Is Malaysia’s 5G wholesale network business model a blueprint for success?

It mandated the creation of a single, national cloud-native wholesale 5G netco, Digital Nasional Bhd (DNB) to provide ‘RAN-as a-service’ to the country’s existing communications service providers (CSPs).

Existing telecoms operators, however, did not wholeheartedly welcome the proposition. In an effort to allay concerns that DNB would operate as a monopoly and ensure private financing, the government has offered Malaysia’s telcos up to 70% equity in DNB. As discussions between the government and MNOs continue, we caught up with DNB to discuss the thinking behind the project, as well as its technology choices, which it believes represents a world-first in network sharing.

Although the government wants DNB to be self-financed, the primary purpose of the new shared 5G network infrastructure is to serve the nation’s interests. The expectation is that “the move away from competing on coverage to service-based competition … should drive the price [for end-customers] down,” says Ken Tan, Chief Technology Officer at DNB.

There is also a hope that – unburdened with the cost of network construction – CSPs will be able to offer 5G connectivity at lower prices than 4G.

“No one is paying more for 5G if it’s just connectivity. Infrastructure sharing is becoming a means to achieve [cost reduction] with the move from passive into active infrastructure sharing,” says Tan. “5G needs to be equal in cost or cheaper than 4G.”

Speed of roll out is another important consideration. Whereas CSPs typically base their network capital expenditure decisions on their revenues and calculations of customer demand, DNB’s principal consideration is to maximize the supply of 5G connectivity. As a result, it believes it will be able to build out 5G coverage faster than any commercial telco – its aim is to reach 80% of the Malaysian population by the end of 2024.

As for the CSPs operating today’s 4G networks, the idea is that they will “innovate on services rather than duplicate infrastructure,” according to Tan. These could include fixed wireless access or cloud-based services such as predictive maintenance, security or gaming. The Malaysian government estimates that 5G could add as much as RM650 billion in total to the country’s GDP between 2022 and 2030 as well as an estimated 750,000 jobs with manufacturing, transportation, finance and retail being among the biggest drivers of 5G-fuelled GDP and job growth.

Shared core network

DNB has also set out to ensure the country’s 4G mobile network operators can integrate 4G and 5G services and maintain control of network intelligence. With this in mind, it has chosen to use Multi-Operator Core Network (MOCN) technology.

“One of the fundamentals we looked at from day one was enabling the existing mobile base to transition to 5G. That’s really key, otherwise we could have gone straight to standalone,” explains Tan. MNOs will retain “the core … and [preserve] all the IT systems where they create products and innovate and manage their existing customers.”

Ericsson will supply the MOCN, having already deployed a system in Taiwan that allows two core networks to share the same active RAN infrastructure and 5G bandwidth. The Malaysian deployment, however, will be much more ambitious.

“We want to be the world’s first six-radio MOCN,” says Tan.

In addition to allowing CSPs to retain control of their operations, a MOCN has the advantage of allocating spectrum dynamically, which makes much more efficient use of all available spectrum, explains Tan. The network will eventually operate with spectrum in the 700Mhz, 3.5 Ghz and 28Ghz ranges as it evolves to a standalone core.

The telcos will share both the active part of the site – i.e. the radio controller, backhaul and base station — and the passive part, namely the site and the power.

To help accelerate deployment, DNB will seek to lease existing fiber networks, tower sites, street furniture, macro sites and small cells from existing operators.

It wants to “increase fiber everywhere … because otherwise [with microwave] you’re not going to be able to support those high-speed use cases,” says Tan.

The rollout is expected to hit 80% 5G coverage of populated areas by 2024 and more than 90% by 2030, with the DNB committed to delivering minimum download speeds of 100Mbps.

Another important consideration when planning DNB was the cost of building a national 5G network.

DNB estimates the total cost of the 5G rollout at RM16.5 billion over the next 10 years. This compares to a December 2019 estimate RM7.5 billion per telco, or a total of RM30 billion if four MNOs developed their own 5G infrastructure.

The government initially provided DNB with some RM500 million in equity capitalization, but with the aim that DNB will be self-financed and part-owned by the country’s telcos. However, its proposal of up to 70% equity in DNB to the country’s existing telcos is on condition that they commit to signing DNB’s access agreement for wholesale 5G services.

On 1 July 2022, the Malaysia’s Communications and Multimedia Minister, Tan Sri Annuar Musa told reporters that six telcos have agreed to take up equity in DNB. An official announcement is yet to come, but when it does, Malaysia will show the world a very different approach to building national 5G infrastructure.