Malaysia expects to reap a wide array of benefits by propelling telcos into a 5G era, including achieving 80% 5G population coverage by the end of this year.
Tasked with overseeing the 5G rollout, state-owned agency DNB (Digital Nasional Berhad) has reached 50% by the end of 2022, according to prime minister Datuk Seri Anwar Ibrahim during the tabling of a revised national Budget 2023 in February 2023.
The 5G push
The 5G push is in tandem with a fresh allocation of RM725 million to continue to enhance connectivity this year through the Jendela project by boosting 4G connectivity in 47 industrial areas and 3,700 schools.
The communications and digital minister Fahmi Fadzil recently released Q1 2022 details for the first phase of Malaysia’s digital infrastructure plan – Jendela (Jalinan Digital Negara). Briefly, the numbers slightly surpass the initial targets :
- The 4G network covers 96.92% of Malaysia’s populated areas
- Fibre-passed premises has reached 7.74 million (initial target was 7.5 million)
- Average mobile broadband speed is rated at 116.03Mbps (initial target – 35Mbps)
- Some 830 rural areas have seen enhanced internet access via satellite connectivity
- 5G: By the end of February 2023, 54.7% of populated areas have been provided coverage via 4,363 sites
As mentioned above, the overarching aim is to reach 80% population coverage by year-end, a year ahead of DNB’s schedule.
With the government’s impending announcement following its current review relating to matters of inclusivity and transparency of its 5G rollout, Malaysia looks to be poised to move into higher gear with its 5G ambitions.
Raising the bar
To review the possible pitfalls and opportunities for telcos in the 5G era, Disruptive.Asia spoke with Albert Chai, general manager Red Hat RoSEA.
Commenting on Malaysia’s 5G rollout, he said: “Now is the time for them [telcos] to be open to embracing changes in their technologies, practices, and processes to better meet customer demands, and in turn, create opportunities to drive new revenues. It means becoming a more agile and open organisation that leverages software technologies to create a modular foundation on top of which they can innovate.”
“To take on new challenges and possibilities, telcos must transform their networks and operations by adopting modern IT architectures and operational management approaches,” he continued. “To do so, these telcos will need to start adopting or improving their cloud approach, which will play an integral role in helping traditional operators who primarily run on legacy systems to reinvent themselves.”
In the wider context, cloud service providers across the globe have raised the bar in recent years, demonstrating how cloud-native architectures and open-source development create opportunities to accelerate service delivery, deployment, and iteration.
“By working with these cloud service providers, traditional telco operators will be able to function with greater agility, flexibility, resilience, and security,” he said.
Hurdles to deployment in Malaysia
Malaysia’s telcos, in common with their peers in APAC, face an ever-changing market landscape, Chai said.
He continued to detail some of these challenges, which are presented below as bulleted points together with his comments:
● Increasing competition – “While new technologies help create new business opportunities, they invite new competitors too. Public cloud providers have redefined the data centre and colocation business while over-the-top (OTT) competitors, such as Amazon, Facebook, Google, and Netflix, have subverted the mobile and data subscription model by offering services directly to subscribers over telcos’ networks. While 5G will unlock a range of opportunities for telcos in the country, it is also imperative that they identify what makes them different in the market.”
● Decreasing revenue – “Revenues from traditional mobile services such as voice and messaging have plateaued, whereas a continued upward trend is observed in data usage and costs. While we see a rebound in mobile revenue growth in 2022, it will largely remain stagnant till 2025 due to competitive pressure, delineated in a GSMA report.”
Voice revenues dropping
In addition, Global Data noted that mobile voice service revenue will see a drop of 1.7% CAGR between 2022 to 2027 due to the widespread consumer shift towards OTT-based communication platforms and the subsequent decline in voice service average revenue per user (ARPU) levels.
However, Chai said that was encouraging to note that Malaysia’s mobile data service revenue will see an increase at a CAGR of 4.9% between 2022 and 2027. “This is driven by the steady rise in the subscriptions to higher ARPU yielding 5G services and growing adoption of higher data volume plans, making this the best period for telcos to leverage the 5G opportunity.”
● Traditional infrastructure – “Traditional networks consist of tens of thousands of proprietary hardware devices. New service delivery often requires network reconfiguration and additional hardware, which leads to the need for more space and power, increased costs, and delayed time to market.”
He added that “This is especially prominent in Malaysia, as most telco operators operate on traditional legacy systems that are unable to fuel the rapid innovation that is needed in the present digital space. With Malaysian telcos looking to roll out 5G services, there is no better time than now to upgrade to a modern and automated infrastructure that can bring greater agility and flexibility to their operations.”
