From Azrai Aziz

The arrival of 5G is much awaited by many – it promises super-speed broadband connection up to a hundred times faster than 4G and will pave the way forward for autonomous vehicles, among many other exciting innovations.

It will revolutionise the internet of things and make smart cities a reality.

Singapore, through its telecommunication giant Singtel, is deploying hundreds of 5G standalone sites across the country to usher in this new era of connectivity.

Meanwhile, Thailand is among the leading countries in terms of the biggest widespread 5G adoption – with the technology now reaching all 77 provinces.

Then, we have the situation in Malaysia — first there was a planned spectrum distribution to a consortium chosen through an open tender; then awarding it to five major telecommunication players (but later revoking the order); and now the decision for it to be owned and developed by a government special purpose vehicle (SPV), the Digital Nasional Bhd (DNB).

Simply put, the government will be the one financing the capital expenditure to develop the network, which it will then lease out to the private sector for a price.

This entire exercise is expected to cost RM15 billion. DNB has been on record as saying that the government will fork out the full amount.

This is not a small sum, especially at a time of pandemic, when the money could be used to finance other more pressing needs of the country, especially with the rising number of Covid-19 cases and related deaths.

More importantly, the RM15 billion cited is a major increase compared to the initial report prepared by the National 5G Task Force under the Malaysian Communications and Multimedia Commission (MCMC), which had projected the cost of the 5G roll-out to be only RM7.5 billion.

What accounts for this twofold cost increase? If the single wholesale network model to develop 5G in Malaysia will be way more expensive, why then are we taking this route?

It simply does not add up on so many levels.

First, Malaysia is the only country in the world to adopt this approach for the 5G roll-out.

There is a reason why other countries chose not to go down the single wholesale network route that we are taking.

Based on the report published by GSM Association, an industry body that represents more than 750 mobile operators worldwide, three countries (Belarus, Mexico and Rwanda) had opted for this approach during their 4G roll-out.

All of them encountered problems, ranging from delays to roll outs, inefficient utilisation of frequency spectrum, low 4G transmission speed and a lack of competition.

Hence, why is the Malaysian government putting a lot of faith in this unproven model? If this approach does not work, the repercussions could be irreversible and will adversely impact our economy — both in terms of a huge investment going down the drain and lost opportunities from the 5G roll-out.

Second, why should public money be used to lessen the burden of telco operators?

Times are tough for everybody but despite being affected by the pandemic, these telco operators still managed to record a net profit last year. For example, the top three major players (Maxis, Digi and Celcom) all recorded a profit for 2020.

Why should public money be used to subsidise their capital expenditure for 5G? And on top of the subsidy for these telco operators, the public will still have to pay them to use the service later. Is the government prioritising the interests of the private sector over the rakyat?

Third, there is a lack of transparency and clarity on DNB and the 5G roll-out.

Despite the assurance by MCMC that DNB would be regulated like other telco players, one cannot help but wonder if MCMC can be truly fair and impartial when it comes to this, given that DNB is a 100%-owned government SPV.

Fitch Solutions has come out to say that the lack of private sector involvement in the SPV also raises concerns that contracts might not follow open tender processes and that financial reporting obligations of the new entity might eschew transparency.

This concern is not without a basis, especially when there is a lack of appropriate checks and balances right now with Parliament being suspended.

A massive national project such as this would typically experience cost-overruns and leakages, even more so in the current landscape where there are many uncertainties because of the pandemic.

The fact is, we cannot be taking unnecessary risks or taking any gamble that will affect Malaysia’s 5G adoption, which is critical to our future economic growth.

The government might say this is the fastest way for the 5G roll-out, but have they truly considered the challenges and obstacles?

Ensuring the 5G roll-out is done in the most optimal manner should be prioritised over obsessing over the race to be the fastest.

Azrai Aziz is an FMT reader.

The views expressed are those of the writer and do not necessarily reflect those of FMT.