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The selection process for the market's third operator was a spectacle to behold
With less than five months to go before Thailand’s great 4G auction, only chaos and confusion reigns with new auction laws not yet passed, new governance bodies still being formed and little idea as to what is even on the auction block, how the auction will be held or even who will be eligible for the auction.
Last Tuesday, the government’s new Digital Economy Commission has ordered or, rather, politely requested that the regulator, the National Broadcasting and Telecommunications Commission hold the 4G auction by August. By the end of the week, the NBTC said that no order in writing had been received and that they could not even start work on the auction until July because of one of the early junta orders following the coup ordering that work on the 4G auction be postponed for a year.
Even if the NBTC could proceed with the auction their days are numbered. The Cabinet has sort of approved a draft bill that would replace the 15-member dual-board NBTC with a 7-member single board that would oversee both broadcasting and telecommunications as well as put it on a tight budgetary and operational leash under the Digital Economy commission.
Sort of as while the cabinet did approve the draft bill, the public backlash on the so-called digital economy laws’ provision on spying made the junta backtrack and put the laws back to the consultation phase
The other question is what is to be auctioned and even there the answer is not quite clear-cut.
AIS’ concession on 17.5 MHz of 900-MHz spectrum is coming to an end this September. TrueMove and AIS’ 12.5 MHz (each) of 1800 sort of came to an end two years ago. Sort of, as the NBTC extended the non-extendable concession by a year, and then again because TrueMove could not port its subscribers out to its new 850 and 2100 networks in time.
Back in the 2G era Thailand went for both US and European standards (much like how it sided with both the Japanese and the Allies in the war) meaning that there was only 17.5 on 900 and 25 on AMPS 800. With the move to digital the big guard band between what is now UMTS 850 and UMTS 900 is no longer needed and the NBTC has reduced it from 3.5-MHz to 1 MHz meaning that a full 20 MHz is available for auction on 900.
So on the 850/900 spectrum, Thailand now has 15-MHz of CAT/True (another sort of fudge), 10-MHz of CAT/Dtac (in a in-band migration of the concession ending in September 2018) and now 20 MHz of 900, the latter of which should be up for auction.
On 1800 we have 25 Mhz of True/AIS and another 25 MHz of ex-Dtac spectrum that has been recalled by CAT and has since remained unused and disputed. Dtac has urged the regulator to use their right to take back unused spectrum and re-auction it. Former CEO Jon Eddy Abdullah had ruled out developing 1800 4G on that slice in the short time-frame left before the end of the auction and given the 30% revenue share terms of the concession.
CAT on the other hand has indicated it will claim the 25 MHz slice under the new Digital Economy laws (that sort of have been approved but then have not) that would allow the Digital Economy Board to allocate non-commercial spectrum first before leaving the rest for the NBTC to allocate.
Mainstream media has widely reported that it was the Digital Economy board that has ordered the NBTC to hold the auction though without the DE laws being passed, they have no formal authority to do so. Only the fact that the chairman of the DE board is General Prayuth Chanocha who has absolute power under both the interim constitution and the current state of martial law.
Then we have the matter of 2600. Deputy Prime Minister Pridiyathorn Devakul sort of ordered the NBTC to look beyond 900 and 1800 for 4G and to look to 2300, 2400 and 2600. Yes, he actually said 2400 though most media outlets spared him the embarrassment and edited it out or edited to 2500 which is probably what he meant.
Pridiyathorn said he would go and negotiate with MCOT, formerly the Mass Communications Authority of Thailand, for return of 120 MHz of 2600 for use in 4G within the next two weeks. This prompted the NBTC to say that 2600 is not a standard 4G band with no handsets supporting the spectrum and is not suited for 4G. Of course everyone in the real world knows that 2600 or band 7 is a prime 4G band and that all modern 4G handsets support it, not that anyone still considers Thailand as part of the real world by now.
A few days later someone obviously had a talk to Pridiyathorn who announced he would shut up and would not interfere with the NBTC’s auction. Obviously not interfering inasmuch as passing a draft bill that would rip apart the current NBTC and replacing it with a new one who knows when counts as non-interference.
