Thai 900-MHz auction delayed a month

03 Nov 2015

Both Thailand’s 900- and 1800-MHz auctions have been thrown into doubt with both state telcos taking aim threatening to file for an injunction unless they both get a free 4G network.

CAT Telecom’s labor union has threatened to recall the 5 MHz of (ex-)Dtac spectrum (actually 4.8) it relinquished to the regulator unless its demands for an LTE network on the remaining 20 MHz of 1800-MHz are granted.

Way back in 2006 CAT, as Dtac’s concession holder, recalled 25 MHz of Dtac spectrum, citing that it had not demonstrated need.

In early September, Dtac got a no-strings-attached deal to develop and launch an LTE network on its concessionary network that expires in 2018.

Then a week later CAT offered the telecom regulator a no-strings attached deal to relinquish 4.8 MHz so that instead of two 12.5 MHz 1800 licences, it would be two 15 MHz. Since all real-world implementations of LTE run in 5 MHz chunks, two 12.5 MHz licences would be a waste of 5 MHz.

The offer was made on a Friday morning by the ICT Minister. On Friday afternoon, the NBTC had accepted the offer, tore up its old auction notification and issued a new one. The auction documents were sold the next Tuesday and the applications by the telcos were taken on Wednesday all in one mad rush.

The auction is scheduled in a week’s time on November 11. If granted, an injunction to hear CAT’s argument would postpone the auction for months at the very least.

However, the elephant in the room is that the current NBTC Act clearly stipulates that secondary spectrum trading is prohibited and it is likely that CAT’s union would point that out in any claim for an injunction they may make.

While officials from CAT and the MICT have said that each step had no-strings attached, the statement by the CAT labour union proves the lie that this was a package deal and, it could be argued, that there was spectrum trading in trading 5 MHz for the others for a 10 MHz deal for Dtac and for 20 MHz for CAT.

The question is why now? Well, apart from the fact that the auction is in a week’s time there are two recent developments.

First is that Dtac has launched its new LTE 1800 network yesterday. The second is that TOT has slowly been gaining more and more concessions in exchange for not stopping the 900-MHz auction, most recently a chunk of 60 MHz of 2.3 GHz, and CAT is suffering from sibling rivalry. After all if TOT gets 60 MHz (TDD) as a reward for not throwing a tantrum, why can CAT not get 2x20 MHz (FDD) too?

The NBTC yesterday announced that the 900 MHz auction would be postponed a month to 15 December. Originally it was scheduled for the 12th of November. In other words, the telecoms regulator decided to postpone a critical auction just 10 days before the date.

The lack of clarity in the message speaks volumes. Half the media reported NBTC secretary-general Takorn Tantasit said that the move was to prevent collusion while half quoted him saying that it was to help the telcos from having cash flow problems from having to pay for two auctions too close to each other.

Someone should tell Takorn that telcos can work to any plan, all they need is clarity and stability, of which the current regulator offers neither.

Takorn said that the delay would not affect the launch of the new 4G networks in Thailand in January 2016 either.

However, in context the postponement came just after the regulator approved a plan for TOT to launch a new TDD 4G network on 60 MHz of 2300 for the next ten years.

TOT has demanded $2.8 billion (100 billion Baht) in cash from AIS in compensation for amendments to its concession (an amalgam of figures, the bulk of which is a supreme court ruling against then-Prime Minister Thaksin Shinawatra for conflict of interest whose wife, children, maid and driver at the time owned AIS), 2.3-GHz, 900-MHz and AIS’ customers too, the latter two are clearly stipulated in the concession agreement.

Uttama has been slowly giving into TOT’s demands since he became ICT Minister, offering them 2.3-GHz and a 5 billion Baht soft loan to launch an LTE network.

Putting the pieces together would suggest that TOT has again rejected Uttama’s offer and he needs more time hence the need to kick the 900-MHz auction down the road so that more negotiations can be conducted and more concessions given to TOT so that they will not file for an injunction.

The way the auctions have been haphazardly hacked together would make it quite likely for any request for an injunction to succeed, and everyone knows it.

Either that, or perhaps the new NBTC and Digital Economy Acts will be ratified before that date. In recent drafts, the new laws would give spectrum allocation power to the Prime Minister good causes ahead of the telecom regulator, which would change the dynamics of power entirely. Under the current NBTC Act, the telecom regulator can only allocate spectrum through competitive auction.

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