Thailand turns back the deregulation clock

07 Aug 2013

Thailand’s regulator has backed a government proposal to amend the 2010 Frequency Allocation Act in a way that would reverse years of hard-fought-for deregulation and re-empower the state telcos.

The telecoms chair of the national broadcasting telecommunications commission Colonel Setthapong Malisuwan announced his support of a revised Frequency Allocation Act that would scrap requirements for a competitive auction for spectrum allocation and allow licence holders to sub-let their spectrum to third parties.

The requirement for licensees to operate the telecom business themselves, article 46, was written to prevent well-connected rent collectors from winning the auction and then sub-contracting them out to real operators.

More specifically it was put in to prevent a recurrence of today’s model whereby state telcos CAT Telecom and TOT Corporation act as nothing but idle rent collectors, squandering the 30% revenue share on wasteful, lavish projects and leaving only a pittance for the exchequer. The reason for this change is ostensibly to allow for easier infrastructure sharing.

Article 45 of the current Act requires that spectrum allocation be done competitively via an auction. Colonel Setthapong said that going forward most countries are turning to beauty contests.

This change would quite probably also nullify the current inquiry from the auditor-general into the controversial 3G non-auction last October; one that could have landed the commissioners in jail were they found guilty. The specific case by the auditor-general was that the bid was not conducted competitively, not that there was collusion in the bid as had been widely reported.

In addition to these amendments, ICT Minister Group Captain Anudith Nakornthap has said that he does not agree with the early return of 25 MHz of 1800-MHz spectrum from Dtac to the NBTC for re-allocation. Rather the ICT Minister says it should be used by CAT Telecom until the end of the Dtac concession in 2018.

How CAT could roll out a new network with just five years to break even and turn a profit is anyone’s guess, unless perhaps they are thinking of sub-letting the 25 MHz to someone else, though the only 1800 operators are TrueMove and Dtac. Or perhaps they still are hoping against hope for the TrueMove network assets to be transferred.

The 25 MHz was taken back by concession holder CAT Telecom and currently lies unused. Dtac says that the regulator has the power to recall unused spectrum and should auction it off early since the spectrum cannot be used by anyone else. Dtac CEO Jon Eddy Abdullah had ruled out launching an LTE network as uneconomical given the 30% revenue share that had to be paid to CAT Telecom under the concession terms.

This change in the law would also go some way to abolish any possible guilt in the TrueMove H 3G network that currently is operating without a licence.

Also likely to be amended is article 29, which requires public participation in allocation of licences, as this has caused delays and inflexibility for the regulator’s work.

Again, this article has been held against the regulator in last year’s 3G auction when the auction design was changed from a 20 MHz spectrum cap to 15 MHz at the 11th hour without any further public consultation. With 3 bidders, 45 MHz up for grabs and a 15 MHz spectrum cap, there was no need for competition and thus the licences went for a sliver above reserve.

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