Thai 3G auction hangs in the balance... again

12 Oct 2012

As arguments against holding Thailand’s long-overdue 3G auction go, I was never convinced by Anuparp Teeralarp’s objections as initially reported.

These objections: that the 3G bid does not have quality of service targets; the NBTC has no control over data pricing; no clauses in inclusion of the poor or those in rural areas; and the NBTC has not made it clear how revenue from the auction will be channeled back into helping people or how much will be returned to public coffers.

However, in court today, Dr Anuparp’s argument centred on the constitution. In particular article 47 of the 2007 constitution that calls for an independent regulator (later to be named the national broadcasting and telecommunications commission).

This article is referred to in a transitional clause, 305, which says that article 47 paragraph 2 does not apply until a law is passed (the frequency allocation act, which was passed in 2007).

And here is the crucial detail – the clause states that the law “...shall have details on the supervision and protection of business, the establishment of telecommunication resources development fund and the promotion of public participation in running of public mass media...”

Anuparp argued that the auction should be put on hold until those details, all the acts, plans, laws and announcements stemming from article 47 are passed.

Back in 2010, CAT Telecom successfully argued in court that an auction may not take place until a frequency master plan has been passed. Anuparp is taking that line of thought further and is essentially saying that all the laws referred to in article 47 of the constitution must be passed first, not just the frequency allocation act and subsequent master plan.

The NBTC led by commissioner for legal affairs Suthipol Thaweechaikarn countered primarily that Dr Anuparp was not a bidder and thus could not be a plaintiff.

Suthipol argued that the previous injunction had set the bid back by two years and had cost the country $5 billion (153.9 billion baht) in lost GDP.

After this preliminary hearing, the court will issue two rulings within the next couple of days - whether to accept the case and whether to grant an injunction.

Outside the courtroom, Anuparp was besieged by media asking who was behind his actions, with many trying to pin him down as acting on behalf of a telco that was excluded from the auction.

Two years ago, both CAT Telecom and TOT Corporation, former state enterprises still fully owned by the finance ministry, were up in arms at being excluded from the auction. CAT was deemed an affiliated company to TOT which already had 15 MHz from day zero. Not that it has been able to capitalise on a virtual monopoly since December 2009, it still has an embryonic network three years later.

TOT wanted more, CAT wanted in and both carpet-bombed the courts with lawsuits until one hit home and the injunction was granted.

Fast forward to 2012, the 3G information memorandum had, past tense, many references to existing holders of 2.1-GHz spectrum who wanted to bid for more, up to the original 20-MHz spectrum cap. This meant a possible extra 5 MHz for TOT or 5 MHz for CAT for its own use, though it never referred to the two state telcos by name.

At the eleventh hour, the NBTC re-jigged the IM to lower the spectrum cap from 20 MHz to 15. The reason that was given was to prevent a 15-year duopoly with AIS and Dtac (inferred, but not directly named) on 20 MHz each with True on 5 MHz.

One line of thought is that this is a compromise deal with the telcos to prevent True from using the nuclear option of the foreign dominance notification which could disqualify both AIS and Dtac.

The FDN is a law that should never have been passed, is impossible to objectively police and, intriguingly, need someone to lodge a complaint before the NBTC can take action. In this case, nobody complained.

But in doing so, the NBTC (perhaps) inadvertently kicked out CAT and TOT from the auction, leaving two very upset, very powerful state telcos with nothing to lose and everything to gain if the auction is derailed again.

If TOT or CAT were to file for an injunction, either would have a very strong case. The change to the IM was made at the last moment and crucially, after the last public hearing had been completed. Instead, the NBTC said that anyone who had a comment on the new IM could leave a comment on its website, hardly a shining beacon of transparency and good governance.

A source close to TOT said that there are factions within TOT considering applying for an injunction and commissioner Suthipol himself said he has reports of three or four lawsuits trying to stop the auction from happening.

I am actually quite surprised it got this far at all given the clumsy old-school military make-up of the regulator.

If someone had wanted to derail the auction, a much easier way would be the foreign dominance notification and article 305 of the constitution - which prohibits frequency allocation (article 47) until all the laws are passed and regulatory bodies are up and running.

I could argue that True, Dtac and CAT together broke article 305 in transferring 2.5 MHz of old Dtac AMPS 1G spectrum to True which, with another 2.5 MHz of CAT spectrum used it to launch its trial 3G network.

Most agree that Dtac with 12.5 MHz of 850 (and AIS with all of the 900 band) had an unfair advantage.

But fair or not, re-allocation was done before the regulator was up and running, clearly violating the constitution. Armageddon would quickly follow with the FDN taking care of anyone left (AIS) leaving the status quo.

I could, but I would not. Despite all the flaws and the auction that is not an auction, despite the failure to find new entrants, despite everything, everyone has had enough. It is time to move beyond these 30% revenue share BTO concessions and into a modern licenced telecom regime.

Well, everyone except the concession holders who are benefiting from the status quo, of course.

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