The 2010/11/30 at 10:02
Whilst certain countries in the region are already developing their 4G network, the Kingdom of Thailand has just postponed, for the umpteenth time, the attribution of 3G frequencies at the request of the incumbent operator Cat Telecom which contested the authority of Thailand’s existing National Telecommunications Commission (NTC) to regulate on this matter. The Thai Supreme Administrative Court handed down its decision in September: it is the National Telecommunications Board (NTB) that will allocate frequencies. The problem is that this body has not yet been set up and is not expected to see the light of day until the start of 2011…
After long years of discussions and reports, this new delay causes despair in the business arena. “This will create opportunity losses for both the operators and consumers,” regrets Suchart Sakkarnkosol, Senior Director of the domestic economy division of the Bank of Thailand. Visibly embarrassed, the President of the Thai Chamber of Commerce (TCC) has preferred not to answer our questions.
A study carried out by the NTC foresaw the creation of 80,000 jobs and up to 2.3% extra growth thanks to the consequences of 3G, allowing high-speed data transfer (videophones, television…). The Supreme Court’s decision “leaves the overall status of telecoms development uncertain” declares the Joint Foreign Chamber of Commerce of Thailand (JFCCT) in a statement.
Even Cambodia and Laos are ahead
It should be pointed out that Thailand is one of the rare Southeast Asian countries to not yet have launched 3G. The first so-called “third-generation” network was launched in Japan in 2001, and all countries belonging to the Association of Southeast Asian Nations (ASEAN) have not introduced it. Even Myanmar (formerly Burma) has now put in place a 3G network around the economic capital Rangoon for a lucky few, mostly officers of the ruling junta. Laos, Vietnam and Cambodia, considered as less developed countries, have also gained a head start on Thailand in this domain, even if the market is still limited. “The median age of the population is 21 years. So our consumers are open to new technologies, there is a market,” declared Morten Eriksen, Chief Executive Officer of Cadcomm, a 3G pioneer in Cambodia. Since the launch of the network in 2008, over 80% of traffic flows from Internet data exchange rather than classic uses (voice, SMS).
An impact difficult to quantify
In Malaysia, another neighbouring country, the first commercial 3G formula was launched in 2004. “The development of 3G in Malaysia was necessary. Today, all new mobile phones are equipped with this technology,” comments K.S. Wong, Executive Director of the National Chamber of Commerce and Industry of Malaysia. He nevertheless considers that it is difficult to quantify the impact of 3G on the local economy. In Indonesia, where penetration rates of mobile phones are around 50% of the population according to a Nielsen survey dating from April 2010 commissioned by the Indonesian Chamber of Commerce (KADIN), 3G appeared in 2007… In Thailand, penetration rates exceeds 110%. Certain observers therefore believe that the absence of a 3G network is a serious handicap for the Kingdom. “In the week prior to the new report, the National Telecommunications Commission had organised a big event to flaunt the merits of 3G for consumers. Thailand is making a fool of itself!” exclaims one commentator.
According to Laurent Perche, Head of Solution and Marketing at Alcatel-Lucent (Thailand), the Kingdom’s image in the eyes of investors is suffering. “When a company wonders where it is going to set up its head office, telecoms are a primordial factor. It’s like wondering about electricity supply! Today, access to high-speed services is still relatively limited in the Kingdom. By raising more competition, 3G would allow cost cuts and better quality services.” The placing of 3G frequencies on auction has now been suspended until a favourable decision by the Constitutional Court or the forming of the NTB, the new regulating organism. A procedure that could take another two years.
A case dogged by political stakes
The telecom case in Thailand is highly politicised: the mobile telephony concession granted to AIS – a subsidiary of the Shin Corp holding – enabled former Prime Minister Thaksin Shinawatra, the bête noire of the current government, to make a fortune in record time and to become the country’s most popular politician. It is also the resale of Shin Corp to a foreign group that precipitated his fall in 2006. But the fate of the incumbent operators TOT and Cat Telecom is the major cause of the current impasse. Until now, GSM radio frequencies (900 MHz and 1,800 MHz) have been controlled by these two public operators which lease the right to use their frequencies to private operators, forced to accept highly unfavourable conditions. Even today, “renters” must invest in equipment, transfer their ownership to the incumbent operator, and finally pay the latter 20 to 30% of their income. Last year for example, TOT reaped 19 billion baht (390 million euros) from this “profit sharing”. By buying a 3G frequency, private operators will only have to hand over 6.5% of their takings – the loss of a major opportunity for the incumbent operators. Since debates on 3G began in 2003, no alternative solution has been offered to TOT and Cat Telecom which are therefore fighting to delay the arrival of the new network. “This case demonstrates the inefficiency of the Thai government, its bureaucracy, and shows the extent to which it can hinder the progress of this country,” asserts one Thai commentator from the banking industry.