Insanity prevails in Thai telecom

06 Aug 2012

Albert Einstein defined insanity as doing the same thing over and over again and expecting different results. By that token, insanity prevails in the Thai telco scene if recent comments from the regulator are to be taken seriously.

National telecommunications and broadcasting commissioner Pravit Leesathapornwongsarn has said that telcos may be excluded from the upcoming 3G auction unless they sort out the issue of expiry of pre-paid credit first. The NBTC says that pre-paid should never expire.

Yes, in the same way that his predecessors managed to wreck the 2009 auction, doctor Pravit and his team of merry men have taken to solving today’s telecom industry problems via the only tool they have: threat of exclusion from the 3G auction.

That the telcos have failed to act on pre-paid registration and credit expiry is no secret. The problem, from the operators' point of view, is that since everyone is currently breaking the rules, whoever complies first and enforces prepaid registration or credit expiry will be at a distinct commercial disadvantage. Everyone needs to move at the same time. Around 90% of Thailand’s estimated 80 million telco subscribers are on pre-paid.

Doctor Pravit said that all telcos have already been ordered to amend their pre-paid rules and are currently appealing them. He reasoned that non-compliance means they can be excluded from the 3G auction in October.

Back in 2009 his predecessors tried to similarly lump many things into the 3G auction terms including reform of 2G at one point by requiring telcos to voluntarily give up their 2G spectrum in return for access to the 3G auction. Luckily common sense prevailed and this clause was dropped, not that it saved the auction in the final inning.

The industry is on tenterhooks now. The two largest players, AIS and Dtac, have come out stating that they would be happy with 15 MHz each. Previously many had feared that an open auction would result in the two cash rich telcos with the maximum 20 MHz and the cash-strapped telco with just 5 MHz. All in all, 45 MHz of paired spectrum is up for grabs.

This has been viewed as a olive branch to TrueMove in the hope that not going for more than 15 MHz (and, by extension, for all three players to bid just the reserve price rather than fight for 20 MHz) will appease True. In turn, it is hoped True will refrain from using the “nuclear option” of the foreign dominance notification to scrap the auction, which would lead to meltdown and deadlock as everyone sues everyone else in the courts and asks for injunctions.

However, the issue of prepaid is adding stress to what is already an uneasy truce.

Of course, Pravit’s comments could just be a bluff.

But if that were not enough, the ICT Ministry has added to the confusion by saying that expiring 2G spectrum should be returned to the state telcos rather than be re-allocated by the regulator. The 30 MHz of 2G spectrum used by TrueMove and AIS on 1800 MHz is expiring in September 2013.

AIS said it would be happy with 15 MHz of 2.1-GHz 3G because of the upcoming 1800-MHz auction which the regulator has pencilled in for March 2013 for 4G LTE use.

If that 4G spectrum is not going to be made available, its 15 MHz pledge would obviously need re-evaluation.

ICT Minister Anudith Nakontap said that he would be sending the concession contracts to the council of state - the government legal advisory board - for interpretation as to whether the expiring spectrum is returned to the concession holder, CAT Telecom, or to the regulator for re-allocation.

Anudith said that the two state telcos need to be given one last chance to prove themselves. For its part, the NBTC has said that the frequency allocation act of 2010 clearly says that expiring frequency is to be returned to the regulator.

What is worrying is that historically, the council of state has often been used as the ultimate excuse by politicians. If a government minister or senior civil servant consults the council of state and abides by the recommendation, then they are usually free from any corruption probe as they were just following due process. However the COS is not a court, and the way a query is worded can easily influence the outcome.

The COS has made many questionable decisions, where their recommendations have cost the government dearly when the private sector partner has sued them in court.

The risk of course is that the ICT Ministry might force the return of 1800-MHz spectrum to CAT and 900-MHz spectrum to TOT, and it would take the private sector operators years to get compensation through the courts, by which time it would be too late.

It is ironic that the statement from Anudith came at the opening of this year’s Bangkok ICT Expo hosted by the ICT Ministry, focusing on 4G wireless technology.

“I wonder if the government is still in charge of the asylum?” someone who shall remain anonymous told me when asked to sum up the state the industry is in. Perhaps when reading this column, he will take solace in the knowledge that he is not alone in asking that question.

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