Understanding Malaysia’s second 5G network decision

Damned if you do, damned if you don’t. That’s the situation Communications Minister Fahmi Fadzil found himself in when he announced in May 2023 that Malaysia would roll out a second 5G network.

When Malaysia adopted the Single Wholesale Network (SWN) model in 2021, critics claimed it would lead to a monopoly over pricing, and a lack of transparency.

After Fahmi announced that the government had agreed to roll out a second 5G network, there were howls of derision from other critics who alleged that it was a waste of money.

Why a Dual Wholesale Network (DWN)

DWN ensures there is no monopoly over the 5G network.

It is a model that allows multiple operators to share a single infrastructure while maintaining distinct retail services. It will provide broader options for telecommunications companies to offer services and enable them to differentiate their 5G services from their competitors.

One telco might utilise both 5G networks and set itself apart with its coverage, while another could use the second network as it might have features that the existing SWN does not have.

In a statement explaining the decision to allow a second 5G network, Fahmi said: “This model also takes into account the sustainability of the telecommunications industry ecosystem in Malaysia, ending the monopoly element.”

Who is bidding to run the second network?

On Aug 15, Fahmi confirmed that four telecommunications companies – Telekom Malaysia, CelcomDigi, Maxis, and U Mobile – submitted bids to run Malaysia’s second 5G network.

However, on Aug 23, it was announced that TM's tender would not be considered.

“The second provider will be the one who offers the best price. MCMC (Malaysian Communications and Multimedia Commission) will make that decision. I will not be involved,” Fahmi said in August.

“We want to make sure that our internet is not only the fastest in Southeast Asia, or the fastest among the fastest in the world, among the cheapest in the world, among the most widely covered in Malaysia, we also want to make sure that it’s safer.”

A decision on the second provider is likely to be made next month.

Ericsson vs Huawei

Malaysia’s 5G network was designed and built by Sweden’s Ericsson unit, Ericsson (Malaysia) Sdn Bhd. It won the tender in 2021.

However, Malaysia’s second 5G network could most likely be built by China’s Huawei, despite misgivings from the United States and the European Union.

In May 2023, the Financial Times reported that US and EU envoys to Malaysia wrote to the government in April, asking it to reconsider Huawei, saying: “Allowing untrusted suppliers in any part of the network subjects Malaysia’s infrastructure to national security risks”.

Washington has blacklisted Huawei.

However, on Sept 27, 2023, Prime Minister Datuk Seri Anwar Ibrahim said the dual 5G network would provide Malaysia with a balance of Western and Eastern technology.

Speaking at the Huawei Malaysia ICT Summit, Anwar said: “We in Malaysia... and I believe rightly, decided that while we get the best from the West (Ericsson), we also should benefit from the best from the East.

“After extensive discussions, we decided to allow for a dual network, and thus, the decision for more effective participation by Huawei,” Anwar added.

Equal partners

Malaysia aims for equal strength between the first and second network operators, prioritising long-term national objectives over individual corporate agendas for effective collaboration and resource allocation to benefit the 5G ecosystem.

This balance is crucial for ensuring effective collaboration, and can lead to more efficient resource allocation, benefiting the 5G ecosystem.

Huawei-Maxis alliance

Huawei has forged a strong relationship with one of Malaysia’s leading telcos – Maxis.

Last month, Maxis and Huawei Technologies announced they were establishing a joint innovation centre to develop 5G-Advanced solutions, focusing on use cases, customer experience, operating efficiencies, and nurturing local talent (main image).

The centre will explore potential innovations for 5G and 5G-Advanced tech features, such as mobile edge computing, network slicing, end-to-end network orchestration, RedCap, and Passive IoT.

The collaboration will also leverage digitalisation, artificial intelligence, and machine learning to optimise network operating efficiencies.

The centre will help build skillsets for Malaysian university students and the local workforce through training programmes, R&D projects, and cooperation between academic and telecom industry sectors.

In May, the two companies held Malaysia’s first 5G-Advanced technology trial at KLCC.

5G-Advanced, also known as 5.5G, provides 10 times faster speeds than 5G, handles 10 times more connected devices, and results in a significant reduction in latency. It is ideal for demanding, real-time applications.

Stronger Malaysia-China relations

Malaysia’s ‘Unity Government’ has sought closer ties with China since coming into power after the 15th General Election in November 2022.

In March 2023, Anwar visited China, where he met with President Xi Jinping to mark the 10th anniversary of the Comprehensive Strategic Partnership.

This year marks the 50th anniversary of diplomatic ties between the two countries and is also the Malaysia-China Year of Friendship.

To mark both occasions, Foreign Minister Datuk Seri Mohamad Hasan visited China five months ago, while the country’s Premier, Li Qiang, was in Malaysia in June.

Malaysia’s King, Sultan Ibrahim, recently concluded a state visit to China from Sept 19-22, where he met Xi and Li.

It is understood that Fahmi will also visit China later this month.