Will govt’s new 5G rollout model still result in cheaper internet prices for Malaysians? The Edge owner asks

Malay Mail
Malay Mail

KUALA LUMPUR, May 20 — Financial publication The Edge owner Tan Sri Tong Kooi Ong has questioned if the Malaysian government’s new 5G rollout plan involving two networks can actually help secure cheaper internet prices for Malaysians, and if it could help increase competition among telecommunications firms (telcos).

In an opinion piece published in The Edge’s weekly paper this week, Tong listed out the features of the government’s original and revised plans to deliver 5G internet to Malaysians, namely the Single Wholesale Network (SWN) and the Dual Wholesale Network (DWN).

For the original plan dubbed the SWN under the government-owned Digital Nasional Berhad (DNB), Tong said DNB is expected to sell 5G access at a wholesale price of 13 sen per gigabyte (GB), and this would then result in telcos offering 5G internet at an average retail price of RM1 per GB.

Tong said that this SWN model under DNB was intended to increase competition by breaking the current oligopoly nature of the telco industry, and suggested that the new DWN model could possibly result in a “duopoly from five existing players” in the telco industry.

Tong said telcos are currently selling their 4G packages at an average price of RM2 per GB, and suggested that it is impossible that consumers will not want access to faster internet speeds via the 5G network at half the price (RM1 per GB).

He said the cheaper price of RM1 per GB for 5G internet access is possible, as the SWN model is capable of reducing 5G generation costs from 50 sen per GB to 13 sen per GB — due to “lower cost of a single infrastructure and economies of scale”.

He suggested that telcos with existing 4G networks will not find it to their advantage to market 5G internet, saying that one of them had not signed an access agreement with DNB to make 5G available to its customers.

“And since the telcos are the retailers, and DNB can only sell wholesale to the telcos, consumers’ choice is at the discretion of the telcos. This is one of the reasons that the SWN was rolled out in the first place — to break the oligopolistic hold on the cellular ecosystem.

“The government needs to insist that telcos offer this new 5G at a lower price as a policy direction,” he said in his two-page opinion piece which also featured a chart.

With the new 5G rollout model to be under DWN instead of SWN, Tong asked: “When and how will the government ensure that [Mobile Network Operators] (telcos) deliver the lower-price 5G (of RM1 per GB) to the rakyat instead of pushing their current 4G packages of an average of RM2 per GB?”

Tong also raised multiple questions in his opinion piece titled “Is the government setting up DNB, which it fully owns, to fail with second network? And why?”.

He said the DNB — under the current SWN network — is financially sustainable and it is fully funded by private banks without requiring any government guarantees, adding that an independent leading investment bank has given DNB’s equity value at RM15 billion.

“The banks were willing to fund DNB, with no government guarantees. This is obviously based on the SWN model. Now that this is no longer certain, with DWN as an option, why would banks still fund DNB?” he asked and sought accountability if the new model would result in the need for direct government funding or the government giving guarantees for private banks’ funding.

“5G spectrum effectively creates no less than RM15 billion in equity value for the government. Whether it is SWN or DWN, the combined value created under any revised plan should not be less than RM15 billion for the rakyat,” he also said.

Among other things when raising questions on the new 5G rollout model, he also cautioned that it was possible the DWN model could result in the government-owned DNB putting in resources to build the 5G network at a high cost and turn out to be a huge public subsidy to put the already highly profitable private telcos in a highly lucrative position.