DNB’s 5G plans for Malaysia

Photo Credit Izuddin Helmi Adnan Unsplash

Telcos will pay much less per GB than what they are spending on their own 4G network.

Digital Nasional Berhad (“DNB”) has published a report by Ernst & Young Consulting Services Sdn Bhd (“EY”) on the potential future impact on Malaysia’s economy from the deployment of a single wholesale 5G1 network (“SWN”) and the adoption of subsequent 5G applications (or “use cases”). EY’s forecasts were based on two economic models developed by the firm’s UK-based Economic Advisory team, which has extensive experience in developing empirical economic impact assessments globally.

The report entitled “Estimating the economic impact of the Single Wholesale 5G Network in Malaysia” was published in conjunction with the National Digital Economy and 4IR Council meeting chaired by the Prime Minister, YAB Dato’ Sri Ismail Sabri bin Yaakob recently. The report sets out EY’s objective forecasts based on robust data sourced from the Department of Statistics Malaysia and EY’s third-party data sources, as well as qualitative interviews with industry leaders.

EY’s first economic model indicates that in 2030, the adoption of 5G technologies will increase Malaysia’s Gross Domestic Product (“GDP”) by 5% or RM122 billion. In addition, 5G will also support the creation of 148,000 jobs across the economy and will contribute to an increase in the proportion of high-skilled jobs. The uplift of GDP and creation of jobs are expected to begin with the rollout of the SWN in 2021, steadily increase in the years to 2030, and extend beyond 2030.

The projected increase in GDP will be driven by increases in efficiency and improvements in productivity that are delivered by digital transformation enabled by 5G use cases. The expansion of digital industries and the entry of new firms to the market will also increase GDP.

EY’s second economic model indicated that DNB’s direct investment in the 5G network could generate an additional GDP contribution of RM20.9 billion. Of this, an estimated RM7.9 billion (or 38%) relates to the GDP generated directly by DNB through its expenditure on operating and corporate costs, with RM13 billion generated throughout the supply chain and wider economy. At the peak of the network deployment in 2022, DNB’s investment could support over 14,800 jobs across the economy through the increased demand placed on the sector’s supply chain.

Thus, the overall impact on the economy will be generated by private investment as the cost of deploying the 5G network will be funded entirely by the private sector through DNB, with no government allocation, funding or guarantees involved.

The report also considers the wider socio-economic and environmental benefits that could be realised with the SWN being developed by DNB for 5G services. It highlights that the SWN will help bridge the ‘digital divide’ and provide a more level playing field in terms of connectivity by providing the Rakyat with accelerated access to a high-quality broadband connection, especially in rural areas.

Bringing connectivity to rural areas will improve inclusivity, provide more opportunities for education, skills development and employment, as well as improve access to essential healthcare services. This will help in driving rural economic growth and provide rural businesses with more opportunities to scale up by accessing online markets.

Digital Nasional Berhad (DNB) is expected to make its 5G offering prices to mobile network operators (MNOs) public as part of its pledge for transparency, its chief operating officer Dusyan Vaithiyanathan said.

In an interview with the media Vaithiyanathan said telco companies will also pay much less per gigabyte of 5G data to DNB than what they are spending now on the existing 4G network.

This will likely translate to proportionately lower charges for consumers, who are also able to check what their operator pays for data, he explained.

“We will make public the price we’re going to offer,” Dusyan told Malay Mail.

“That way consumers will know what the actual cost for Telcos is to buy 5G data.”

The Ministry of Finance’s decision to deploy 5G via a single wholesale network (SWN) system had been criticised, with detractors likening the move to a monopoly. Critics, including Opposition lawmakers, claimed some of the risks linked to the SWN approach is poorer service quality and higher 5G service prices for end-users.

Under the SWN approach, the government-owned DNB will deploy Malaysia’s 5G network with equal access to MNOs. This is in contrast with the current practice where MNOs have deployed parallel 4G networks.

Dusyan, in an interview with the Malay Mail last Friday, said domestic scrutiny around SWN may be warranted because of the problems faced by countries that adopted similar systems, but he argued that most of the criticisms were inaccurate.

Among them is the claim that DNB was “riding” on infrastructure such as towers and fibre optic cables which already exist, mostly built by MNOs to deploy the 4G network.

