Mobile players say 5G access too expensive
PETALING JAYA: There is still a tug-of-war over some of the terms of the existing reference access offer (RAO) for 5G wholesale access which has yet to be resolved and mobile players find the access pricing offered to be too steep.
The mobile players are concerned that this could lead to higher pricing of 5G services to their customers amid apprehensions over committing to a 10-year agreement for the access.
A decade is seen as too long given the rapid pace of global technological advancements.
The mobile players, in negotiation with Digital Nasional Bhd (DNB), would prefer a three-year agreement similar to what they have for the wholesale access for high speed broadband under the mandatory standard on access pricing.
The wholesale access pricing for 5G is also based on a base rate offer. Simply put, it is a commitment to buy a certain amount of capacity each month.
The base rate is RM30,000 for 1,200 Gigabits per second (Gbps) capacity per month and for a 10-year period, a player may have to fork out RM4.32bil in access payment.
Major operators are likely to exceed this capacity per month once 5G is rolled out across the country and what they pay will be much higher.
However, there are volume discounts offered for usage of above 1,200 Gbps at RM22,000 per month.
“The wholesale pricing is simply too high. Even with the discounts, it is still steep. Based on the estimates revealed during briefings held since January this year, the cost in wholesale access payments over 10 years for each major network operator could be about RM8bil,’’ said a telco executive.
“At RM8bil, it is higher than the cost to build and operate their own 5G network or in partnerships. Those self-built networks could provide more capacity, scope for innovation and potential differentiation instead of buying wholesale access.
“This is a real concern as if the base pricing is high, obviously the end pricing will be expensive and in normal circumstances this cost is often passed on to the consumers,’’ the executive added.
That may be the reason why the operators are dragging their feet to sign the ROA and there are other conditions that have yet to be met.
“They want the amendments they had suggested before April, including technical specifications to be included into the RAO,’’ the executive added.
On April 8, the major mobile players – Celcom Axiata Bhd, Digi.Com Bhd, Maxis Bhd
and U Mobile – had warned that “the RAO in its current published form will not enable affordable and quality 5G services for the rakyat and businesses in Malaysia, and will impede the acceleration of 5G services and penetration in the country.’’
On April 8, the major mobile players – Celcom Axiata Bhd, Digi.Com Bhd, Maxis Bhd and U Mobile – had warned that “the RAO in its current published form will not enable affordable and quality 5G services for the rakyat and businesses in Malaysia, and will impede the acceleration of 5G services and penetration in the country.’’
Even the former CEO of Jaring Mohamed Awang Lah was reported to have said recently that the (5G access) rates offered by DNB as per the RAO “were expensive.’’ He was making comparisons with the rates set under the mandatory standard on access pricing.
However, DNB had conducted clarifications/review sessions with the players on May 10 and 12.
“DNB has provided verbal briefings recently, much of which seemed acceptable but they have yet to be documented. So, we are still waiting for documents with the amendments,’’ said another telco executive.
The high possibility is that the players will not enter into any agreement for 5G access at the current base rate, and if the country is to have 5G access sooner, some form of harmonisation should be done, according to the executive.
DNB has been given the rights to set up the single wholesale network.
Players have no recourse to build their own 5G networks even though that is the natural progression from their 4G networks.
The four mobile operators have raised concerns over pricing and asked for technical reviews.
For now, the RAO is an important document that sets access pricing and service terms and conditions for provision of 5G service by access seekers.
It was reported that if the four major operators reject the offer to buy up equity stakes in DNB by the end of June, it would be offered to both domestic and foreign private equity funds. The funds are said to be interested in a stake in DNB and the government is not averse to selling it to them.
“Private equity funds normally invest in companies because they want aggressive dividends. Would they prefer DNB which is based on a cost recovery model?’’ asked the telco executive.
