Economist warns of potential profit-driven duopoly with dual 5G network

The Malaysian government's decision to implement a dual 5G network model has been met with mixed reactions. While the move is intended to break the monopoly and foster competition, there are concerns that it could lead to a profit-driven duopoly. Economist Goh Lim Thye from Universiti Malaya has warned that this development might result in slower services and higher prices for consumers, counteracting the intended benefits of increased competition.

The dual 5G network model was introduced to prevent a monopoly and ensure that consumers have more choices. Communications Minister Fahmi Fadzil emphasized that the initiative aims to provide affordable 5G plans and high-quality service. "Having two networks provides some level of competition and avoids a monopoly. It gives 5G users more choices and creates competition on price and quality," said economist Geoffrey Williams.

Potential Risks

Despite these benefits, Goh Lim Thye cautions that the dual network could become a profit-driven duopoly. "The introduction of a second 5G network could lead to a return to slower services at higher prices," he warned. This concern is echoed by other industry experts who fear that the two dominant players might collude, rather than compete, to maximize their profits.

Economic Implications

The economic implications of a dual 5G network are significant. While increased competition could drive innovation and improve service quality, a duopoly could stifle these benefits. Alfie Amir, a principal analyst at GlobalData, noted that small and medium enterprises (SMEs) could benefit from the dual network as it drives innovation and the development of business applications. "Features such as multi-access edge computing (MEC) and network slicing can enable new industrial enterprises such as autonomous vehicles, robots, dense internet-of-things applications, and smart factories for high-risk workers," he explained.

Challenges in Implementation

The transition to a dual 5G network is not without its challenges. Integrating the new network with existing 2G and 4G networks could be complex and costly. Additionally, some mobile network operators (MNOs) already have ownership in the first 5G network, which could complicate the integration and interworking across both networks. Alfie Amir pointed out that "having two networks can create challenges in the integration and interworking across both networks, as well as with the MNOs' existing 2G and 4G networks".

Current Progress

As of April 30, 2024, the 5G network has reached 81.5% coverage of populated areas, with a 39.2% adoption rate. The individual category has seen 12.78 million users, while the enterprise category has 422,609 accounts. These figures indicate significant progress, but the full benefits of a dual 5G network will depend on how well the transition is managed and whether true competition can be maintained.