Billions Riding On 3G Auction Ruling

[webfact]

ANALYSIS

Billions riding on today's ruling

By The Nation

CAT and TOT stand to benefit if court rejects the NTC's right to stage the 3G auction, but the public could lose out

The legal commotion over the 3G auction stems from many reasons. Cancellation of the bidding would help CAT Telecom and TOT, but put many others at a disadvantage, Telecom reporters write.

It all started with the coup, which led to the scrapping of the 1997 constitution guaranteeing the full authority of the National Telecommunications Commission (NTC). The current Constitution stipulates that another regulatory body, the National Broadcasting and Telecommunications Commission (NBTC), should be formed under the Frequency Allocation Act, which must be enacted within 180 days after the government reveals its policy to the Parliament.

The law has still not been passed, even though Thailand has welcomed two governments. And the NTC's authority is in question. No one can give a clear-cut answer if it can continue working until the NBTC is created, or if it should have been promptly abolished following the demise of the old constitution.

The Central Administrative Court's issuing of an injunction against the 3G auction indicates that the court believes the NTC should have ceased operations.

CAT and TOT were heavily criticised for lodging their legal challenges with the Administrative Court. However, as state-owned enterprises, they have to do everything possible to protect their own interests.

If the 3G bidding takes place today as scheduled, they can expect customers to flee from concession services to 3G services. With most of their revenue coming from the 2G concessions, this will severely batter their finances.

Huge support from the labour union also encouraged CAT's management to seek the court's intervention.

Still, as state enterprises, they are under political influence. Their boards of directors are filled with government officials and political appointees.

CAT and TOT have been earmarked for privatisation for years, but the process gets nowhere. It is fair to say that once they go public, good governance must be in place to lure investment, with representation from the private sector. But who will invest in a privatised entity that is not totally free from political interference?

"It's a long story," a government source says. "This stems from CAT's failure to win the Information and Communications Technology Ministry's support to acquire Hutchison Telecom's Code Division Multiple Access (CDMA) 2000 1-x cellular network in 25 provinces. Some influential figures were also mad as many other projects, from which they can retrieve some commissions, are delayed."

The Cabinet approved the CDMA network acquisition deal back in April, backed by a Bt7.5-billion budget, but the ICT Ministry questioned the price, which could be lowered to Bt5 billion.

The ICT Ministry recently transferred an IT investment project to the Justice Ministry amid tips that politically connected parties are involved. On the cards is also CAT's fibre-optic investment plan worth Bt6 billion and TOT's Bt17-billion investment in a nationwide 3G network.

"All kickbacks will be impossible if telecom contracts are granted through the licensing schemes under the NTC," the source said, echoing what several companies and suppliers have said.

After the previous constitution was discarded, CAT and TOT never questioned the NTC's authority. As the NTC said in its appeal of the injunction, CAT even asked for the NTC to rule on an interconnection dispute and to give its permission for Total Access Communication and TrueMove to provide the 3G service on their existing 850MHz frequencies. Notably, both had never raised doubts of the NTC's authority during the public hearing.

Today, if the Supreme Administrative Court upholds the injunction, who would be the winners and losers?

Among the winners is CAT. Operating a CDMA network, which is equivalent to 3G, in 51 provinces, CAT can expect to gain more subscribers from 400,000 at present without new competitors. As no one can flock to new operators, its revenue sharing from three 2G operators will remain at Bt15 billion per year. If the ICT Ministry gives the nod for its acquisition of Hutch's CDMA network in 25 provinces, the network will expand and so will its bottom line.

TOT will also enjoy the lack of new entrants. Its existing 3G network in Greater Bangkok now serves 200,000 subscribers and it awaits government approval for an extra Bt17-billion investment to roll out the 3G network nationwide. Like CAT, revenue-sharing from 2G concession holders will remain unchanged at some Bt18 billion per year.

The NTC and the telecom industry as a whole would be the biggest losers if the Constitution Court says the NTC's authority ended with the previous constitution. Without the NBTC in place, all pending telecom disputes and development will be left hanging. The Central Administrative Court might ask the Constitution Court to rule if the NTC has any overall regulatory authority at all.

This would be a huge setback to the country as a whole. The NTC estimates that the direct and indirect economic benefits from 3G would amount to Bt240 billion-Bt480 billion through the 15-year licence term. The NTC's closure would also dash the private sector's hopes to raise the country's competitiveness via IT infrastructure. The public also remembers the slow service when telecom services were monopolised by state agencies.

Companies are moaning about lost opportunities. Telecoms consider now the best time for investment, thanks to the strong baht, which would lower the cost of imports. Nearly all telecom equipment is

supplied from overseas.

Banks will see slower growth in loans, based on the estimate that within three years, if the 3G bid goes as planned, total loans from this project could reach Bt125 billion.

Waiting for the NBTC is taking Thailand back to square one. It remains up in the air when the NBTC would be established. When the NBTC finally gets off the ground and starts the 2.1GHz spectrum process anew, technology would have already leapfrogged beyond that point.

-- The Nation 2010-09-20

[gotlost]

CAT and TOT stand to benefit if court rejects the NTC's right to stage the 3G auction, but the public could lose out

COULD LOSE? The public HAVE been the loser on this since day one due to greed and incompetence. The world will be on 6G while Thailand is still on soup cans and string.

[siamtexan]

TOT & CAT ; A "public service company" is a term seen in print and vocalized in the media but never truly realized or possible in Thailand. There are just to many rice bowls being maintained by a select few. Protecting their private turf makes the public service reference a criminal joke on the real public.

[Pib]

CAT and TOT stand to benefit if court rejects the NTC's right to stage the 3G auction, but the public could lose out

COULD LOSE? The public HAVE been the loser on this since day one due to greed and incompetence. The world will be on 6G while Thailand is still on soup cans and string.

But CAT and TOT will still be getting a percentage on each soup can and string call.

[gotlost]

Bangkok Post is reporting that the court has postponed their ruling tell Thursday. What a joke.

[Pib]

That doesn't surprise me; if fact, I would have been surprised if there wasn't a delay. The Thai courts routinely extend the judgment date on many important cases. In fact, for the court to have issued a judgment at 8:30am on Monday they would have had to evaluate a complicated case and prepared the judgment over the weekend, after just accepting it late last week. Plus it would have probably given the impression of a rushed judgment just to meet some other government agency suspense.

But I bet you there were no shortage of calls between high rollers and notes being slipped under doors as to the impact of this or that judgment. In fact, I bet the CAT and TOT soup and string lines have been/will be burning up with calls between interested parties in this case.