The DNB COO said this infrastructure could be utilised to deploy 5G at a fraction of the cost of building new ones — by leasing them. He said MNOs will be getting revenue from the leasing of their existing towers and fibre optic cables.

“RM7.5 billion of our actual total cost are actually going back to the MNOs through rental and leasing of towers and fibres,” said Dusyan, explaining that operators will be earning from DNB leasing their infrastructure.

“I always tell the Telcos you can keep complaining but if you take the deal and you can give us a good rate so we can keep our cost down then net-net your price to serve 5G is even less,” he added.

Pricing of 5G data for MNOs and the ensuing cost to provide the technology to end-users has been at the centre of the controversy around DNB’s single network distributary approach.

GSMA, a global association representing private network operators, claimed in an audit by the London-based consultancy DT Economics there had been concerns over a supposed lack of clarity around how DNB plans to price the spectrum and vague regulation.

Ralph Marshall, DNB’s chief executive officer, was quoted by The Star as saying that the special purpose vehicle will only focus on cost recovery. DNB had repeatedly stressed that it is a “neutral wholesale provider” mandated by the government to keep the cost of 5G rollout as cheap as possible.

The state-owned firm is expected to utilise a multi-operator core network (MOCN), which it said will help maximise efficiency. Dusyan said the model was among the strategies identified to help DNB achieve its mandate, with an estimated total cost of just RM8 billion.

Putrajaya will not be guaranteeing loans or other financial facilities used for the nationwide 5G rollout, said Finance Ministry-owned Digital Nasional Bhd (DNB).

DNB chief financial officer Nik Azlan Aziz told The Vibes that the risk is in the business model, “just like any infrastructure or utility-type business model”, and financing will be borne by the private sector.

DNB is estimating that the total cost of the 5G rollout is around RM16.5 billion but may increase to RM20 billion between 2025 and 2030, after factoring another RM3.5 billion of additional investments to add sites or densify the network to satisfy demand for additional capacity.

The RM3.5 billion, DNB said, is purely an estimation of potential future costs that will only be committed based on possible increases in the demand for 5G.

DNB will also work with telecommunication companies (telcos) and infrastructure providers to develop the 5G network and utilise existing infrastructure as far as possible, thereby avoiding duplication and reducing costs.

The network cost was forecast to be RM12.5 billion, of which RM4 billion is for network equipment and RM8.5 billion for network infrastructure.

Of the RM12.5 billion 5G coverage network equipment and infrastructure cost, only RM1.8 billion will benefit foreign interests; RM10.7 billion will be expanded into the domestic telco ecosystem through tenders, with primary beneficiaries being telcos, and fibre, infrastructure, and power providers – including an estimated RM1 billion for Tenaga Nasional Bhd and the Malaysian Communications and Multimedia Commission each, the latter for spectrum apparatus assignment fees.

The cost of the 5G coverage network equipment and infrastructure was initially estimated at RM11 billion, as announced on July 1.

Digital Nasional Bhd says it has since become clear that a further RM1.5 billion is required for fibre of higher specification and faster throughput. – ALIF OMAR/The Vibes pic, November 5, 2021

DNB said it has since become clear that a further RM1.5 billion is required for fibre of higher specification and faster throughput over 10 years from Telekom Malaysia Bhd, to upgrade the existing fibre infrastructure in the country to support the higher throughput required and provide a better quality 5G experience.

DNB completes world’s first 5G RAN trial integration with five telcos

Before Malaysia officially launches 5G services by the end of this year, Digital Nasional Berhad (DNB) has announced its completion of trial integration with local telcos. DNB claims this is the world’s first 5G Radio Access Network (RAN) trial integration with more than two mobile network operators (MNO). They have successfully integrated with five telcos, with a sixth telco to be integrated later.

According to DNB, they are on track to have 500 5G sites ready for MNOs by the end of 2021, and consumers with 5G compatible devices can enjoy at least 100Mbps at the weakest point of 5G coverage. It added that this is made possible with the adoption of the Multi-Operator Core Network (MOCN) model of the 5G rollout which enables the sharing of network infrastructure and 5G spectrum resources.

Through a single-wholesale network, DNB said 5G services can be delivered to telcos at a lower cost per GB compared to the current 4G standard. As a result, consumers can look forward to ultra-fast, high quality and affordable internet speeds. Following the MOCN integration, MNOs can sign up to acquire 5G wholesale services from DNB to offer affordable 5G services to their end consumers.




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