00:005G has the capability to transform our lives.
00:09Like 4G, which brought us social media, e-commerce, gaming, streaming services, and e-learning,
00:165G is poised to create trillion-dollar industries and unlock unprecedented opportunities.
00:29This next-generation network promises to be a game-changer, revolutionizing industries
00:34such as healthcare, business, manufacturing, and smart infrastructure, and potentially
00:39being a catalyst for economic growth and improving income levels.
00:44But for Malaysia, the path to 5G isn't just about technology.
00:48It's also about navigating complex policies and market dynamics.
00:53The story of Malaysia's 5G rollout began in 2021, when the government established Digital
00:58Nasional Berhad, or DNB.
01:01Tasked with leading the rollout, DNB was created as a Single Wholesale Network, or SWN.
01:07But what exactly does that mean?
01:09In an SWN model, DNB, with the help of Ericsson, will build and own the nation's 5G infrastructure,
01:17and then sell access to this network to telecommunication companies, who will then compete to offer
01:235G services to consumers.
01:25This model aims to reduce costs, ensure widespread coverage by avoiding redundant infrastructure
01:30development, and create a level playing field for all telcos.
01:34However, the establishment of an SWN also raised concerns about creating a monopoly.
01:41Critics worried that having one company control the entire 5G infrastructure could stifle
01:45competition, limit innovation, and give DNB and Ericsson too much power over the market.
01:52In 2022, as a response, the government decided to divest 70% of its shares in DNB to telco
01:59companies under a shared subscription agreement.
02:02This move made the telcos both shareholders and customers, which raised concerns about
02:07potential conflicts of interest.
02:10In 2023, Prime Minister Anwar Ibrahim announced a review of DNB's 5G rollout strategy.
02:16The government proposed introducing a second 5G network, transitioning from an SWN model
02:21to a dual-network model run by telecommunication companies selected through a bidding process.
02:28The goal was to break DNB's monopoly and foster competition for better prices and better services.
02:34We want to have healthy competition.
02:37When there's healthy competition in the market, it's the end-users that will benefit.
02:40It's the rakyat that will benefit.
02:42The government also hinted at a strategic partnership with Huawei from China for the
02:46second network, aiming to balance geopolitical relationships with the West's Ericsson.
02:52And I believe rightly that once we get the best from the West, we also benefit the best
03:00from the East.
03:02Despite concerns about monopolistic practices, DNB seems to have delivered on its targets.
03:08Malaysia now has the fastest 5G speed in Southeast Asia and has achieved 80% coverage in just
03:13two years.
03:15This success raises a critical question.
03:17Is a second network necessary to achieve better services?
03:20More importantly, how can we make sure it complies with the law?
03:24The introduction of a second network could potentially violate Section 133 of the Communications
03:29and Multimedia Act 1998, which prohibits actions that diminish competition.
03:34Currently, the government owns 30% of DNB, with the rest held by telcos.
03:40These telcos have seats on DNB's board, positioning them as both shareholders and
03:45customers.
03:46This dual role raises conflict of interest concerns, especially when it comes to the
03:50government's decision on which telco to award the second network.
04:10There are also concerns that the second network would play by different rules.
04:19Under the SWN model, DNB must go through telcos before reaching consumers.
04:25In contrast, a second network owned by a private telco could sell directly to consumers.
04:41To proceed with a second operator with different rules, that is not right.
04:47So I think whatever is not right, we have to say it's not right.
04:52Experts have called for a re-evaluation of the move to dismantle DNB's monopoly.
04:56Of course, a strategic pause will allow time to reassess the financial implications and
05:03also to ensure the cost-effectiveness of the deployment.
05:07And definitely it also ensures that infrastructure investments are aligned with, of course, national
05:13interest and economic stability.
05:16It also facilitates better coordination between different stakeholders, including government,
05:21network providers, consumer groups, and ensuring that the rollout meets the needs of all consumers
05:27equitably.
05:29Now that things are turning out well for DNB, and they're performing with high speeds and
05:33Maybe it's time to reconsider sticking to the initial plan of the SWN model.
05:38To understand why some are advocating for a single network, let's take a look at how
05:42the telco industry worked in the past.
05:45Imagine the industry only needs four towers.
05:48No more, no less.
05:51Say each tower costs one ringgit.
05:53However, in the 4G model, each telco builds four towers because they're competing.
06:00This results in duplication, meaning you'd end up with 16 towers in total, costing the
06:05entire industry 16 ringgit.
06:08Now in the 5G model, since the industry only needs four towers, DNB would build those four
06:14towers at a cost of 4 ringgit.
06:17Then they'd rent out 5G services to the telcos for 2 ringgit each.
06:22So DNB would make 8 ringgit.
06:25Taking away the costs for building the towers, we're left with an extra 4 ringgit, which
06:30could be reinvested in improving infrastructure, especially in rural areas.
06:35Now consider the impact on consumers.
06:38In the 4G scenario, each individual telco would spend 4 ringgit on towers.
06:43Say to make a 2 ringgit profit, they'd have to charge consumers 6 ringgit.
06:50But with the 5G model, telcos only need to rent the service from DNB for 2 ringgit.
06:56If they still want to make that 2 ringgit profit, they'd only need to charge consumers
07:004 ringgit.
07:02So you can see that in the 4G model, consumers get charged 6 ringgit, while in the 5G model,
07:09they get charged 4 ringgit.
07:13It's clear that with 5G, consumers end up paying less.
07:17While DNB's success demonstrates the potential benefits of a unified network, the call for
07:21competition highlights the desire for innovation and consumer choice.
07:26The challenge lies in balancing these priorities to ensure the best outcome for Malaysians.
07:31The ideal situation might involve maintaining the SWN model's efficiency, while introducing
07:36measures to enhance transparency and governance.
07:40This could involve having an independent body run DNB's operations, without telcos having
07:45a share, to ensure neutrality and a level playing field.
07:49If DNB wants to stay as is, then there should not be any second operator, just one operator.
07:56The service provider, the MNOs, should not be the shareholders of DNB.
08:01DNB should stand alone, be neutral.
08:04To recap, the 5G rollout in Malaysia, led by DNB, aimed to provide widespread coverage
08:10and lower costs through a single wholesale network model.
08:13However, the government's plan to introduce a second network raises questions about competition
08:18conflicts of interest, and legal compliance.
08:215G's potential to transform our lives and society is immense, making it crucial to get
08:27this rollout right.
08:29As Malaysia navigates the complexities of this digital leap, striking the right balance
08:33between innovation, competition, and equitable access will be key.
08:39Ensuring a clear, systematic deployment and fostering robust use cases will be essential
08:44to unlocking 5G's full potential for everyone.
08:48The right approach will not only drive economic growth, but also ensure that all Malaysians
08:53reap the benefits of this transformative technology.
08:58Danish Radjah Reza, FMT Business.
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