What’s next for 5G deployment in Malaysia?

(April 24): With Malaysia’s 5G outdoor coverage reaching the 80% Population Coverage Target (CoPA) target by the end of 2023, and following the signing of the Share Subscription Agreements (SSAs) by five mobile network operators (MNOs) on December 1, 2023 , What’s next for the next phase of 5G deployment in Malaysia? The way forward is highly dependent on what will happen to Digital Nasional Bhd (DNB), the entity that successfully deployed 5G under the Single Wholesale Network (SWN), in terms of its operating and ownership structure and whether there will be a deployment take place. of a second wholesale network, which has been the subject of speculation since the change of government following the 2022 general election.

A possible route that would allow DNB to remain an independently operating wholesale network (but owned by the telecom companies) AND allow more equipment suppliers to participate in the 5G ecosystem would be to allow tenders for the remainder of the 20% of the CoPA , and for 5G indoor coverage and for enterprise solutions. This will require a number of policy decisions to be made.

First, the government will have to decide whether or not it will retain a golden share in DNB and the power to appoint the chairman. The gold stock option makes sense to bring about coordination between the telecom companies and ensure that DNB’s debt obligations are met without any financial burden on the government. This will also provide an additional check and balance (in addition to the Malaysian Communications and Multimedia Commission’s oversight) to ensure that the existing 4G spectrum is not converted into “5G spectrum”, which would have a negative impact on the already substandard spectrum. 4G performance in some areas.

Secondly, the government will have to make the decision to conduct an open tender for the three areas mentioned above – the rest of the 20% of populated areas where 5G coverage has not yet been rolled out, and most importantly the coverage indoors for 5G, which has not yet been deployed (except for a few selected sites) and for private networks. ZTE, another Chinese equipment supplier, is already working with DNB for standalone indoor 5G solutions and has rolled out trials with Telekom Malaysia Bhd (TM) and DNB. There needs to be a thorough discussion on the different models, such as whether these open tenders should be done separately or together, the financing model for each type of implementation and the timetable for implementation. For example, should universal service provider (USP) resources be used to roll out 5G in rural areas under the DNB SWN model instead of the current tender system for such contracts under 4G rollout, which can be significantly improved through transparency and cost-effectiveness perspective?

One of the reasons why 5G is not deployed indoors and for private networks is due to the high costs involved and the slow adoption of use cases in areas such as smart manufacturing, smart agriculture, telemedicine, integrated logistics, the deployment of autonomous vehicles, to name a few. It may be worth considering models for indoor 5G coverage for key public areas such as government offices, airports, etc., and the deployment of private networks for industry-used cases, such as Petronas’ private network at the regasification terminal in Sungai Udang in Melaka and Hong Kong. The private network of the international airport for logistics and other related services. DNB would be responsible for managing the deployment of wholesale networks for indoor coverage with one or more equipment suppliers, while the MNOs can manage the deployment of the 5G private network for enterprises in collaboration with DNB, which manages the spectrum. The tender for the indoor 5G network and the private network would also allow other equipment suppliers, including Huawei, ZTE and Nokia, to submit competitive bids for DNB (or an appointed consultant) to assess.

It is also worth pointing out that in the current model, all operators use their own core systems provided by different suppliers, including Huawei and ZTE. This enables differentiation and reduces the risk of a single point of failure.

An important point to make here is that if the MNOs want to own and deploy a second 5G network, their immediate focus would first be on providing outdoor 5G coverage before focusing on indoor coverage. But if the majority of 5G use, including enterprise solutions, was likely to take place indoors, why not focus on indoor deployment of 5G under the successful DNB SWN model, rather than waiting for a second 5G network is deployed for outdoor urban coverage? for which 80% coverage already exists?

A second possible route: if a second wholesale network is created, DNB and the second network should remain independent wholesale networks, owned by different groups of MNOs, but with a similar governance structure, so that their key performance indicators (KPIs), including provisions on in terms of service levels, are in line with the expectations of the regulators. The second network should not be allowed to ‘shortcut’ its way to providing adequate 5G coverage by restructuring part of the 4G spectrum and allowing it to be ‘passed on’ as a 5G signal to consumers and regulators.

A third possible route, which is the worst case, would be if DNB were to be “depowered” by the MNOs and had its current 5G network combined with the existing MNO network, which was designed for older technologies (2G and 4G) instead of 5G, and have a second network structured in the same way. We will end up with a situation not too dissimilar to what we have now under 4G, where the MNOs will take the time to “sweat” their 4G and to a lesser extent their 5G assets to get the most profit for their shareholders. achieve. 5G deployment on a second network will be slow, and indoor deployment will be even slower. In the event that such a second network is approved, the price impact for consumers should be the same as what is provided by DNB, with the same technical standards imposed on this second network.

Policy clarity and consistency are needed on the part of the government as we expect major announcements on our country’s 5G policy later this month or early May. In the absence of policy clarity, news articles emerge inviting unproductive speculation and unnecessary clarifications from government agencies and the private sector, none of which is beneficial to the investment and policy environment in the country, especially in this sensitive area of ​​public policy.

Dr. Ong Kian Ming is a former Deputy Minister of International Trade and Industry.