In a move that heralded the long-awaited rollout of 3G services in Thailand, the National Broadcasting and Telecommunication Commission (NBTC), in late June set a reserve price for an auction of 3G 2.1-Ghz spectrum mobile licences.

According to Settapong Malisuwan, the chairman of the NBTC?s subcommittee in charge of telecoms, nine licences for 5 MHz of bandwidth will be auctioned in October for a minimum of $142m. The auction is a further step in the rollout of 3G services in the country, a long-delayed development that has left many mobile customers frustrated.

The delays have been due to a number of factors, including a court injunction to prevent the auction of two 3G licences in 2010, as well as the merging of two regulators to create the NBTC in December of the same year. Confusion surrounding the delegation of duties and the exact responsibilities of the NBTC with regard to 3G created further hurdles for the rollout.

The cancellation of the auction was ordered by the court on behalf of CAT Telecom (CAT), one of the state-owned telecoms companies. CAT, together with the Telephone Organisation of Thailand (TOT), is at present completely reliant on 2G concessions, given the continued decline in fixed-line consumers. Both companies acquired licences for 3G services in 2008 but have been slow to develop their services. As a result, the two companies have protested the slated auction for 3G licences.

The coming auction also continues to create a great deal of debate among local telecoms firms, with the two state-owned companies hoping to retain the spectra granted to them even after their cellular concessions end. While the NBTC has said both companies must return their spectra for reallocation once the concession periods end, CAT has said it plans to discuss the deal further.

Additionally, some local companies are complaining that the spectrum reserve price of $142m for 5 MHz is too high. Supachai Chearavanont, the CEO of True Corp, a local telecoms company, suggested a price of $158.23m for a 15-MHz slot.

?The NBTC should also adjust some licensing terms and conditions to give more room to licence winners, as [the winners] will need to heavily invest in the 3G network rollout,? he told local media in July.

Supachai also expressed dissatisfaction with the clause allowing firms to bid for up to 20 MHz of the total 45 MHz of bandwidth in the spectrum. He said this could lead to a potential duopoly situation in which the first two bidders would have 20 MHz each, meaning a third bidder, with only 5 MHz, would eventually be forced out of the market.

While the current bidding rules could put True Corp, which has been losing revenue in recent years, at a disadvantage, other companies are looking at the auction as a way forward. ?We want to bring modern telecom technology to Thailand and to our customers,? said Jon Eddy Abdullah, the CEO of Total Access Communication (DTAC). ?Consumer demand, particularly for data usage, is growing rapidly. Therefore, we see the 2.1-GHz spectrum as an important part of our long-term business strategy.?

Further concerns exist over the issue of foreign dominance. The previous regulator, the National Telecommunications Commission, put in place a tool that would allow telecoms licences granted to foreign-owned or -directed companies to be revoked based on the grounds of national security. More recently, the NBTC has written a draft regulation that would control the presence of foreign firms in the telecoms sector, a move that has garnered criticism from the EU.

As a result, at the end of June an EU trade delegation asked the regulator for further clarification of the proposed rules. Representatives from foreign and local bodies alike have expressed concern that the rules, which are expected to come into effect this summer, would prevent foreign investment in the sector.

Although confusion over terms and conditions remains, the rollout of 3G services will fill a gap in the development of the Thai telecoms sector. ?At the end of the day, the NBTC has to decide what would best serve the interest of Thailand, the Thai telecoms industry and Thai consumers,? Abdullah said.

 

Source: oxfordbusinessgroup

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