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Malaysian Government: 5G is Key Economic Enabler

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The Final Report on the Allocation of Spectrum Bands for Mobile Broadband Service in Malaysia was recently released. It generated excitement and anxiety across the country’s telco landscape.

There is, reportedly, intense focus on the MCMC’s preference for a single company – but owned by various licensee holders – to run the infrastructure as part of Malaysia’s 5G network.

5G network plays major role in Malaysia national infrastructure development.

However, this is not a new idea and was first mooted when 4G was being planned around 2011, and then finally launched in 2013; with the value proposition then being the same as it is now.

The aim is to avoid redundant backbone networks which do not provide operators with meaningful market advantages but rather result in costly and duplicated infra that is purchased from foreign network operators. This, in turn, results in the outflow of funds.

The reduction of Capex and the sharing of network resources is expected to result in the mobile players being able to roll out services quicker and to win market share by innovating and offering better quality services.

However, the then Minister of Communications and Multimedia did not go this route. While the end result saw the listed telcos enjoy above-average financial performances with enviable EBIDTA margins, Malaysia languished with average digital infrastructure performance at best.

In terms of fixed broadband download speeds, even with the dramatic speed upgrades enjoyed by customers in 2019, Malaysia is still ranked 37th globally and third in SEA behind Singapore and Thailand.

The MCMC Chairman and the Minister of Communications and Multimedia have therefore made it their priority to change this.

The increasing the urgency for Malaysia to get its 5G rollout right and not repeat the mistakes of 4G is a strong linking factor between future economic development and digital infrastructure.

5G is seen as a key national infrastructure play that Malaysia must get right in order to drive its economic growth in a digital economy.

Concurrently, the need to share infra is also seen to be more practical and urgent in 5G, whose high speed and low latency networks require all telco towers to be fiberised, currently, only about 40% are, and with many more small cell sites with the line of sight.

Cities like Kuala Lumpur and Penang will likely become dotted with small cell sites on traffic lights, light poles, billboards and buildings.

This means that rollout will be more expensive and will likely be concentrated in an economically feasible area, thereby widening the economic divide between urban and, sub-urban and rural areas – a scenario the MCMC does not want to see unfold.

However, despite this urgency to get 5G rollout done right and the likely temptation to bulldoze its way through, the MCMC and the Ministry of Communications and Multimedia have engaged with all related parties.

It is important to note that this is only the second time in the history of the MCMC that spectrum matters have been opened for Public Inquiry.

The first was in May 2002 over the 3G spectrum, was reported to have been focused on determining the standard to be used for 3G.

The 2019 Public Inquiry had a much wider scope with identification of the band, manner of assignment and general approach to be taken on the planning for the relevant bands.

The Final Report that came out on 31 December 2019, and was the result of not just a two-month Public Inquiry from 1 July to 31 Aug 2019 but also, the 5G Task Force, and from meetings with mobile network operators and vendors in October 2019 to obtain information on 5G business plans and readiness of the 5G ecosystems within the relevant spectrum bands.

Another salient feature of the single party infrastructure provider is that the National Fiberisation and Connectivity Plan (NFCP) Protem Committee, while not specifically agreeing to the single infrastructure provider, did agree to share infra in more ways than currently, which includes active sharing of spectrum.

This is seen as a big step forward towards the single infra provider.

While the MCMC is happy with the sharing proposal framework so far, there are more details to be worked.

Thus, Malaysians can hope that the outcome of the national 5G game plan, will be one designed to benefit consumers, businesses, entrepreneurs looking to build disruptive services and products around 5G technologies and, ultimately, the nation.

Robust digital infrastructure is needed to provide cutting edge digital services in an increasingly digital economy.

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