Malaysia has been mulling a shared national 5G network for some time as a way to speed up roll-out and encourage availability of 5G to support national industrial objectives, including the digital economy blueprint unveiled early this year. The plan is now coming to fruition though the costings and funding structures remain obscure.
The government has set up a special purpose vehicle called Digital Nasional Bhd (DNB) to implement, own and manage the network and to hold spectrum in 700 MHz and 3.5 GHz. DNB has requested bids from eight vendors to help build and manage the shared network. Malaysia is not one of the countries that has sought to exclude Huawei from 5G build-outs, and in fact there are three Chinese companies on the RFP list – Huawei, ZTE and Fiberhome – plus Ericsson, Nokia, Samsung, NEC and Cisco.
“These companies are expected to give their views on building Malaysia’s national 5G network, and are also expected to come up with end-to-end solutions that will address the country’s 5G needs,” said a government source.
Prime minister Muhyiddin Yassin has promised that MYR15bn ($3.87bn) will be invested over the next 10 years in the wholesale network, which will remain fully state-owned and would complement individual roll-outs by operators.
Some government members had wanted to follow the example of neighboring Singapore, whose regulator insisted on early-stage deployment of 5G Standalone and the 5G core, in order to maximize the services that could be enabled and the socio-economic impact. However, with 5G SA solutions still thin on the ground, and the first services on the wholesale network due to be launched by the end of 2021, it is likely to run initially on Non-Standalone technology.
In many ways this would be a wasted opportunity, since a greenfield roll-out can more easily go straight to a 5G core, but if the aim is to offer 5G services nationally as soon as possible, it will be more practical to implement a system that allows users to fall back to LTE where 5G coverage is not yet available. This will be one area of complexity, since users will presumably fall back to whichever 4G network belongs to their service provider, but seamless roaming onto multiple different LTE systems will be a challenge for the network.
DNB aims to complete vendor selection by the middle of this year. It owns the spectrum and will own and manage the network for at least 10 years, operating an open access wholesale model for the four MNOs and, potentially, other service providers. Sources say the first deployments, in late 2021, will be in the national government seat of Putrajaya, the hi-tech district Cyberjaya and some parts of capital Kuala Lumpur . It will be expanded to 17 major cities across the country over the next two years.
It is not clear how the MYR15bn budget will be split between state and private investors, or whether any upfront cost will be incurred by the operators. The finance ministry has said it will be mainly privately funded, but DNB’s new CEO, Augustus Ralph Marshall, formerly head of MNO Maxis, has said he expects it will be government-funded.
There are also no details, so far, of how the wholesale 5G network plan will work in key areas such as cost of access for service providers, whether access will be fully open or restricted to operators, and what spectrum will additionally be made available for individual MNO usage. It is assumed that operators will have the chance to get their own spectrum at a later stage – more will be allocated, in the 3.5 GHz band at least, in the future.
The latest uncertainties just add to the confusion about how 5G will get deployed in Malaysia, after several changes of policy during the past year. “This infrastructure cost sharing enables telecommunication companies to generate higher returns and, in turn, provide better and cheaper 5G services to consumers,” the prime minister said earlier this year, and that in turn would accelerate 5G adoption and enable service innovations. That would all help to ensure that “Malaysia will emerge as one of the first countries in this region to build a 5G ecosystem”.
Muhyiddin has also confirmed that the government will invest MYR21bn ($4.3bn) over four years in a national fiber plan, called Jendela, to expand 5G-capable backhaul as well as targeting almost 100% coverage with fiber-to-the-premise in populated areas. That would increase the premises passed by fiber from 7.5m at the end of next year, to 9m by the end of 2025.
Operators previously objected to the wholesale plan because they feared being unable to differentiate effectively, but at least the new development provides them with some certainty about timescales after over a year of policy U-turns and delays.
In late 2019, Malaysia came up with one of the most innovative, if potentially over-complicated, 5G spectrum schemes, with the aim of accelerating build-out, especially to support enterprises, via a shared network. In June 2020, however, the government said it would bypass the auction process altogether for 700 MHz, and allocate the spectrum to five operators – Celcom Axiata, Maxis, Digi and Telekom Malaysia, plus MVNO Altel Communications (though not 4G providers U Mobile and YTL).