● Global growth due to changing customer demand – “Modern consumers have redefined the service consumption model, creating the need for a far more robust customer experience when accessing and utilizing mobile services. Moreover, low-latency and high-bandwidth applications, such as broadband IoT, will generate even more data, necessitating additional data processing capacity across edge environments and 5G deployments.”
Chai said that some telecommunications networks were not originally designed to scale for the continued proliferation of mobile devices and increased data usage. To thrive in this dynamic and rapidly evolving market space, service providers must reduce costs and create new revenue streams while addressing infrastructure modernization and existing demand.
● Evolving skills – “With infrastructure modernization, some job roles will change due to automation. Telcos, therefore, need to reorganise their resources to ensure that their workforce focuses on revenue-oriented or other value-added services.”
According to Coursera’s Global Skill Report, while Malaysians are more adept at digital skills such as cloud computing and data analysis, there is however a skills gap across business, technology, and data science, where skills are scored at 53%, 56%, and 52% respectively. To further modernize and achieve their digital transformation goals, telcos need to address the digital skills gap by investing in upskilling or reskilling exercises for their employees.
“Today, telcos across APAC are in a race to create competitive differentiation and become more agile,” he continued. “In order to capture more opportunities presented by open source, some key actions that telcos need to take include modernising their network infrastructure, enhancing the digital experiences of customers and matching up against their expectations, along with automating their services.”
“At Red Hat, we work closely with our partner ecosystem to drive open-source innovation that can help telcos find the flexibility they are looking for. Open source provides a stable foundation that also allows for efficiency and scalability. In addition to these benefits, infrastructure modernisation creates the following opportunities for telcos:
● Drive New Revenue – “The open telco cloud approach provides the operator with the opportunity to leverage their private cloud for internal and external workloads. These external client-facing workloads can drive new enterprise use cases to build new revenue streams. There are use cases for retail security, agriculture, mining, transport, local government, manufacturing, and logistics that all leverage the 5G network. Tapping into the partner ecosystem that surrounds open source provides more choice for an operator than a legacy approach, where the focus would have been on a vertical silo approach.”
● Increase agility and flexibility – “For instance, virtualization technologies can provide the scalability, manageability, and automation of infrastructure that can help service providers keep pace with both expected and unplanned growth and market changes. Meanwhile, container technology enables apps to be strategically deployed and moved across environments to keep up with demand.”
● Deliver more customer value – “For example, automated management tools can help telcos launch, deliver, and scale services quickly and reliably across cloud-based infrastructure. Moreover, having an integrated environment for building and deploying containerized applications can enable telcos to rapidly create compelling new services using modern app development approaches.”
● Reduce costs – “Cloudifying their infrastructure with an open framework will allow telcos to increase resource utilization and improve overall efficiency with a common and unified infrastructure.”
Capitalising on opportunities
Against a constantly evolving landscape, industry watchers opine that telcos need to capitalise on opportunities that will enable them to set key differentiators from their competitors and strengthen their position in the market.
“To do so, telcos should start recognising the value of commercial open source solutions, which bring the benefits of providing cross-functionality in cloud-native environments and access to the latest innovations and security features,” said Chai.
He believes that factors that telcos need to consider before employing an open-source model include:
● Understanding transformational goals and objectives – “Firstly, it is essential for any organisation to set clear end goals to define its transformational objectives. For telcos to successfully transform their organisation, they must first decide on their end goal – what role do they want to play in the new digital solution value chain? As the consumer market becomes increasingly commoditized, telcos will turn their attention to B2B. Their strategy here will define the subsequent digital transformation required to deliver the new business model. The next step is to consider how open source fits into the puzzle.”
● Assessing operational needs – “In employing open source and facilitating digital transformation, new skills and talents will be required and telcos are struggling to obtain these fast enough due to the limited supply of software engineers in certain markets of the APAC region, outside of China and India. Additionally, telcos have to compete with large technology companies and innovative start-ups for talent.”
“In order to fully leverage the opportunities and benefits of open source, the right talent is required to manage and operate the software. Hence, more internal initiatives, such as upskilling the workforce through training programs, are needed to meet the above outcome.”
Transitioning to “techcos”
Today, we can see that many telcos are attempting to transition their business model towards becoming “techco” (adopting a “technology company” centric approach) as they seek to grow revenues and change the foundation their network is built on.
Some of the key trends that telcos are pivoting towards include:
● An increase in cloud adoption and migration – “As greater business and IT agility is needed to support telco operations, more telcos will adopt hybrid cloud. It lets operations deploy and orchestrate workloads across multiple infrastructures according to performance, security, compliance, and cost requirements,” Chai commented.
“A hybrid cloud approach will allow telcos to take advantage of the economics and services available in the public cloud. Private cloud remains an option if needed to reduce security concerns or support local data regulations. Providing multiple routes to customers gives them access to their applications from anywhere, at any time, with a consistent experience.”
