Thai deregulation experiment has failed

21 Jan 2016

The Thai government has ploughed at least $963 million (35 billion baht) into a series of broadband connectivity projects including a new international internet gateway that has rekindled fears of the single gateway surveillance project.

The cabinet allocated $412 million (15 billion baht) for an internet gateway upgrade with money coming from the 1800- and 900-MHz auction licence fees. This is in addition to another $137 million (5 billion baht) that the ICT Minister said he would request from the new Digital Economy Commission through the normal budget process. A further $551 million (20 billion baht) again is earmarked for the two state telcos to build a 2.3-GHz network (TOT) and upgrade its 850-MHz network (CAT) to provide last mile access.

Deregulation was all about getting CAT and TOT off the drug addiction that was easy concession revenue share money and moving from a state run concession to a licensed model with an independent regulator. It was a huge struggle to get the 30% revenue share decoupled from the two state telcos and paid directly to the Ministry of Finance. Well, now that the state telcos cannot squander the 30% revenue share cash, the government felt it necessary just to hand money to the two state telcos instead.

Today the government is again using tax money and scarce spectrum resources to compete with the private sector.

Many in the industry believe it is because the government owns the two state telcos and sees their success as reflecting on government performance. These optimists urge the government to look at the bigger picture and act as one who owns the ICT industry, not just one who owns those two state telcos.

Someone more cynical would say that bungling bureaucracies are a good way to write off corruption as incompetence.

Then there is the national security argument which this military government seems very keen on.

Thailand does not need to invest 20 billion for a new state-owned and run internet gateway despite the ICT Ministry saying it would reduce prices as the private sector is doing a good job already. Rather, it is to give the state telcos control of the country’s connectivity and is the realization of the next phase of the single gateway project.

Thailand’s experiment with deregulation has failed. In 1992 in the aftermath of the Black May massacre of pro-democracy protesters it was decided that among the many reforms needed for lasting peace, one crucial element was separating government control of media and by inference spectrum from that of direct government control though the establishment of an independent regulator.

Without free media there can be no free speech. Without free spectrum there can be no free media. A telco or a radio station would quickly fold on any commitments to free speech if their continued business is threatened.

All of that has progress has been torn up in recent months.

The other bombshell is the return of one half of the dynamic duo that gave us the Foreign Dominance Notification. Professor Sudharma Yoonaidharma has been drafted out of his retirement as an academic to head the rewrite of the country’s digital economy laws, the very set of laws that in the first draft put the regulator under the control of a digital economy commission that was chaired by the Prime Minister and granted sweeping powers for the PM to order any telecoms operator to spy on citizens.

Sudharma and fellow National Telecommunications Commission board member Dr Natee Sukonrat were the masterminds behind the foreign dominance notification law that banned any foreign-dominant entity from operating in Thailand’s telecommunications sector.

The law began as a national security law but then morphed into some sort of protectionist fudge with the regulator vowing to go beyond mere commercial law and go as deep as needed into holding companies’ shareholding structure until individuals and their nationalities were identified.

In the run-up to the 2012 2100-MHz 3G non-auction everyone was speculating that Dtac and AIS would be disqualified because of the FDN but when push came to shove, the NBTC said that since no affected party had officially filed a complaint about the bidders under the FDN, they could not start any investigation.

Today the FDN is still law but nobody bothered to even talk about it in the recent 4G auctions.

The fact that someone with such protectionist leanings is now in charge of the new digital economy laws which includes a revised frequency act is worrying. Then there is the tight timeframe - Sudharma has been given just over a month to revise all eight laws before they are presented to the legislature in on 1st March.

Recent cyber attacks by Anonymous leaking court website databases have turned public sentiment to the government’s favour especially given the dump that included personal information of many innocent users. Rather than chastise the courts for storing personal information unencrypted on an old web server, the police say they need a single gateway to protect the people of Thailand from further attacks and it seems like they are going to get their wish.

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