Something fishy in Thailand

Five years in the making, five days to fail dismally. That’s the sad story of 3G in Thailand. Yes, I’m talking about 3G spectrum auctions. Not 4G or LTE, plain old 3G, the stuff that most other countries introduced years ago. Even India, the past leader of 3G procrastination, managed to get its act together earlier this year.

So why does Thailand continue to make life difficult for its hapless private mobile operators? You would probably not be surprised to hear that the regulator had something to do with it, right? But if I told you it was because that very same regulator had no teeth and was rolled over in court by the state-owned operators,CAT Telecom and TOT, then you would probably start to get interested.

Rather like Thailand’s political system, one never knows who is really in charge. The countless coups and constitutional rewrites over the years have rendered the democratic process rather useless. In one of these spates of change it was decided to establish the National Broadcasting and Telecommunications Commission (NBTC) to take over regulatory responsibility, and spectrum auctions, from the existing political football known as the National Telecommunications Commission (NTC).

The only problem was that the NBTC lacks enabling legislation at the moment and the market was crying out for 3G spectrum so the constantly delayed auctions were started by the NTC with the blessing of almost everybody but CAT and TOT who were suspiciously quiet in the run up to the auction.

You see, under the current 2G licence allocations, CAT and TOT receive more than 20% of the revenue from the private mobile operators AIS, DTAC, and True Move in the form of ongoing licence fees. However, a consequence of the new 3G licensing rules meant that 3G operation licensing fees were to be paid to the NTC and not them.  By the way, all three private firms qualified to participate in the auction, after a last-minute scare about foreign ownership rules. 

CAT launched legal action the week before the auction, and Thailand’s Central Administrative Court granted CAT an injunction halting the planned auction. The injunction was granted on the grounds that the revamped constitution of 2007 stipulates that the NTC be replaced by the new unified regulator, the NBTC.

The NTC subsequently appealed but that was overturned by the Supreme Administrative Court. The Constitution Court will now take several months to decide whether the existing regulator has the legal right to conduct the auction. If not, management of the 3G auction process will fall to the new unified, but powerless regulator, NBTC.

Nicole McCormick from OVUM commented that the best that the private operators can hope for is that the NTC prevails against CAT in the Constitution Court. Even if this happens, the auctions will have been delayed for months. Meanwhile, AIS, DTAC, and True Move are stuck in a 2G time-warp, relying on GPRS/EDGE to support customer demand for increasingly advanced and bandwidth-hungry applications.

The government is now reportedly considering allowing commercial 3G services to be rolled out in 2G spectrum under the existing 2G concessions. Operators currently offer in-band 3G services on a non-commercial trial basis. Significantly, these services are provided under existing concession arrangements with TOT/CAT, requiring operators to continue paying high 2G revenue-sharing payments.

And the fishy bit? TOT-owned and already 3G-enabled subsidiary, Thai Mobile, is reportedly preparing to ask Cabinet for permission to expand its 3G network – which is used by several MVNOs – nationwide next week. Meanwhile, the private operators watch on helplessly and foreign investors get nervous.