KUALA LUMPUR – Mobile network operators (MNOs) should not be allowed to dictate the pace of the nation’s 5G roll-out even if they collectively own a majority stake in the government’s special purpose vehicle Digital Nasional Bhd, said Ong Kian Ming.
This comes after the government decided to back the single wholesale network (SWN) model for the 5G nationwide network, in a “win-win” move that gave the telecommunications companies the opportunity to buy up to 70% stakes in the Finance Ministry-owned DNB.
Last week, the country’s four major telcos, Maxis, Celcom Axiata, Digi Telecommunications, and U-Mobile, issued a joint statement saying they would like to “further understand and explore” the government’s equity stake offer, raising speculation of the giants seeking to dictate the 5G roll-out for their own interests.
Ong said from a policy perspective, DNB’s programme for the 5G roll-out should have a timeline and cost structure approved by the Malaysian Communications and Multimedia Commission.
He added that the roll-out must involve discussions with the telcos, as they are DNB’s main customers.
“But the telcos themselves should not be able to dictate the 5G roll-out even if they collectively own up to 70% in DNB at some point in time,” Ong told The Vibes.
If the telcos are allowed to dictate the pace of the 5G roll-out, we would end up with the situation that the SWN model wanted to avoid, which is a slow roll-out of 5G while the big four telco players (Celcom, Digi, Maxis, and U Mobile) ‘sweat out’ their 4G assets.”
On March 16, the government announced the SWN model for the national 5G broadband roll-out, adding that the telcos can have majority stakes in DNB, in its bid to end the standoff with the telcos who had earlier proposed a dual wholesale network.
Among other reasons for opposing the SWN model, the telcos had cited concerns with the monopoly of 5G networks in the country, as well as maintenance issues.
However, Finance Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz said DNB was also instructed to keep the wholesale price of the 5G network to below 20 sen per gigabyte.
He added that the decision is based on the supply needs of the country and on a cost-recovery model.
DNB said in a statement that it is pleased the government has reaffirmed that the current “cost-recovery, supply-led” SWN model being implemented is best suited to accelerating the deployment of the national 5G network.
The company aims to achieve 80% coverage of populated areas by 2024, and will be extending its ongoing commercial pilot to June 30.
While the government has offered majority stakes in DNB to the telcos, Ong said transfer of ownership should only be done gradually.
It may make sense for the Finance Ministry to maintain a golden share for at least the first three years of DNB’s existence, as most of the 5G roll-out is frontloaded and would have been largely completed by 2024,” said Ong.
Technology architect Steven Wong, whose background includes the telecommunications industry, said there are two ways to look at the issue involving the telcos’ stakes in DNB.
He said that while the SWN model does not appear to be competitive, the model is already being practised in the financial industry.
He cited the Paynet system, which is run by Bank Negara, with a certain percentage of ownership by local banks.
“It fulfils the needs of interconnectivity between banks and to customers via MEPS, DuitNow, JomPay, etc.
It will also drive consensus faster and standardise the transaction approach without risk of fragmentation.”
However, he said the downside to this is that the costs involved may not be competitive since there are no equal competitors in the playing field.
He also said that as 5G is of national interest, the telcos will still want to provide fresh network services to customers.
Wong said telcos will usually bundle their plans and phone packages to upsell existing products.
“Without 5G, repackaging existing network plans is a tough call as customers may not find a reason to buy into it unless it's cheaper or more value-added.
“5G is a catalyst for the growth of telcos, which can have seats in the DNB board to steer and ensure their interests are protected.” – The Vibes, April 5, 2022