● Edge computing – “Deploying processing power and network functions closer to the network edge will help telcos in improving application performance, reduce bandwidth and cost, and create new, differentiated, low-latency services. Edge will also shorten provisioning times and improve network scalability and agility.”
Advantages 5G brings
The greater capacity, speed, and performance that 5G brings can help reshape industries, he said. “Companies that compete in the same market space should collaborate to develop industry-specific services and applications. Digital service providers that can capitalise on 5G’s advantages can capture a fair share of its opportunity. However, cloud service providers are positioning for that as well.”
He added that this competition will push digital service providers to minimise the cost and speed gap with hyperscalers and innovate to offer differentiated services. Doing so requires new thinking around automation, continuous integration/continuous delivery (CI/CD) cloud-native development, and other advanced technologies.
“With 5G deployment happening across APAC, more telcos are expected to harness the power of edge computing. Hence, it is clear that the next challenge for telcos will be distributing resources over geographically dispersed, small footprint edge data centres in order to successfully install and operate a variety of edge computing use cases, services, and applications.”
“With this advancement and the anticipation of other enabling technologies to come, we look forward to seeing more connectivity of data across industries like the public sector, healthcare, education, and manufacturing, among others. However, this does mean that citizens will need to be open to embracing the ongoing technological disruptions, and it is essential for the government to prepare and equip Malaysians with the correct knowledge and skill sets to truly harness its benefits.”
Measuring 5G success
According to some experts, early low-hanging fruit from 5G lies in the enterprise and public services arenas. Furthermore, when speaking recently to local media, GSMA head of Asia Pacific Julian Gorman opined that a more authentic metric of success with 5G adoption lies in innovation rather than just measuring population coverage.
Indeed in an earlier article, How Digital Malaysia will tap the disruptive power of 5G, we noted some examples of such benefits from numerous use case demonstrations across nine verticals – agriculture, education, entertainment/media, digital healthcare, manufacturing and processing, oil and gas, smart city, smart transportation and tourism.
At that time, some 72 industry use cases and 28 government use cases, resulting from a collaborative platform comprising ministries, industry partners, SMEs and startups, included smart community demonstrations at the time–such as envisioning Langkawi as a smart island.
More recently, Malaysian Research Accelerator for Technology and Innovation (Mranti), an agency that helps accelerate ideas to market, recently spotlighted further advanced enterprise 5G innovations with 20 5G players during a special roundtable.
Mranti CEO Dzuleira Abu Bakar said a 5G enterprise focused facility – the Mranti 5G Experience Centre – would demonstrate the wide range of use cases to support multiple sectors, including smart manufacturing, automated vehicles and smart hospitals. Mranti holds that 5G is playing a vital role in speeding up the path to bringing innovation to market.
Innovation is key
Shazurawati Abd Karim, executive vice president, TM One (Telekom Malaysia’s enterprise and public sector business solutions arm), opines in her commentary that faster speeds and lower latency in 5G presented new commercial opportunities for enterprises in various sectors.
She suggested that applications development for many sectors–such as smart cities, autonomous vehicles, drone delivery, immersive entertainment, mobile robotics and remote health monitoring– will generally benefit from network slicing.
“Enterprises today can benefit from data-intensive applications to innovate seamless and immersive digital experiences for their customers. Of course, 5G is more than a new technology; it is a prime business enabler,” she said, adding that this activity is under the umbrella of TM’s human-centred approach to digital adoption.
During an interview with Disruptive.Asia, Shazurawati detailed how 5G’s heightened connectivity will act as “the catalytic ‘glue’ to help smart services ‘connect the dots that are required to enliven a dynamic digital economy.’”
Interesting demonstrations of 5G’s potential to help connect smart services and enhance the growth of smart communities reached a new level in early 2020. These were recounted in last year’s edition of TM One’s City LEAP Summit, a two-day event for the country’s local city and municipal councils.
An industry collaboration featured efforts by Telekom Malaysia (TM) to transform the Langkawi archipelago into a showcase of 5G-enabled smart services. The island’s bounded environment proved to be an ideal testbed to kickstart several new use cases, 11 of which were on show, spanning smart cities, smart tourism, smart agriculture, and other areas.
The 5G command centre 5GCC, APIs (application programming interfaces) and related projects were built and developed on an open, sharing model to allow for extended collaboration by other service providers and organisations in other Malaysian states in the coming months.
Looking ahead, Albert Chai said: “As we approach 5G deployment in Malaysia, it is important that the government continues to introduce allocations that will allow for 5G to be accessible, as well as encourage and promote digital adoption with the anticipation of improved connectivity. There will be more opportunities for different industries to improve their operations and communications, most of which will directly benefit Malaysian citizens.”