PUTRAJAYA must be more transparent over the long-term costs of a government-owned single wholesale network (SWN) for the 5G roll-out, the Institute for Democracy and Economic Affairs (IDEAS) said.

It said that under the current SWN proposal, the licence for 5G was given only to the government-owned Digital Nasional Bhd (DNB), which will be responsible for the infrastructure roll-out.

At the same time, the existing mobile network operators (MNOs) will be relegated to offering only variations of retail service, IDEAS chief executive officer Tricia Yeoh said in a statement today.

“IDEAS calls for the publication of a feasibility study that justifies the selection of this model, which should be made available to the public and given to a relevant parliamentary select committee to scrutinise and report its findings to the public.

“The establishment of the DNB has been justified primarily by the SWN model’s projected capacity to increase network coverage for a reduced network deployment cost,” she said in a statement today.

Yeoh added the existing competitive wholesale market structure has been replaced by a nationalised upstream monopoly regulated by the Malaysian Communications and Multimedia Commission (MCMC).

She said that IDEAS was concerned by the way in which justifications for the SWN came about after its announcement in 2021, with no independent economic or regulatory study published beforehand.

Last Saturday, DNB chief executive officer Ralph Marshall said the primary motivation for the government in opting for the SWN approach was to address the issue of internet connectivity in the country.

He said it was to address the poor internet connectivity available in Malaysia, particularly in the suburban and rural areas where even 4G coverage and quality are, at best, marginal.

Among others, Marshall said it was to remove the need for MNOs to invest heavily in 5G networks and to permit them to focus on the improvement required of their existing 4G and fibre networks under the Jendela plan.

Yeoh, however, said there must be transparency in the process through which the government-owned SWN model was decided upon.

She also said that IDEAS believed that there were potential risks of a monopolised 5G infrastructure, which DNB and the government of Malaysia must seriously consider and take mitigation measures over.

She added that competition at the infrastructure level would provide more advantages than a monopoly, the latter of which may ultimately disincentivise innovation and investments by MNOs in the long run.

“Without competitive pressures in the form of alternative infrastructure, DNB has reduced incentives to ensure quality of service for MNOs and consumers.”

She said the government should provide clear evidence of how DNB, a company formed within the space of a year without any previous infrastructure, would roll out a cost-efficient 5G infrastructure across the country.

“For example, would DNB need to lease and upgrade towers from existing service providers in order to lease back to these same providers the 5G network that it is exclusively licensed to operate?

“Would such costs be passed on to the consumer? This questions the value-add offered by DNB, apart from the permission to charge for sub-leasing as the sole licensee for 5G.” – February 18, 2022.