Looking back at 2 months of Thai 3G drama

14 Dec 2012

With the long overdue 2.1-GHz 3G auction done and dusted and the licences out the door, one looks back at the past two months and wonders what might have been. The recriminations and lawsuits will continue for a while, but a historic step has been made. The licences are out and the era of shackled, ham-fisted, expensive concessions will soon be ending.

The concessions are downright evil. It is not just the crippling 30% revenue share, not just the build-transfer-operate nature (and not, as is often stated, BOT), but the sheer subjectivity. Take, for instance, femtocells. After much lobbying and debate, the regulator finally classified femtos as consumer devices. However, one of the concession holders decided that a femto was a base station, so it could collect fees and ownership thereof. Hence the lack of adoption.

But all that should soon be over, with one key exception. Thailand still has no functioning wholesale market. Having retail price caps without a wholesale, cost-plus structure is a recipe for disaster and the next hurdle that will have to be crossed.

Working backwards chronologically, the key objection that one has to make regarding these licences is the last-minute imposition of a price cap. As they issued the licences, the regulator issued an order capping prices at 15% less than the price today.

The reason was that since the licences went for a low price, two at the reserve price and only with AIS bidding against itself for a tiny premium, the regulator had to ensure that the savings were passed on. None of the telcos disagreed as none dared to be the only ones without a 3G licence, but the fact remains that this new rule was imposed ex post facto.

Then there was the madly rushed board meeting to issue the licences. The five-member telecom board and not the full eleven-member board met to issue the licences and did so on a 4:1 vote. Dr Pravit voted against, saying it was humanly impossible to read the wad of papers thrust in front of him to approve in time. He also said that the documents were littered with errors, the most glaring one of which saw AIS and Dtac issued with the same frequency. No matter, the documents were ratified and the licences were issued with the correct frequencies inserted instead.

Makes you wonder what happened to due process. While common sense would say it is fine to change the frequency allocated between ratification and issuance in this case, how many other details were incorrect? How many other changes were made? Would that licence stand up in a court of law if challenged given it was never properly ratified?

This we will never know. Since October, the telecom board has gone into stealth mode. While the broadcasting board is still publishing agendas and minutes of every board meeting, the telecom board has simply stopped making that information public, leaving the media only glimpsing at the inner workings of this secret society by comments from Doctor Pravit from time to time.

Secret and unaccountable. Many NGOs tried to sue the NBTC to halt the auction but the courts said they were not the affected parties. Then the senate, through the office of the Ombudsman tried to sue the NBTC, but the courts, after weeks of testimony, said that the Ombudsman could only oversee civil servants and political appointees, not independent regulators such as the NBTC.

Secret, unaccountable and unauthorised?

It was only after the auction was ratified that a new allegation came to light. One of the senators pointed out that the constitution gave the power to hold an auction and to issue spectrum to the NBTC, being the full 11-member board. The auction was ratified by the 5-member telecom sub-board. The argument here is that one cannot delegate a constitutional responsibility to what is effectively a third party. That case is now with the constitutional court.

Going further back there was the huge psychological operation that led the public, and mainstream media, to believe that many were opposing the bid because the telcos colluded to bid low. Nobody ever made that accusation and yet the regulator asked the department of special investigations to investigate the auction; it set up a committee to investigate the auction and the telcos got together and held a huge press conferencing swearing they did not collude.

Nobody ever accused them of collusion. The accusation was that the regulator designed a fixed auction; one that had no competitive element.

In the final days running up to the auction, the regulator reduced the spectrum cap from 20 MHz down to 15. With three incumbents and a foreign dominance law that effectively precluded any foreign bidder, everyone predicted a non-auction and for the spectrum to go at reserve. Everyone but the regulator, who said that there would be huge competition between the three players to bid for rights to choose first.

The chairman of the telecom board likened the spectrum to three plots of land. The lower the spectrum, the closer it was to Bangkok and thus would be more expensive than land further away. In the end, AIS paid a premium to pick first and picked the highest frequency, confounding the regulator’s explanations, to be next to TOT’s spectrum. Worse, True and Dtac drew lots. True picked next and picked the middle bit and Dtac picked last and took the piece that the Colonel said would be most sought after.

Not that he ever showed repentance. He said that a lower frequency was better and that he would “return his books to his teachers” if he was wrong. Well, he was wrong, and yet he still uses his academic title.

So that, in a nutshell, is a summary of the past two months. Ultimately, none of the facts mattered. The outcome was driven by mass hysteria and who cares if due process is ignored or the constitution is trampled on. Even the court cases were all dismissed without a proper hearing on technicalities. Today, everyone is happy, but when the same secret, unaccountable bureaucrats start to make decisions that go against the interests of the players, only then will we see people complaining again.

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