TOT has waded into the fun by claiming that its concession agreement with AIS says that at the end of the concession it is to take control of the network, the spectrum and the remaining customers and here they have a point. The concession actually does spell that out but until recently the constitution had clauses forcing the reallocation and re-auction of spectrum. Since that constitution has been torn up they have a point. Sort of.
TOT is now negotiating with 2300. It had earlier agreed to return 30 MHz of 2300 (a popular TD-LTE band) for refarming but now it seems that the future of 2300 might be offered as part of a swap deal with 900.
One senior telecom executive has said that a backroom deal had been done amongst the elites with end net result being TOT taking 900 and that 2600 would be the scraps of meat thrown to the spectrum-hungry commercial telcos as a consolation prize. This would leave only True with sub-GHz spectrum and hand over the most valuable spectrum to the two most incompetent state telcos while giving the commercially successful telcos a huge handicap in providing coverage on 2600, he lamented.
CAT successfully held the country to ransom a few years ago and was well rewarded for it, so TOT has every reason to try and do the same. He said that Pridiyathorn was just hungry for the media attention and had jumped the gun with half-cocked information to be the one in the headlines. Perhaps that tip-off does have more than a grain of truth in it.
What is totally lacking in this debate is how CAT and TOT are to be reformed. The Junta has appointed a new super-board to reform all struggling state enterprises but putting the two under a joint holding company is not nearly enough. Giving them more and more free resources to squander in the hope of a miracle down the road seems to be the answer.
The NBTC is sort of enjoying this fudge and has come out saying that this time a beauty contest would be the best way to hold the auction. Never mind that the current law stipulates an auction and only an auction for spectrum allocation. Obviously the NBTC is working to a draft Digital Economy bill that sort of has been passed by the cabinet, ignoring the fact that once that new bill allowing a beauty contest is passed, that would also mean the end of the NBTC as we know it.
There is also the question of who will be bidding. The NBTC’s foreign dominance notification effectively bars all foreign companies from participating in telecoms operations in the country, not just in an auction. One industry source has said that there has been a gentleman’s agreement not to talk about the FDN anymore. Never mind that it has been tabled at the WTO last December by Norway and never mind that if followed to the letter, the FDN will probably disqualify at least two, if not all three, of the telcos in the Thai market. The NBTC seems to think that its FDN is written to exclude foreigners from bidding when the letter of the law actually forbids them from holding an operating licence and running a business.
During the last 2100 bid, the NBTC said that nobody had complained under the FDN and thus they had no complaint to investigate. Many NGOs and think-tanks did complain but apparently only those who are directly affected had the right to lodge a complaint with the NBTC. Since the general public is affected, apparently nobody is an affected party under the terms of the FDN in some Kafkaesque logic.
So to recap, the Digital Economy board (which does not have any legal basis yet) has ordered the (for now) independent telecoms regulator to hold an auction in August. The regulator has quoted a junta order prohibiting any work on an auction until July. The NBTC is working to an auction under the draft new NBTC act that has not yet been passed and the Digital Economy Commission will only formally have jurisdiction once the Digital Economy laws are passed, but those Digtial Economy laws will call for a new 7-member NBTC board (not one, but two, catch-22’s). Beyond the 25-MHz of 1800, there seems to be no clarity at all as to how much 900, 1800, 2300 and 2600 will be up for auction, if at all. And to top it all off, the Foreign Dominance Notification still hangs over everything threatening to kick all the commercial operators out of the auction.
In other words, it is like trying to carry out an oil, spark plug and filter change on a car while it is hurtling down the motorway at 70 miles per hour while the driver and navigator are arguing over the map or where to go while trying to climb out and switch seats with a fresh driver and navigator.
But there may be a silver lining to all of this. One must remember that Thailand today is a dictatorship without rule of law. If there is a dictat that 4G will happen, a deal will be made by the elites behind the scenes and all the public will see is a smooth miracle of an auction whereby everyone is happy except for a few radical academics and fringe journalists who saw through the charade.
May God have mercy on our souls.