNB’s costings for the SWN due to possible “hidden costs” that were either “not laid out transparently or not considered thoughtfully”.
He said the RM4 billion in estimated corporate costs over 10 years for an “entity that nearly owns nothing, does nothing except playing the role of a middleman of a kind, simply suggests itself for more scrutiny and breakdown”.
In response, Plum said that DNB’s costings are fully transparent and included in its detailed business plan, which has been approved by the Malaysian Communications and Multimedia Commission (MCMC) following detailed scrutiny.
The firm said the plan is based on costs supplied by Ericsson, one of the world’s leading 5G equipment vendors, adding that DNB ran an open competition seeking bids to build and operate the network.
“This was won by Ericsson with materially lower prices than any other bidder,” it said.
“As a highly experienced profit-maximising organisation that is subject to strict contractual conditions, Ericsson is unlikely to have omitted or hidden any significant costs.”
“DNB is rolling out its 5G network to serve 80% of the population in three years. This is not the act of an organisation which ‘nearly owns nothing, does nothing’,” Plum said.
“There are start-up costs of around RM0.8 billion in the RM4 billion corporate costs. But once these start-up costs are excluded, DNB’s corporate costs are in line with other Malaysian mobile operators.”
Delay in roll-out
Plum said Emir’s proposal to change the SWN to multiple 5G access networks would involve a substantial delay in the nation’s 5G roll-out as DNB's two years of work would be largely written off.
It said that DNB has reported that it is ahead of schedule in meeting its main roll-out target of 80% population coverage by the end of 2024, as it has now reached 40% coverage a year after starting its network deployment and has two more years to cover the remaining 40%.
“Substantial time would be needed to unwind current arrangements and move to individual 5G networks for each mobile operator,” Plum said.
“For example, there would be a need to reassign 5G spectrum and terminate DNB’s contracts with Ericsson, with Telekom Malaysia, and with the five mobile operators who are now signed up to DNB’s reference access offer for the next 10 years.”
Plum said the proposal would require six times as many 5G cell sites to be built than under the SWN model, which is problematic as building a cell site requires substantial technical expertise while the pool of manpower with these skills is limited.
“This would inevitably lengthen the time needed for each operator to reach 80% population coverage – well beyond the DNB target date of 2024.” – The Vibes, December 21, 2022
