From Ong Kian Ming
The role of Digital Nasional Bhd (DNB), 100% owned by the Ministry of Finance (MoF) Incorporated, in the rollout of the 5G infrastructure has been a source of great discussion among key stakeholders in the telco industry, multinational companies keeping track of the security issues surrounding the rollout, and MPs.
The adoption of the Single Wholesale Network (SWN) 5G rollout model where DNB owns the 5G spectrum, appoints the contractor for the rollout and then charges the telco operators for access to the network, raises many questions which need to be answered in a transparent, accurate and easy-to-understand manner.
Here is a list of my questions to DNB which reflects my own concerns on the proposed model used for the 5G rollout in Malaysia:
1. The initial proposal when Pakatan Harapan (PH) was in government was a consortium-led model where telco companies would own the majority stake in a single entity responsible for the 5G rollout with the government holding only a minority stake in this entity. Why did the Perikatan Nasional (PN) and now Keluarga Malaysia government change this model to one where the government owns 100% of the entity responsible for the 5G rollout? Wouldn’t the existing telco players in Malaysia, with their many years of managing capital expenditure for the rollout of telco infrastructure and services, including the rollout of 4G, be in a better position to be responsible for the 5G rollout compared to DNB?
2. Some have argued that the government can potentially raise billions of ringgit if it were to auction off the 5G spectrum to the highest bidders among the telco industry and interested new players. Why was the public auction model not explored by the government? What are some of the financial implications to the government, to the telco players as well as to the consumers if the 5G spectrum was allocated via public auction?
3. The only other country in the world that is using the SWN model for 5G rollout is Mexico, through a 100%-owned government entity called Altan Redes, which was given the responsibility of deploying a 4.5G network infrastructure as a path towards full 5G rollout. In July 2021, this company filed for bankruptcy because it was not able to meet its rollout targets and secure enough customers. Why is the government confident that DNB will not suffer the same fate as Mexico’s 100%-government owned SWN entity?
4. What is the basis of the government’s strong confidence that the SWN model can deliver the lowest 5G rollout and operational costs compared to a model with multiple telco players owning the 5G spectrum with the responsibility of deploying their own 5G infrastructure? If the government wants the existing telco players to share the costs of 5G infrastructure, why is it not willing to sit down to negotiate with the telco players to come up with a cost-sharing model among the existing telco players in the country?
5. There have been accusations that the eventual winner of the 5G contract awarded by DNB was not the “best” bid among the list of bidders. Is DNB willing and able to release the full details of all the bids which it received and explain the cost and technology advantages of choosing the eventual winner?
6. In a zoom briefing with selected MPs conducted by DNB in July 2021, the total costs of the 5G rollout were RM18.9 billion (RM11 billion in infrastructure costs and RM7.9 billion in corporate costs). In a briefing given to all backbenchers in December 2021, the total costs had been reduced to RM16.5 billion but with a different breakdown (RM12 billion in infrastructure costs and RM4.5 billion in corporate costs). Can DNB explain the changes in these cost estimations and provide a more detailed breakdown of the estimated infrastructure as well as corporate costs in the interest of transparency?
7. One of the issues which DNB highlighted in their presentations to the MPs is the uneven rollout of 4G coverage in the urban areas and also many rural areas. How will the SWN model ensure that there will be proper 5G coverage in the urban areas in the fastest time possible and how will the 5G deployment be rolled out to the rural areas in a manner that significantly improves on the current 4G deployment?
8. Since there will be a concurrent expansion of 4G coverage under the Jendela programme as well as the 5G rollout under DNB, what are the steps currently being undertaken by the government to ensure seamless coordination between 4G expansion and 5G rollout in both the urban as well as rural areas?
9. The existing telco players are concerned that because access to the 5G SWN is solely under the control of DNB, they will be charged “unfairly” for access to this network so that DNB can earn excessive profits including the use of some of these profits for 5G deployment to less densely populated rural areas. What is DNB’s response to this specific concern expressed by the telcos?
10. If the 5G network is controlled and operated by DNB, would this mean that it would be more difficult for telcos to compete based on the speed and quality of data delivery over the 5G spectrum since DNB promises fair and equal access to all telco players?
11. Some have asked for another network infrastructure provider to partner with the current provider to reduce the risk of deployment failure and to increase the speed of 5G expansion. Is this proposal something which DNB and the government of Malaysia is willing to consider?
12. DNB has set certain 5G rollout targets for itself and the selected network infrastructure provider including for the end of 2021. Will DNB report its 5G rollout progress publicly, on a monthly or quarterly basis like what Jendela.my is doing via its quarterly reports?
13. If the government were to change, the current SWN model with 100% government ownership of DNB to another model (whether it is a single consortium model or a model with multiple license holders rolling out 5G on their own), what will happen to the existing contract signed with the network infrastructure provider already selected? Will this have any impact on foreign investor confidence especially visa-a-vis the sanctity of contracts signed by the government with the private sector, especially those involving multinational corporations?
14. If the SWN model were to be replaced with a model where the telcos will be primarily responsible for the rollout of the 5G infrastructure, how will the ownership of the 5G spectrum be allocated among the telco players?
15. Finally, if the SWN model were to be changed and different/additional infrastructure providers are selected for the 5G rollout, how will existing security concerns on the 5G infrastructure be addressed especially from a network hacking and slicing perspective for stand-alone and non-standalone 5G systems?
Ong Kian Ming is the DAP MP for Bangi.
The views expressed are those of the writer and do not necessarily reflect those of FMT.