The government very quickly did another U-turn, and cancelled that plan, reviving the shared network scheme that had been originally mooted in 2019. At the start of 2020, regulator MCMC had drawn up plans to award 700 MHz and 3.5 GHz spectrum to a consortium of operators, which would build and run the shared, national wholesale network rather than a single special entity. That shared network would have occupied just 2×30 MHz in the 700 MHz band and 100 MHz in the 3.5 GHz band, and small operators, MVNOs or new entrants would have been able to provide 5G services too.
The 2020 and 2021 plans do not go as far as Telekom Malaysia – the wireline incumbent, but only fourth in the mobile market – had wanted. TM had proposed that it should take sole responsibility for building a single, wholesale 5G network to reduce costs for all the MNOs. It wanted to be given the rights to be the exclusive deployer of 5G in sub-6 GHz bands and claimed “a drastic approach” was required to make Malaysia’s 5G roll-out cost-effective and able to support the government’s ambitious national digital and industrial objectives.
“The basic supply-side economics of individual mobile roll-outs and multiple overlapping networks can no longer work,” TM wrote in a regulatory filing last year, and the expense of such an approach would limit the ability to launch critical services like health and public safety, or to extend mobile broadband to underserved rural areas.
“Splitting the spectrum bands to many operators is neither efficient nor economical for the country,” TM added. “A single national infraco will avoid duplication of infrastructure and networks, thus reducing the total cost of ownership for the industry.”
In 2020, MCMC also proposed plans for millimeter wave spectrum, which are assumed still to be going ahead, though perhaps not until later in 2021. These would offer 26 GHz and 28 GHz spectrum for 5G via an auction (26 GHz) or on a first-come, first-served basis (28 GHz). The latter would be open to any organization, not just telcos, and would be allocated for highly localized areas, not nationally like 26 GHz. This shows an attempt by MCMC to open up airwaves for industrial or other providers. These may find a better commercial model than the operators to support some localized or specialized user groups and applications, whether for enterprises, cities, rural areas or other sectors with demanding requirements.
Meanwhile, Russia’s competition watchdog, the Federal Antimonopoly Service (FAS), has reportedly given preliminary approval for a group of operators to launch a shared 5G network, despite a history of failed sharing projects in the country.
The scheme includes three of the four national operators, but not the largest MNO, MTS, so this is possibly a way for MTS’s rivals to up their competitive game against the leader by adopting a cost-effective shared platform. The partners in the proposed joint venture would be fixed-line incumbent Rostelecom, which has also had mobile spectrum since 4G, together with its subsidiary Bashinformsvyaz, plus two MNOs – Beeline (Veon) and MegaFon.
The FAS has given a cautious green light, provided checks and balances are in place, notably that the shared network must provide open access to all MVNOs (and potentially other MNOs). Before full approval, the partners will have to provide the regulator with details of the conditions for shared use of infrastructure and spectrum, as well as for MVNO access rights.
MTS has started rolling out its own 5G network and launched pilot services last March in certain markets. Like their US counterparts, Russia’s MNOs have suffered from limited availability of midband 5G spectrum and have been forced to use millimeter wave bands.
It is not clear whether the new shared network scheme retains a key element of a previous proposal, mooted in 2018, which would have seen state-owned equipment provider Rostec taking a stake in the consortium and supplying most of the kit. That plan involved Rostelecom and MegaFon but not Veon.
Those proposals emerged from a working group that was set up in late 2017 by the three organizations, mainly to explore options for roll-out in the 3.4-3.6 GHz and 26 GHz bands. MegaFon CEO Sergey Soldatenkov said at the time: “In the current market conditions, the most logical and cost-efficient option for deployment of the new standard is cooperation between several players. We are already working together successfully with Rostelecom as part of the working group on information infrastructure under the government program for digital economy and we see huge potential for further cooperation.”
But MTS said: “We always look for ways to be more efficient in our investment plans. Given the high level of cooperation on the market already, however, we don’t see the need to create additional groups or entities.” MTS already has an infrastructure sharing initiative called LTE Union with MegaFon, Veon and Tele2 and says it is sharing “everything from towers to spectrum”.
At the start of 4G, the Russian government was very keen on sharing, setting up former WiMAX provider Yota as a neutral host operator whose network would support all four MNOs (there is now a fifth national MNO, Tele2). However, this fell apart amid lack of enthusiasm from the operators, and in-fighting over how costs and capacity would be allocated. In the end, MegaFon acquired Yota.