PETALING JAYA: The key argument for single wholesale network (SWN) is that it is more cost effective to roll out 5G as it removes additional costs of network duplication, according to a research house.

       PublicInvest Research said the Ministry of Finance (MoF) estimated a total cost of RM17bil if its done under the SWN model, and that includes the 5G’s infrastructure and equipment cost of RM12.5bil, and financing and corporate costs, over a 10-year period, of RM4.5bil.

       Meanwhile, it would cost around RM30bil to RM35bil if the country is looking to deploy 5G under the Dual Wholesale Network (DWN) model.

       The research house also noted that although the DWN model comes with a costlier 5G deployment, a more competitive landscape should lead to lower cost in the long run.

       “Under the SWN model, telecommunication companies or telcos may be required to pay upfront wholesale fees to Digital Nasional Bhd (DNB) while under the DWN model, the high capital expenfiture cost in 5G deployment would translate into higher depreciation, spectrum and maintenance costs,” said the research house.

       The digital divide between the urban and rural areas under SWN is expected to be narrowed as DNB is not profit-driven, according to PublicInvest Research.

       In terms of funding, MoF had said the implementation of 5G through DNB would not involve public funds.

       “Hence, if it involves private funds, there could still be risk that DNB may not be able to invest heavily in unprofitable areas,” added in the report.

       In contrast, the wider digital divide between urban and rural areas is expected under the DWN as telcos may not be willing to spend on less densely populated areas because they are not financially feasible as the research house expects the funding to be from borrowed or internally generated funds of the telcos.

       However, the research house suggested that the regulator could set conditions compelling the telcos to invest in rural areas in return for the allocation of spectrum.

       “With 5G, bandwidth will expand, latency will reduce and thus increasing the reliability, security and quality of services.

       “However, for 5G to make business sense, a complete ecosystem is required,” said PublicInvest Research.

       The report said the SWN model has failed to gain sufficient support from the existing mobile network operators (MNOs) and they were not willing to sign on long-term wholesale agreements with DNB given the potential loss of control of 5G rollout, spectrum ownership and low profitability.

       Hence, this had delayed the commercial launching of 5G which was originally scheduled to take place in December 2021.

       Last month, four MNOs, which included Celcom Axiata, Digi, Maxis and U Mobile, had recommended that the government allow the DWN model involving DNB and a consortium of MNOs.

       “The MNOs are pushing for the DWN, arguing that it creates a more competitive business model to ensure continuous investment and innovation of products and services,” said PublicInvest Research.