Running out the clock on TrueMove 2G

08 Jul 2013

Nobody wants to talk about the real reasons for the regulatory mess that has erupted over the extension of Thai operator TrueMove’s 2G concession.

A year ago, Thailand was on course to refarm 1800-MHz for 4G LTE. Now, having negotiated a lower fee and extension to the concession, it seems like the status quo shall continue for the 17 million subscribers on the network.

I learned that it is not so much about any strategic landgrab, setting things up for 1800 LTE, but a simple case of lack of network capacity on TrueMove’s 3G side.

Last generation concessions face a crippling 30% revenue share cut. Licensing is at 6% except the fudge that you-know-who has which does not even have to pay that 6%.

So why would anyone want to continue with a concession? Some (stuck in the mud) senators have argued in favour of the concession, that it was an important source of income for the country. They forget how the two concession holders have managed to squander all that revenue share with nebulous, dead-end, questionable projects and lavish bonuses on their staff and executives.

TrueMove and CAT Telecom have gone as far as saying that any attempt by the two 2.1-GHz 3G players (AIS and Dtac) to mass-port subscribers out would be illegal and a breach of the concession agreement. The argument is that the 2G subscribers are part of the assets of the concession and thus would need to be transferred to CAT when the concession ends, similar to the equipment and backhauls that has already been transferred. The same would go for AIS and TOT, but the latter does not seem to be complaining much.

TrueMove has said that all companies should abide by the mobile number portability agreement, one that gives the new TrueMove 3G entity 4,800 numbers a day to port in, 4,500 for the MVNO TrueMove H and 300 for parent MNO CAT My 3G. Yes, Virginia, in Thailand an MVNO can have nearly all the network capacity and leave the MNO with scraps and nobody thinks it is odd.

Doing the math, 17 million divided by 4,500 would take about 12 years to port over.

With the September 15 date for the expiry of the concession looming, why do we still this omnishambles? Why would anyone, least of all the mighty conglomerate CP which is behind TrueMove want to continue with a concession? I would have understood if they wanted to landgrab 1800 for LTE as well as 2.1, 850 and 2.5 the group currently uses, but using 1800 for GSM?

It was in a dark, quiet hotel corridor that someone enlightened me. TrueMove H 3G simply does not have the capacity to take on 17 million more customers. If MNP were opened up with the caps removed, what would happen is that most of those 17 million would simply port over to Dtac and AIS 3G.

By engineering this situation, running out the clock and holding consumers hostage, the extension is more about minimising loss and maintaining market share rather than any landgrab for 1800 LTE.

“But what of their 2.1-GHz licence?” I asked. “Surely with 15 MHz, thanks to that fixed so-called auction, they would have all the capacity needed. AIS and Dtac obviously do.:”

My new best friend told me that it was clear that True was already struggling with investing in its 850-MHz 3G network and did not have the resources to roll out yet another network. Hence all they could do was raid the kitty litter for pennies for the 3G quasi-auction and launch a 4G LTE 2100 PR stunt on it.

Now it all made sense.

He continued and pointed out that my predictions of True getting into trouble over their illegal 3G network would not get any traction, and already people are starting to forget about it. The regulator knows that if it were to crack down on True’s 850 network it would also have to crack down on AIS and Dtac and the country’s entire telecommunications sector would collapse into anarchy.

The 850-MHz deal between CAT and True blatantly ignores the public-private joint investment laws and was not approved by the Cabinet. But the same could be said of AIS and Dtac’s own extensions.

“But surely that’s different. TrueMove H is a new network while AIS and Dtac are extensions on existing ones,” I responded.

Not quite.

Maybe on the surface, but upon closer inspection, True’s 850 3G network is the way it is, a convoluted mess in which CAT outsources everything to BKFT (a wholly owned True subsidiary) and then resells everything again to RealMove (another True subsidiary) in order to preserve the entity that is BFKT.

BFKT was the now defunct Hutchinson-CAT CDMA network entity so, on paper, the brand new TrueMove 850 3G network is actually just an extension of the old Hutchinson 2G CDMA network, albeit a 14 year extension. Just another extension like the extensions AIS and Dtac were given.

“The question you should be pushing is why are we bothering with a regulator when one of our competitors can get a de-facto concession from the state telco. It’s not just about the 6% fee, it’s a matter of principle. If state agencies can still grant these types of contracts, why do we even need the NBTC?” he said, leaving me lost in deep thought.

Why indeed.

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