Malaysia has revived its plan for a state-backed wholesale 5G network, after several changes of policy during the past year. The country’s prime minister, Muhyiddin Yassin, now says the network should go live by the end of this year, with the aims of accelerating 5G progress, and extending availability cost-effectively to key industry verticals and to underserved areas.
This is part of a broader digital economy blueprint unveiled last week, but also picks up some threads of 5G policy from previous administrations.
Muhyiddin promised that MYR15bn ($3.87bn) would be invested over the next 10 years in the wholesale network, which would remain fully state-owned and would complement individual roll-outs by operators. The government plans to set up a ‘special purpose vehicle’ to own the relevant spectrum (700 MHz initially and probably some 3.5 GHz) and to own, implement and manage the 5G infrastructure.
He was optimistic about gaining support for the plan from operators, even though the track record of success for national shared networks has been poor in the 4G and early 5G eras, as experiences in Russia, South Africa, Kenya and other countries testify. However, operators are becoming increasingly open to the idea of sharing not just passive towers but active networks, in order to reduce the costs and time to market of launching a new cellular platform every decade or so. Most examples so far relate to joint ventures or neutral host deals struck between private companies however – the intervention of a state body is often seen as over-restrictive by MNOs.
“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, 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 also confirmed that the government would 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.
There are 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.
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 eight months of policy flip-flopping 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).
In the government’s new plan, of May 15, the three largest MNOs – Celcom, Maxi and Digi – would have been allocated 2×10 MHz each in the 700 MHz band, with TM and Altel receiving 2×5 MHz each. However, there was no mention of the 3.5 GHz band – the one in which most operators round the world have started their 5G roll-out because of its suitability for adding capacity selectively where required, while keeping 4G for coverage in the early phases.
But it very quickly did another U-turn, and week cancelled the new plan. Saifuddin Abdullah, the minister for communications and multimedia, then said that, “to ensure a transparent process”, he had directed the regulator, MCMC, to cancel the ministerial directive and review the situation.
Last week’s announcement reverts in many ways to the thinking of the government in 2019, though with more state control than originally envisaged. At the start of 2020, 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.
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 aim of MCMC’s plan was to avoid the trap of forcing operators to compete for relatively scarce capacity (in 5G terms at least), and so ending up paying very high sums, with a poor knock-on effect on the ability to deploy rich networks. If shared between multiple MNOs, not only would prices skyrocket, but no operator would be likely to come away with sufficient capacity to support the differentiated services which industries such as manufacturing, as well as consumers, are hoping for in 5G.
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.