Thailand: 4G world in a 2G mindset

07 Dec 2011

Thailand will soon get its first taste of 4G LTE but beneath the veneer, little has changed in the way the industry is structured with the country stuck in a twentieth century concession model controlled by the government.

The regulator, the National Broadcasting and Telecommunications Commission (NBTC) has approved a joint application by number one telco AIS and its concession holder, State-owned TOT Corporation to trial an LTE network on the 2.3 GHz band using 20 MHz of TOT’s spectrum.

A total of 84 cell sites will be set up, and the trial will run for 90 days with an option to run for another 90 days.

The NBTC also announced that it would entertain similar requests from CAT Telecom and its concessionaires for tests on CAT’s frequency.

And therein lies the rub. The balance of power still lies far too much in favour of the concession holders, CAT Telecom and TOT Corporation.

At a public hearing last year, TOT cold-shouldered a gathering on wireless broadband, sending only a low-level functionary to the meeting who seemed to be authorised only to say, “I have not been authorised to say anything”. What happened behind the scenes since then to change its mind and allocate spectrum to AIS? That is anyone’s guess.

TrueMove does not have enough spectrum for a decent LTE roll-out anywhere and DTAC is sending out mixed signals. Some say it has 50 Mhz on 1800. Some say it has only 25 allocated to it from CAT so far. One of its VPs recently stated that it could actually only use 17 MHz of what it was supposed to have. This lack of clarity is not helped by the insistence by the state telcos and the previous regulator that a frequency map is a state and military secret and not subject to freedom of information laws.

Number two telco DTAC, one must remember, first told its concession holder back in 2007 that it would upgrade its 1G AMPS network to 3G HSPA. CAT has taken five years to make up its mind whether such an upgrade was an upgrade or a new network (indeed, one might say that CAT never did make up its mind and was simply blindsided and did not risk public backlash when its concessionaires went ahead with network rollout anyway).

Controversially, it approved a more convoluted request by fellow concessionaire TrueMove to take over a competitor (Hutchinson) and upgrade its network from CDMA to HSPA in a matter of weeks. That is the status quo in the Thai telecommunications sector and despite the semblance of civility with 3G being rolled out and now 4G, nothing has changed under the hood.

Most of the world saw a parallel evolution of technology and regulation. Most 1G networks started with state owned telcos. Digital technology brought with it first concessions along with 2G networks, and in most countries, concession conversion and the change to licensing by an independent regulator by or around the time 3G had arrived.

Thailand did well on 1G and indeed on 2G, but that is where the country got stuck. Concession conversion still has not happened and despite numerous free trade obligations, promises and at least two constitutions calling for the deregulation of the telecom industry, it is still very much firmly stuck in concessions for the next three years at least as that is the time frame given for the concession fees to be decoupled from the concession holders and re-routed directly to the exchequer via the regulator. So, for the next three years, expect more delay and hiccups and token gestures like this LTE network while the concession holders milk their concessions as much as they can.

Private Thai operators by and large (except for TrueMove) rolled out 3G on crippling 30% revenue share concessions. For AIS, why would any sane investor roll out a 3G network with three years left on a concession that may or may not be extended?

The new regulator, the NBTC, has sent mixed signals since it has come to power. The Frequency Allocation Act allows it to arbitrarily set a date for non-concession spectrum to be returned to it for re-allocation, but instead of using that power, it first meekly asked TOT and CAT how long they would like to hold on to that spectrum for (most importantly being the 4G 2.3 and 2.5 GHz blocks) and now, has underlined that it is the state telcos who have the authority for 3G and 4G by saying that it would entertain a request from CAT to run a similar 4G test that it granted to TOT and its concessionaire AIS.

The ICT Minister seems to be talking some sense though, having told (not as meekly) CAT to study how much money they would like if they were to sell their concessions back to the concessionaires, TrueMove and DTAC. But one wonders who he is really talking to. Is he talking to CAT expecting them to actually do it? Or is he talking to CP and Telenor, owners of TrueMove and DTAC, who have long demanded action?

What the previous government learned the hard way was that the public wanted 3G. Not just the niche elite super-geeks, but wide swathes the populous toting smart phones and tablets. Their plan was simple, make sure someone else took the blame for lack of 3G. The current government seems intent not to make the same mistake. Yes, the people shall have 4G, who cares if the industry structure is still 2G, or, even 1G arguably (as TOT is the one with the licence)? As long as the people do not know, that is fine.

Who suffers? The people of Bangkok do not, as they now are spoilt for choice with 3G networks and now 4G LTE too. But the promise of wireless broadband for the masses, for connecting rural areas up economically compared to copper and fibre, for income distribution, for equality and access to information and services are all forgotten beneath the 4G headline and momentary euphoria.

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