That consortium idea for 5G? ‘We just have to make it work’ say telco CEOs

  • Not adopting sensible approach may see Malaysia have more problems later
  • Changing mindsets for the new 5G business models seen as equally important

Telco CEO's at the panel session in Langkawi on Jan 20. (L to R): Idham Nawawi from Celcom Axiata, Albern Murty of Digi Telecommunications, Suresh Sidhu of edotco, Gokhan Ogut from Maxis, Noor Kamarul from Telekom Malaysia, Wong Heang Tuck from UMobile and Wing Lee from YES.

The audience saved the best question for last, and it got the best answers from the panelists, made up of chief executives of the leading telcos in Malaysia. The highlight of the Jan 20 Malaysian 5G conference in Langkawi, Malaysia was the CEO panel consisting of the chief executives of Celcom Axiata, Idham Nawawi, Digi Telecommunications, Albern Murty, edotco’s Suresh Sidhu, Maxis’ Gokhan Ogut, Telekom Malaysia’s (TM) Noor Kamarul, UMobile’s Wong Heang Tuck and Yes’ Wing Lee.

Moderated by Freda Liu, producer at BFM Media, TM’s Noor Kamarul leaped to reply, “The fallback is TM!” to a question on what the fallback plan was if the single infrastructure provider approach favoured by Malaysian telco regulator, Malaysian Communications and Multimedia Commission (MCMC), failed to materialise. Predictably greeted by laughter, although Noor Kamarul was only half joking, Albern quickly chipped in that Digi was there for the mobile fallback. He was kidding, I think.

“I don’t think failure is an option,” Albern added. “Whether we like it or not, we just have to make it work.” All the chief executives concur to that sentiment with Idham adding, “The spirit now is about how we are going to make it work. That’s where we are pouring our energy and efforts.”

Gokhan assured the audience that the telcos were trying to find the best way forward. “Give us time, we are working on it. Just trust the industry.”

Pointing to his peers on the panel, UMobile’s Wong notes that the very fact they were all on the panel, shows, “There is a will for us to make it a success. I don’t think there are any other options.”

And work has already started across various teams discussing the single infrastructure network preference for Malaysia’s 5G rollout with Wing describing the interaction among all the telco CTOs as “amazing”. Pulling together the entire industry’s knowledge base to get an outcome that makes sense to all, offers the industry a much better chance of making the single network approach work, stresses Wing.

Cynics may point out however, that it is natural for Umobile and Yes, as the operators with the smallest infrastructure footprint to be the most bullish.

Yet, one gets the sense that all the telcos have quickly come around to see the value in such an approach as well, which will then see them competing to win customers through the value and innovation they offer on top of the network through their consumer and enterprise plans.

Now, couple the uncertain initial returns from their heavy 5G investments, which vendors estimate will be in the billions for the operators, with the MCMC dangling free spectrum for the consortium running the network, and you get a pretty powerful case that should help the telcos overcome any reluctance they may have to buying into this approach.

 

Celcom’s Idham on the need to create a win-win-win situation

As it is, as Celcom’s Idham points out, the telco industry suffers from a peculiar quirk where higher demand does not translate to pricing power where higher demand sees pricing going down as well. “Our industry has to continuously invest, there is no such thing as not doing so,” he says, adding that there are not many industries that invest as the telcos do with every new technology cycle necessitating another cycle of investments.

Such circumstances means the sector needs to look at its rate of investments to make it more sustainable longer term. “This is a very important issue to look at. We need to create a win-win-win situation for users, for government and for us so that the industry can keep investing,” he stresses.

With Malaysians already being among the highest users of data in the world, averaging around 15GB a month, mainly because as Albern points out, the primary access to the internet being via mobile, and with TM’s Kamarul boldly predicting that this could even shoot up to 100GB a month within a year of 5G introduced, thanks to the higher speeds, clearly the investment case for 5G has to be different.

And Albern believes the consortium approach offer this chance, “to look at things differently with the government also looking at allocating spectrum differently in the past.”

Wing points out that the approach MCMC is taking is to keep the unit cost of infrastructure as low as possible while allowing for innovation to thrive on top to drive high value creation. “We won’t just be selling SIM cards and devices,” he says. “This is an opportunity for a paradigm shift if you are interested to take that leap and we (YES) are obviously interested.”

 

edotco’s Suresh on, ‘while no one can predict the future..’

Still, there are clearly doubts on the commercial viability of 5G, especially in the Malaysian context where there are six mobile operators with their own networks and around 10 more players operating on the MVNO (Mobile Virtual Network Operator) model.

Edotco’s Suresh jumped right into the question on whether the market can support so many 5G players, expressing his confidence that Malaysia will benefit from 5G, while leaving it up to the individual players to make their own call. “I absolutely believe that Malaysia does need and will gain from good 5G rollout,” he says. And while Suresh is mindful of the fact that, once upon a time, 3G was supposed to deliver everything that 5G is now promising, globally there seems to be little doubt that 5G is seen positively. And while no one is 100% clear on the blueprint Suresh notes that, for the first time, the traditional hierarchical approaches to how the industry works is being replaced with, “a much more entrepreneurial and innovation driven way to do things.”

