Thailand's pricey tablet proposition

11 Jul 2011

Now that the elections are over in Thailand and Thaksin Shinwatra’s Puea Thai has won a clear majority, one wonders what the implications are for the telecom sector.

Of the party’s election pledges, two stand out. The Puea Thai Party promised free tablet PCs for all students and free Wi-Fi in public spaces for all. The other clear expectation, and one that was reflected in the stock market, was that preferential treatment to Shincorp group companies, namely AIS and Shin Satellite, would return.

Interestingly enough, while the placards everywhere said “One Tablet PC per Child” in English, the Thai “translation” underneath was rather less specific, saying only “Students get to use a computer.” Thai media, meanwhile, have taken “tablet PC” to mean “iPad” and the buzz generated was very high.

Exact demographics are a bit hard to come by, but with 20 million aged between 0-15 and with students going up to 18, a figure a bit short of 20 million is a reasonable guess as to the number of students in the country.

IDC originally put the number of tablets to be sold in Thailand in 2011 at 200,000 to 250,000 units.

Back in 2003, when Thailand’s ICT Ministry announced its budget PC program, it was originally envisioned as an open-source all-Linux affair, but the ICT Minister at that time, Doctor Surapong Suebwonglee, made history by breaking Microsoft’s global price policy and offering a full version of Windows XP and Office XP for an extra 1,500 baht ($35 using 2003 exchange rates).

It was hailed as a success of the bargaining power of the government over a corporation like Microsoft. Many open source advocates look back at the episode as a failure for a Linux ecosystem to take hold and free the people from the Microsoft tax forever.

One thing that is certain is that the lobbyists from the likes of Microsoft / Intel / Qualcomm / Google et al, are now queuing up to try and hammer in the need for a Windows 8 / Atom / Karit Snapdragon / Android / what have you ecosystem for the 20 million strong purchase order.

A senior figure in Pua Thai has said that they would fufill their promise by importing the $35 Android tablets from India, never mind that the $35 Android tablet was only a target, that they currently cost about four times as much and are not commercially available yet.

The next question is connectivity. Are those tablets to be connected via 2G, 3G or via Wi-Fi? Apart from a few cells scattered in major cities, Thailand still does not have 3G. Subsidising 20 million tablets so that telcos (and guess what telco has just under half the Thai population as customers?) get a lot of airtime fees could be a wicked option, though that would push up the price of the tablet. Wiring up all schools with Wi-Fi would cost quite a bit too, but money is no object in this government.

As for budget? Well, the cost of twenty million tablets, even at market prices, pales in comparison to the amount of money needed for her other promised agricultural projects, wage hikes and tax cuts, issues which go beyond the scope of a telco blurb.

Free Wi-Fi in public places is a nice idea, but one that does not really work - just ask anyone in Singapore or Hong Kong. It works, but in such a way that people usually go for 3G anyway. The question again is how much money is the incoming government going to push towards this project and how the networking companies will take advantage of this windfall.

On another level, as expected, the moment the election results became clear, TOT quickly approved Shincorp’s AIS’ request to roam onto its 3G network. That the approval came so quickly was not surprising, but the numbers were somewhat higher than expected. At 0.85 baht per megabyte (both ways, TOT 3G users can now also roam onto AIS 2G), that works out at 850 baht per gigabyte or four to eight times what TOT’s current MVNOs are charging their customers for data. Quite how this would make sense commercially is unclear, apart from bragging rights that AIS now has 2100 MHz 3G.

Also, as the election results started to become clear, TrueMove (which is somewhat aligned with the outgoing Democrats) had its 3G project thrown into disarray. First, the regulator NBTC set up sub-committees to investigate the deal (after months of saying it was not their responsibility) and later, the ICT Ministry (as the Ministry controlling CAT Telecom, concession holder of True) refused to approve the project and deferred it to the incoming cabinet to decide. Talk about doing the right things for the wrong reasons.

This is nothing terminal, of course, just that True would have to, ahem, work harder at appeasing Mr and Miss Shinawatra so that her Cabinet approves the deal.

So AIS gets roaming on 2100. True continues to push ahead with 850 3G. That only leaves poor old DTAC with a bucket load of lawsuits and criminal investigations into its shareholding structure with no 3G network in sight.

The next phase of politics is more worrying though. Many Puea Thai factions have been openly campaigning for a return to the “more democratic” 1997 constitution which would also just happen to conveniently annul the lawsuits against Thaksin Shinawatra without having to grant an amnesty.

The only problem for the telco sector is that the 1997 constitution calls for two separate telecom and broadcasting regulators as opposed to the 2007 converged one.

Selecting articles of the constitution to keep and ones to revert would not be an option as that would open the door for people to question if the ones pertaining to the investigative committee set up against Thaksin should be scrapped or not.

If the 1997 Constitution is re-enacted before the NBTC manages to hold a 3G auction, this would mean many more years of limbo before a regulator is up and running.

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