5G - The Malaysian odyssey

The previous Pakatan Harapan administration favoured a single consortium model where the 700MHz and 3.5GHz frequency bands were to be allocated via “a single entity comprising a consortium formed by multiple licensees, instead of individual licensees.” Along with PH, that idea fell through.

With a new government, a new approach was suggested. In February 2021, the government announced that it would speed up 5G deployment using a special purpose vehicle (SPV) named Digital Nasional Berhad (DNB) that will receive 5G spectra, as well as build, operate and lease 5G infrastructure to new and existing telcos.

By July, DNB chose Ericsson over seven other competitors; Huawei, ZTE, Cisco, NEC, Nokia, Samsung, and FiberHome, with an RM11 billion ($2.6 billion) contract to design and build our 5G telecommunications network.

Of course, that decision drew criticism. To some, it wasn’t clear why the government and MCMC decided to use an unproven, SWN model to roll out 5G in Malaysia.

In December, Minister of Communications and Multimedia Annuar Musa came out to defend the move. Following an evaluation in June, Ericsson scored the highest points in various aspects, including technical support for next-generation development with sufficient fibre safety features. But then he also said that the decision whether to stick with a single wholesale network through DNB was still ongoing. Thus, our long journey towards 5G continues.

From the get-go, the idea of a single wholesale network was not going to be accepted by all. It all depends on who you’re asking, really.

For many, a single wholesale network would be the best choice for Malaysia’s entrance into 5G. It is the best structure to ensure the fastest and cheapest 5G rollout. A technology like 5G benefits from economies of scale and tight coordination. With DNB acting as the coordinating body for a single national network, they can get 5G contractors to bid against each other and save money.

For telcos however, this would mean that they would all have equal access to the 5G core network. For them, DNB’s single wholesale network would be a monopoly, so instead, the telcos banded together to propose the setting up of two networks to be owned by them in place of the current proposal. There are talks of telcos pushing for a retendering of the Ericsson deal. To complicate things further, there is also the debate on why Huawei was edged out. Really?

DNB would not achieve its objective if a single wholesale network failed to be an alternative to telcos’ greed. It will also put another dent in Malaysia’s reputation as a reliable partner if we keep cancelling or changing our minds. When it comes to national mega projects, we need to be firm. Partners need to trust us. We won’t achieve this if we keep on moving the goalposts or changing the game altogether.

In 2014, Lee Kuan Yew said this on the Iskandar region and property investment in Johor. “This is an economic field of cooperation in which, you must remember, we are putting investments on Malaysian soil. And at the stroke of a pen, they can take it over.”

Just look at the Kuala Lumpur - Singapore High Speed Rail (HSR) project. It has been put on hold, cancelled, approved again, and finally in January 2021, Malaysia and Singapore jointly announced the termination of the HSR project as both countries failed to reach an agreement on changes proposed by Malaysia before the project agreement lapsed on December 31, 2020.

There’s a rapidly devolving deficit of trust and it needs to be resolved fast. We need to have policies designed upon careful consideration with long-term goals that ensure confidence to the rakyat and investors. If the Cabinet changes their minds right now on the national 5G rollout it would be seen as another flip-flop, and to make matters worse, the Malaysian government would be seen as bowing down to telcos’ greed for profit. We are at risk of investors going somewhere else to invest, and we are already witnessing this.

The DNB was set up with the rakyat’s interest in mind. It was also set up to make Malaysia a more attractive destination for investors. By bowing to telcos’ demands, by retendering the Ericsson deal, and accepting the telcos’ proposal of having two networks to be owned by them, DNB would have failed its objectives, and the rakyat would have to wait longer for 5G.