4G auction after-party just getting started in Thailand

15 Jan 2016

The auction may be over but the after party is just getting started in the crazy, crazy world that is Thai telecom.

The 900-MHz incumbent and loser in last month’s record-breaking auction AIS has apparently asked the telecom regulator for a six-month extension of its concession in the name of consumer protection. This came to light when the national broadcasting and telecommunications commission announced that it would not even take AIS’ request into consideration just yet as they could continue using the spectrum until winner Jasmine paid for their licence, which Jasmine said it would do later today (15 January).

AIS is stuck with about 11 million 2G customers. Of these 10 million have ported to the new 3G network but only have 2G phones while one million are actually still registered with the old 2G entity.

So instead of actually deciding what to do, they simply kicked the can down the road and is hoping Jasmine will be late with its first payment (of $220 million / 8 billion baht) and bank guarantee (for 1.87 billion / 68 billion baht) so that AIS can hand out its free 3G phones in time.

Jas4G for its part has continued to put on a brave face in public. Privately it has put up a page for its 3BB broadband customers asking if anyone is interested in hosting a cellsite. Forget the UK’s GiffGaff, which goes by the motto, the network run by you (an O2 MVNO which depends on its users for advertising and troubleshooting), Jas4G might actually be the first network actually by its users. CEO Pete Bhotaramik said something about CAT charging exorbitant fees for cellsite sharing, five times the cost of actually building one from scratch.

Welcome to Wonderland, Pete.

Meanwhile, MobileWorldLive http://www.mobileworldlive.com/asia/asia-blogs/blog-uncertainly-fuels-irrational-spectrum-bids-in-thailand/ has reported that Jas4G’s partner, a South Korean Firm (rumoured to be SK Telecom), has got cold feet because of the huge price it paid for spectrum. The story pointed out that Jasmine could have bought number two telco Dtac outright for less than what they paid for the 10 MHz of 900 spectrum.

Dtac, despite losing the last two rounds of auctions, still has 15 MHz of 2100 spectrum, a developed network and 22 million 3G subscribers and just under 3 years left to go on its concession for 850 and 1800 as well.

Elsewhere the ICT Minister seems to be doing his best to confuse matters further. Immediately after the auction Uttama Savanayana told reporters that there would be no early release of any more spectrum. Everyone was expecting that 20 MHz of 1800 would be auctioned off early but no, the ICT Minister instead gave it to state owned CAT Telecom.

This made Dtac - which had lost the last two auctions - look really, really precarious and many commentators were wondering if Telenor would exit Thailand. Then about three weeks later, Junta deputy leader for the economy Prajin Juntong announced that 60 MHz of 2600 would soon be auctioned and those same commentators are now saying that Jas and True will look really silly if Dtac manages to win 2600 on the cheap.

How anyone can make a business plan with the industry looking more like the Queen of Heart’s court is beyond me.

That 20-MHz block expires along with Dtac’s concession in 2018 so obviously CAT has some super-duper marketing plan that will allow it to break even on a new 4G network in less than three years (probably less than two years after CAT finally gets around to it) or they know they will get to keep that spectrum after 2018.

Or perhaps they are totally clueless and are squandering taxpayers’ money on yet another nebulous scheme.

It is not like CAT has not done it before - rolling out a CDMA EV-DO Verizon-style in 2008 comes to mind. Not only did they scrap the network, but they had to pay TrueMove cash to have it scrapped. But let us not dwell on that.

Elsewhere in Wonderland, fellow state telco TOT has announced it would be repositioning itself as a telco for the poor and low-ranking civil servants. That statement is too silly to even warrant a sarcastic comment.

Throughout modern history, doing business in Thailand has always been difficult. The general rule of thumb is that a well-connected person will overbid for a bad concession then years down the line will get the concession amended. If some poor normal person happened to win, then they would be expected to abide strictly by the letter of the contract and they would be expected to fail miserably. Orange, Verizon and Hutchinson have all left Thailand battered and bruised.

We are seeing that unfold right now on the other side of the NBTC in the broadcasting sector. The digital TV auctions bought in a silly amount of money (for TV) and then as surely as night follows day, the operators struggled to pay and the NBTC bent over backwards not only allowing them to not pay the licence fees, but actually forbidding them to go bust under the guise of consumer protection. The situation got so silly that some joked that the only way to actually be allowed to close up shop would be to broadcast something illegal or obscene. Now with Netflix in Thailand 25 more broadcasters are now in crisis talks with the NBTC over licence fee payment.

So if the broadcasters can renegotiate their licence fees that they bid for and won in an open auction, could the same happen on the telecom side? Moral hazard beckons.

But this, ladies and gentlemen, is Thailand, land where the incoming digital economy commission seems to have more in common with the Queen of Hearts in yelling, “off with her head!” than actually knowing how to create and nurture a digital economy.

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