Thai Govt Wants Fair Play In Telecoms Concessions

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OPINION

Govt wants fair play in telecoms concessions

By Nophakhun Limsamarnphun

The Democrat-led government is spearheading an ambitious policy to combine the 2G (second-generation) and 3G (third-generation) mobile phone franchises.

This policy has diverse objectives that are crucial to consumers, state coffers and the long-term competitive landscape of this highly lucrative industry. On one hand, the independent National Telecom Commission (NTC) is preparing to auction off a number of 3G licenses later this year. On the other hand, the ICT Ministry and Finance Ministry prefer the NTC to have a 2G/3G tie-up.

A few months ago, this wasn't possible politically because the ICT portfolio was still occupied by Ranongruk Suwannachawee of the Bhum Jai Thai party, a member of the coalition. In a recent Cabinet reshuffle, Juti Krairirk of the Democrat Party took over this portfolio, so he managed to work with the Democrat-controlled Finance Ministry to implement this policy. Last Wednesday, Prime Minister Abhisit Vejjajiva visited the NTC's headquarters to convince its commissioners to support the policy and his administration's proposal on 2G conversion.

Essentially, the government wants to convert the existing 2G mobile phone concessions into licenses whose duration and fees should be equal to those of 3G licenses to be offered by the NTC. If the government has its way, there should be a more level playing field for telecom operators, which should benefit consumers in the long run in terms of lower price, better service and more choices. In addition, the state will not lose an estimated Bt30 billion per year from existing 2G telecom concessions currently held by AIS, Dtac and True, the country's three largest operators.

The AIS concession granted by TOT (formerly the Telephone Organisation of Thailand) has another eight years to go, while the Dtac and True concessions granted by CAT (formerly the Communications Authority of Thailand) have another five and three years to go, respectively.

These operators currently pay TOT and CAT more than 25 per cent of their revenues as concession fees, totalling about Bt30 billion per year. However, these operators do not have incentives to invest more in the existing infrastructure because the time to make profit is running out.

If their concessions are not converted into licenses, the operators will likely push the millions of users to the new 3G network once it's up and running.

The government's proposal suggests that the NTC should levy a 12.5 per cent license fee on 2G, which should be equal to a planned 3G license fee of 6.25 per cent on revenues plus an up-front auction fee of around Bt12.8 billion per license.

In addition, the government has proposed to the NTC that it should issue new 2G and 3G licenses with equal terms and conditions - 15 years for each of the licenses. This will help create a more level playing field. Currently, some operators have advantages over the others in terms of cost and profitability.

According to the Constitution, radio frequencies used in telecom services are public properties, so they should be used to maximise public benefits. This should be done via free and fair competition. Currently, AIS has the biggest market share of 51 per cent, followed by Dtac's 32 per cent and True's 18 per cent.

Meantime, state-owned TOT and CAT together have a combined market share of only 3 per cent, but the number of their employees is larger than AIS, Dtac and True workers combined.

Both TOT and CAT will also have to compete in the new landscape as operators because they no longer own any concessions or have any regulatory role. Hopefully, this ambitious 2G/3G policy will be successfully executed, even though it looks like an uphill battle for the government.

-- The Nation 2010-07-24

[RKASA]

Somebody should write a song about robbing the Thai people blind. Where is PAD on this one?

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PM concerned over 3G bids

BANGKOK (NNT) -- Prime Minister Abhisit Vejjajiva has expressed his concerns over the planned auction of 3G licenses by the National Telecommunication Commission (NTC) due to some problems in the existing concession contracts with 2G operators.

Speaking in his weekly television program “Confidence in Thailand with Prime Minister Abhisit”, the Prime Minister stated that the NTC had already formulated criteria for the 3G license bidding which will be announced in the Royal Gazette. It is estimated that it will take about one month before the private sector is able to vie for the auction.

Prime Minister Abhisit said that the existing concession contracts with 2G operators might cause problems in asset ownership and could deter effectiveness in other telecommunication operations; therefore, the cabinet had resolved to appoint a panel to change the concession into a permit format within one month.

The Prime Minister further stated that the concession transfer must not cause any effect to legal issues as well as the rights and revenue of the public sector gained from the concession contracts. However, Mr Abhisit noted the change would depend on the willingness and cooperation from 2G operators as well.

Prime Minister Abhisit then affirmed that the Government would supervise the competition in the industry, to ensure fairness as well as the highest benefits for the nation and people using the telecommunication services alike.

-- NNT 2010-7-25