Will private firms profit in cities while govt funds rural 5G?

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Dual Wholesale Network Proposal Raises Concerns Over Urban Profitability and Rural Funding

A proposal for a Dual Wholesale Network (DWN) model for Malaysia's 5G rollout, suggested by four major telecommunications companies—Celcom, Digi, Maxis, and U Mobile—has prompted questions regarding the potential for private firms to exclusively focus on profitable urban areas while leaving the government to fund deployment in less lucrative rural regions. This model, which involves two consortiums and includes the government and Digital Nasional Berhad (DNB), has raised concerns about its impact on DNB's financial sustainability and the overall pace of 5G development in Malaysia.
Potential for Urban Focus and Rural Burden

The core of the concern lies in the possibility that under a DWN model, telecommunications companies (telcos) would be permitted to concentrate their efforts on the more profitable urban markets using a "demand-led" approach. This could result in DNB, or a government-backed entity, being solely responsible for the deployment of 5G infrastructure in semi-urban and rural areas, which are typically less profitable and require a "supply-led" strategy. Such a division could lead to private sector gains from high-demand areas while public funds are allocated to cover the costs in underserved regions, potentially creating an uneven distribution of benefits and responsibilities.
Impact on DNB's Financial Viability

A significant question surrounds the financial sustainability of DNB if the proposed DWN model is adopted. If telcos are allowed to primarily serve urban areas, DNB might receive minimal or no revenue from these operators for accessing its network. This potential reduction in revenue streams could jeopardise DNB's ability to operate, potentially leading to its closure and leaving the 5G deployment landscape entirely under the control of private sector-led consortiums. Furthermore, DNB's capacity to secure financing from the open market and institutional investors could be affected, potentially increasing its borrowing costs and interest service charges compared to a Single Wholesale Network (SWN) model.
Potential Legal Liabilities and Deployment Delays

The shift from an SWN to a DWN model also brings forth considerations regarding DNB's existing contractual obligations. There is a possibility of facing legal liabilities from current suppliers, contractors, and vendors, such as Ericsson, if the operational structure of the 5G rollout changes significantly. Moreover, any transition to a new model could introduce delays in the overall deployment of 5G services across Malaysia. Given that Malaysia is reportedly already lagging behind neighbouring countries in 5G deployment, further delays could exacerbate the loss of competitive edge in mobile download speeds.
Transparency and Regulatory Stance

The Malaysian Communications and Multimedia Commission (MCMC), as the independent regulator of the telecommunications sector, is being urged to publicly state its position on the proposed DWN model. Transparency regarding the details of this proposal and its potential implications is considered crucial for public understanding and feedback. An open briefing, similar to those previously provided by DNB regarding its SWN model, would allow stakeholders to better assess the ramifications of the telcos' proposal on the future of 5G in Malaysia.

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Will private firms profit in cities while govt funds rural 5G?

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