To those still wary of 5G, Suresh acknowledges that while no one can predict the future, “I do know that if we don’t adopt a sensible approach to enabling 5G, we then may have more problems as a country or industry later on.”

TM meanwhile sees no problems at all with a 5G rollout with Noor Kamarul pointing out they have a very good use case for their copper based Streamyx services in areas not covered by TM’s own fibre optic. The expectation is that they can leverage on the pooled resources of the infrastructure consortium to deliver better quality Streamyx services to customers.

 

Maxis’ Gokhan: ‘Malaysian’s have among the highest data consumption rates in the world’

With the MCMC not happy with the level of fiberisation in the country, which stands at around 40%, it was inevitable that this would come up as well with the question making the point that with 3G and 4G service still having issues, why move to 5G. Maxis’ Gokhan took this on, acknowledging that there are more things to be done around 4G, including reaching the last 5% of consumers in the country. But Gokhan disagreed that the country’s 4G service was problematic. “We have very good 4G in this country with Malaysian customers having a choice between 5 or 6 players. This is why we have among the highest data consumption rates in the world,” he said, estimating this at around 15GB a month.

Gokhan highlights that Malaysia does have fibre in the country, just that it may not be connected to the last mile or last base station. At the same time there are other issues to look at around 5G besides fibre and these include base stations, spectrum and the fiberisation of the base stations which stands at almost 40% he says, also highlighting that the 4G base stations in Malaysia are quite dense, more than in other countries, because of the high 4G usage. “So we do have quite a good footprint of fibre in the country,” he says, also pointing to the 2019 introduction of the National Fiberisation and Connectivity Plan which will drive fiberisation in the nation for a five year period from 2020 to 2024 with US$5.27 billion (RM21.6 billion) in committed investment.

 

Digi’s Albern: ‘I don’t want us to get caught up in the tech lingo.’

With 5G expected to bring with it major disruptions in business models and how telcos start transitioning from being engineering based companies to digital ones focused on innovation and customer service, each of the CEOs attempted to explain the key changes they forsee happening.

Leading off, Idham felt that the immediate challenge at Celcom was going to be about learning how 5G will work with the rest of the network while the medium term was about, “how we change our internal processes and look at the market.” Over the long term, it would be about what kind of investments Celcom would make to strengthen its 5G proposition.

Interestingly, for Albern, having seen how most of his Digi team got caught up in the tech in 2G, 3G and 4G, “I don’t want us to get caught up in the tech lingo because it is about utilization of the capabilities [of 5G] that we then have to translate to consumers.” At the same time, from a capacity building angle he wants to focus on bringing his staff along on the 5G journey.

For Suresh, it is all about the mindset change of the organisation around new skills, capabilities and new way of doing things and, “convincing people it is worth them investing their own time in coming along, because it will give them more relevance in their careers.”

In the short term, Maxis sees 5G as a catayst to accelerate its transformation from a mobile operator to a solutions provider, says Gokhan. In the short term it is about virtualization of the network where using more IT & AI will help it deliver better value. And in a break from the others on the panel who see 5G as mainly an enterprise focused value proposition for businesses, Maxis feels that in the short term, consumers will drive 5G growth. “We believe that 5G phone adoption will happen faster than 4G adoption by consumers.” Only in the mid term does Gokhan see B2B and B2B2C applications taking off. While in the long term, he sees Maxis as having become a converged network with solutions for both consumer and enterprise customers.

TM’s Noor Kamarul, on the other hand, sees 5G as solving his Streamyx issues with its promised better connectivity and higher speeds while over the longer term he feels it can solve the digital divide problem of the country and aiming for 98% coverage of populated areas. At the same time he believes there is a potential commercial case to be made for rural areas as well, provided it is done right by offering them wireless coverage first to determine which are the viable pockets where it makes sense to pull fiber to. “It will be good for the country if we can do this.”

For Wong, the short term is going to be a dual focus of getting UMobile’s network ready for 5G and with mindset and culture change being key as well. The reason? “Where traditionally telcos have been doing things ourselves, the future mindset is all about having more partners because of the new business models that will appear.” Wong sees UMobile going for multiple markets to cater for multiple industries. “Telcos alone will not have those capabilities.”

And finally, Wing believes that YES has all the key ingredients in place to, “help us transform from a pipe to a smart pipe company with solutions on top of the pipe. This changes the game for us,” he says, confident that the private cloud YES has built will allow it to offer clients data sovereignty and privacy controls while the 170-person strong solutions team will allow it to help bridge the solutions gap for businesses and help them optimize their business. “These are key ingredients to create new business models in the 5G era,” he says.

For Malaysia, which has made a strong impression globally with its sustained 5G push with over 100 use case pilots across nine verticals and taking place across six of Malaysia’s 13 states, this early commitment of the mobile telcos and Telekom Malaysia with its fixed and mobile presence, augers well for a successful 5G rollout, starting this year. But the caveat being that the various telcos can overcome their respective issues in coming together to form a consortium that will combine their relevant assets to form the backbone 5G network in Malaysia.

In a few short months, we should know whether all the positive rhetoric translates into action. That jury is still out.

 
 
Keyword(s) :
 
Author Name :
 
Download Digerati50 2020-2021 PDF

Digerati50 2020-2021

Get and download a digital copy of Digerati50 2020-2021