KUALA LUMPUR: The government has been urged to clarify Digital Nasional Bhd's (DNB) mandate and regularly monitor the company's performance against its strategic objectives.
This is to help ensure the success of Malaysia's proposed rollout of 5G services via a single wholesale network (SWN) under DNB, according to a report commissioned by the GSMA from DT Economics.
The report assessed the plan from the Malaysian government to deploy a 5G network through the special purpose vehicle, DNB.
It examined the track record of SWNs in other markets around the world, uncovering evidence of failed deployments, slow rollout, poor service quality and profitability challenges.
GSMA, which represents the interests of mobile network operators worldwide, said the government should also introduce a fit for purpose wholesale regulatory regime at the same time as DNB starts its commercial operations.
Furthermore, the government must retain flexibility to allow alternative delivery options for 5G networks and services in Malaysia
GSMA added that without clear mitigation strategies, the proposed SWN network for 5G in Malaysia could face specific risks, hindering the country's ambition to be a leader in the regional digital economy and high-income nation.
"We call on the Malaysian government to follow specific recommendations identified in the report to help mitigate the risks associated with SWN deployment.
"A pragmatic approach is necessary by all parties to ensure DNB delivers the next-generation connectivity that Malaysia needs," said GSMA head of Asia Pacific Julian Gorman in a statement.
He said Malaysia had a thriving mobile economy and a growing digital sector, but the SWN model proposal risked that as the 5G technology was ready to be deployed rapidly.
"Malaysian operators have already made significant infrastructure investments,"he added.
The report viewed that the government should undertake a mandated commercial and regulatory review of DNB's strategic objectives and specific roles and responsibilities with the ability to reform and change elements of its governance structure.
This review could be conducted by the Communications and Multimedia Commission (MCMC) every two to three years.
GSMA said a fit for purpose wholesale regulatory regime would be key to ensuring regulatory certainty and a level playing field among all operators in the retail market.
"It is essential to clarify the regulatory obligations that DNB must comply with around the provision of access, new product development, wholesale access prices, quality of service and network resilience.
"If the regulatory framework is delayed, DNB should commercially negotiate its wholesale access prices in the interim. These prices must be made transparent to the whole industry to minimise competitive distortions," it added.
The report highlighted that there could be risks of delays and other unforeseen developments in any big infrastructure project.
"Hence, there is merit for government to consider alternative options for network delivery. Such choices include allowing current mobile network operators (MNOs) to use their existing spectrum to provide 5G services, deploy 5G networks in specific geographies/sectors of the economy, and enter into co-investment agreements with DNB," said GSMA.
GSMA said alternative delivery options were important for providing 5G services to the enterprise sector, where customer requirements were likely to be more specific and stringent.
"The timely delivery of 5G services to the enterprise sector would also allow the Malaysian economy the opportunity to spring back from the economic and societal challenges of the pandemic."
GSMA said a nationalised monopoly would replace the competitive wholesale market by entrusting the 5G network deployment to DNB.
"Existing MNOs will continue to compete in providing 4G (and lower technology) mobile services. At the same time, be entirely reliant on wholesale access from DNB for 5G services."
However, it said there could be absence of a clear market failure to justify the proposed intervention in the 5G market with the known risks associated with a SWN model.
"A monopoly with exclusive rights to offer 5G wholesale services (and with no clarity on the framework for how its prices will be regulated) will be to the detriment of consumers and enterprises and the broader ambitions of Malaysia to digitise the economy," it added.