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On January 2, 2020, the Malaysian Communications and Multimedia Commission (MCMC) published a final report on spectrum allocation plans, which includes proposals for the allocation of the 700MHz, 3.5GHz, and 26GHz–28GHz bands. The regulator expects to adopt a range of approaches, such as a tender process to a consortium, a direct award on a first-come, first-served basis, and a beauty contest.

Regardless of the allocation process, regulators must ensure spectrum is assigned efficiently and in a timely manner

On January 2, 2020, the MCMC published a final report on spectrum allocation plans. According to the report operators are expected to begin commercially rolling out 5G in 3Q20. The final report includes proposals for the allocation of the 700MHz, 3.5GHz, and 26GHz–28GHz bands, which have been identified as the pioneer spectrum bands for the rollout of 5G in Malaysia. This is in line with the pioneer bands in other regions such as the EU. Unlike the approach taken elsewhere in the world though, the Malaysian regulator has taken the decision to allocate frequencies in the 700MHz and 3.5GHz bands through a tender process to a single entity comprising a consortium formed by multiple licensees, instead of individual licensees. This new approach is expected to lower capital expenditure by minimizing costs and preventing the duplication of infrastructure, while ensuring that investment in 4G continues in order to reduce the digital divide. To begin with, only 2×30MHz in the 700MHz band and 100MHz in the 3.5GHz band will be made available, with the remaining spectrum in these bands to be assigned at a later stage. A few countries have adopted a similar approach in the past, such as Mexico and South Africa.

The spectrum allocation plan, which sees investment in infrastructure shared as well as the sharing of spectrum resources to deliver commercial services, sounds good in theory in terms of cost savings but in practice will be difficult to implement in Malaysia. Operators usually do not work well together because they would also be competitors. Additionally, it looks like the four operators are looking to work in two pairs; however, the 5G spectrum will only be awarded to one consortium. Therefore, if only some of the four operators participate in the consortium, the others will be left behind. Alternatively, if an independent consortium is assigned, this has the same risk as in Mexico, where the 700MHz wholesale network still has very low usage. However, the MCMC has stated that it has no preference in relation to the members of the consortium and will evaluate submissions received as per the tender process, so it remains to be seen how this will unfold.

In addition, the plan will see the 24.9–26.5GHz band be assigned through a tender process (i.e., beauty contest) to licensees on a nationwide basis, while the 26.5–28.1GHz band will be assigned on a first-come, first-served basis to any party (including non-licensees) for the purpose of deploying localized or private networks. A first-come, first-served direct award tends to be implemented when there is a deficit in demand for the spectrum, while an auction or beauty contest is implemented when there is excess demand. The spectrum in these bands will be assigned by way of apparatus assignment, with the regulator arguing that this would result in a more economical spectrum fee, which it is hoped will encourage network deployment.

With the progression toward 5G, regulators around the world must assess how spectrum should be assigned, and sometimes this will mean that an auction process is not necessarily the most effective way. Many countries have already implemented new models for spectrum allocations, such as Chile and Japan. A beauty contest has been implemented in Chile, for example, which also included coverage obligations as parameters to be considered for the assignment process. There may be cases where the value of the spectrum license is low; for example, if it covers an area where the population is very scattered. In these cases, a beauty contest may be a preferred alternative to an auction. However, beauty contests can lead to less transparency than auctions and may lead to less choice of efficient operators.

It is important that whichever spectrum allocation process is implemented, it ensures the timely availability of spectrum, efficiency across operators that preserves competition, reasonable pricing that does not deter infrastructure rollout, and investment-friendly terms and conditions such as license durations that are 20+ years and avoiding burdensome coverage obligations.


Further reading

Spectrum Auction Tracker: 4Q19, GLB005-000217 (January 2020)

5G Service Provider Tracker: 3Q19, GLB007-000309 (October 2019)


Sarah McBride, Analyst, Regulation

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