Thai 4G watch: CAT's game plan

09 Nov 2015

Last Friday Thailand's dear leader, Prime Minister and Junta leader General Prayuth Chanocha waded into the 4G auction mess and said that anyone opposing the auction would be breaking the law and that he would not be held to ransom by those not playing by the rules.

It was a thinly veiled threat at both CAT and TOT. The former was threatening to derail this week's auction on 11 November by asking for an injunction unless they get a free 20 MHz 1800-MHz 4G network. The latter has already sued the regulators and has viewed to halt the December 15 900-MHz auction, arguing that 900 is theirs according to an old Post and Telegraph Department order.

The government has gradually given in to TOT’s demands. They (the ICT ministry policy maker and NBTC regulator) have given TOT 60 MHz on 2.3-GHz, a prime LTE band, under a fudge claiming it's for mobile broadband plus a $140 million (5 billion baht) soft loan.

CAT has given up 5 MHz of 1800 and together with half the industry has fudged a defragmentation of the band so that instead of two non-contiguous 12.5 MHz licenses in a Dtac sandwich, the regulator can auction of two contiguous 15 MHz blocks.

As part of the backroom deal, it is understood that Dtac gets to run 10 MHz of its remaining, shuffled, 1800 for LTE and CAT gets 20 MHz for LTE of its own in return for swapping spectrum around and defragmenting 1800.

The defragmentation, while technically a good thing, has opened a can of worms. Instead of auctioning off expired concessions, the regulator is effectively auctioning off mostly Dtac spectrum that expires in 2018 alongside True spectrum, Dtac having effectively swapped spectrum with AIS at the last minute - literally. The swap was announced on a Friday morning, the new NBTC notification came out hours later, auction documents went on sale Tuesday and applications were taken on Wednesday. But under what authority? The NBTC notification only said what spectrum was up for auction and the current NBTC act prohibits spectrum trading.

This is probably why the MICT and NBTC are so terrified of an injunction by the state telcos as they know they fudged the the Dtac-AIS spectrum swap.

But back to CAT. Obviously something has happened. The day Dtac launched their brand new 1800 LTE network with just three years to go on its concession (will someone please put me out of my misery and tell me how that works economically?) CAT’s union threatened to sue for an injunction and take back that 5 MHz unless they get their promised 20 MHz 1800 network.

Or, put another way, the union finally confirmed the rumours of the backroom deal that had been circulating since the beginning of the year.

However that deal had one fatal flaw and the NBTC telecoms chair Setthapong Malisuwan said it loud and clear - even if he wanted to give CAT the spectrum, he could not.

The current NBTC act only allows for spectrum allocation through competitive auction (note the word competitive, something everyone forgot last time out) and clearly says that any expiring concessionary spectrum must be returned to the regulator for reallocation. In this case, Dtac’s concession runs out in 2018 so arguably, at most, the NBTC could give CAT a three year licence to run 4G. Hardly enough time to make a sensible business plan. Never mind the minor detail that henceforth Dtac will be running mostly on ex-AIS concession spectrum.

My guess is that CAT thought that by this time the new Digital Economy bills would have been passed. The revised NBTC act would give first priority to spectrum allocation to the Digital Economy Commission, chaired by the Prime Minister, for non-commercial purposes and the NBTC would only regulate the commercial players.

The new laws would have given the Prime Minister absolute power in allocating spectrum and this plan would have worked if the law had been passed.

However, the bill has been delayed and now someone in CAT has suddenly realized that they have given up all their bargaining chips only for a vague promise that may never happen if the DE law is not passed in its current form, hence the last minute chaos.

Last Thursday, the government held crisis talks with all the players and CAT is still mulling its response so any move by the CAT labor union will be at the last minute. The union has had a full weekend to mull over General Happiness’ diktat. Whether it is enough to persuade them to back down is anyone’s guess.

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