Malaysia government intervenes to drive 5G forward

The Covid-19 factor

According to Suhaimi, the Covid-19 pandemic had galvanised the government to consider the importance of connectivity, especially in suburban and rural areas where even 4G coverage and quality is marginal at best.

He said internet traffic in Malaysia has not only increased by up to 70%, but has shifted to residential areas by the same percentage. Speeds have reduced by up to 40% and complaints on poor indoor coverage have increased by up to 70%.

The MCMC chairman said another factor exacerbating these challenges is the high investment needed for 5G network roll-outs, which could cost between 25% and 75% more than what was needed for 4G, citing an unnamed study.

“Covid-19 has been a stress test for Malaysia’s digital infrastructure,” Suhaimi said. “A new approach is now needed to address the demand for a better digital economy, and that is why we need a new national approach to managing Malaysia’s 5G roll-out.”

Even through the SPV will own all 5G assets, there will not be any changes in ownership throughout the 10 years of its operation, Suhaimi said. Such an entity, he added, will minimise duplication of network elements, reduce the inefficiencies in spectrum allocation, and address infrastructure and land approval challenges.

“We have spoken in the past about being engaged in service-based competition as opposed to facilities-based consumption,” he said. “Now this is it, service-based competition that benefits the consumer. Ultimately we want communications to work as a utility and pass on cost savings to consumers, while making it easier for them to get on board and use 5G.”

Suhaimi claimed that with the SPV in place, operators dealing with it will have clear and regulated activities, access to competitive and transparent wholesale pricing to promote better network infrastructure sharing.

He assured the industry that the SPV will allow fair and non-discriminatory access to capacity and networks. He also pledged that the entity would deal only with the leasing of wholesale bandwidth and not be involved in the retail sector to avoid any conflict of interest.

Shifting policies

The government’s move towards incorporating an SPV to manage the deployment of 5G spectrum is a new model, not yet floated before.

In previous years, when technologies such as 3G and 4G were rolled out, the MCMC mostly used the “beauty contest” method – the allotment of spectra to the most deserving operator based on financial and technical strength – for awarding spectrum.

In April 2019, Computer Weekly reported the then MCMC chairman, Al-Ishsal Ishak, as saying that Malaysia’s 5G spectrum biddings were not for profit.

Later in the year, Al-Ishsal championed what was then known as the “consortium” idea – a single entity comprising a consortium formed by multiple licensees, instead of individual licensees – for distributing 5G spectrum.

In March 2020, Malaysia experienced a change in government and a new communication and multimedia minister, Saifuddin Abdullah, was appointed, along with policy makers such as Suhaimi. At that time, industry players were on edge over the developments, which included how the allocation of 5G spectra was going to be handled.

To date, it is still not clear what led to the complete reversal in policy and why the government has opted to use an SPV to roll out 5G, or why the consortium idea was abandoned.

Furthermore, after Abdullah came into power, he downplayed Malaysia’s 5G roll-out, noting that it might only happen in 2022 or 2023. The minister had told a local daily that the government preferred to focus on beefing up 4G connectivity and coverage instead of actively planning for 5G.

Asked why 5G is back on track, MCMC’s Suhaimi conceded that while the government did de-emphasise 5G last year, that policy was not cast in stone and the timetable could be brought forward if situations warranted.

“We are satisfied with the investment the industry has made to improve fiberisation and 4G coverage last year, so we have decided to focus on 5G,” he said. “For Malaysia, we certainly want more foreign direct investment [FDI] and we need to move to the next level. 

“Countries such as Singapore, Thailand and Vietnam are ahead in 5G roll-outs and Malaysia has to catch up quickly to remain competitive and continue to attract investors. This is why we have accelerated the timetable and brought the 5G roll-out forward.”

Industry reactions

Due to the sensitive nature of the topic, Computer Weekly spoke to two senior telco executives anonymously who said that while the broad strokes had been revealed, there are still many questions left unanswered.

“There are not many successful examples of government-owned SPV driven projects globally, and for those that have, they experienced significant delays,” said one senior executive involved with regulatory issues.

“Australia’s NBN is one example, but that’s for fixed broadband and that example is probably justifiable due to the extremely high capital expenditure costs. But it’s not the same for mobile broadband as we have moved away from monopolies for decades now, and have always thrived from healthy competition in this space.”

Another senior executive was cautiously optimistic over the developments announced and noted that, at least for now, there is greater clarity over how the industry can move forward with 5G.

One good development is that the SPV has decoupled wholesale and retail functions, which at least gives players a level playing field, the executive said.

“It’s a step in the right direction, but there are still a lot of details to hammer out,” the executive said. “Such as, ‘Who will run the SPV, what are the commercial and technical details, and how they are to be worked out are still in the offing?’. So, there will be a lot to do before we can see 5G appear.

“We also need assurance that since the SPV is a single entity, there will be redundancies as to how the services are kept running and ensure that there will be no single point of failure.”