By Alexandra Sander
Thailand’s National Broadcasting and Telecommunications Commission (NBTC) October 16 held a controversial 3G spectrum auction involving the top three mobile operators in the country: Advanced Info Service, Total Access Communications and True Corp. Each operator won a 15 year license to provide 3G services in Thailand. The NBTC board accepted the auction results 4 to 1 on October 18, with board commissioner Pravit Leesathapornwongsa voting against accepting the results.
Thailand and Myanmar are the only two countries in Southeast Asia that do not offer widespread 3G services, and the recent auction allows Thailand to catch up to its more advanced neighbors. 3G, or third generation mobile telecommunications technology, is more reliable and has faster data transfer rates, at least 200 kbit/s, than previous generations of mobile internet services.
The long-overdue 3G spectrum auction, originally slated for 2005, was derailed by protests sparked by Prime Minister Thaksin Shinawatra’s sale of Advanced Info and other companies and the subsequent military coup d’état. In 2010, the NBTC made a second attempt to schedule an auction but two state-run telecommunications companies blocked the sale by court injunction.
That the auction finally took place this year exemplifies Thai businesses’ resilience in the face of the less than stable political environment, but also demonstrates how that environment harms investment and innovation. Advanced mobile networks are moving on to 4G connectivity, while Thailand is just now receiving 3G services.
In addition to allowing Thai mobile operators to upgrade their services, the 3G spectrum auction has significant implications for the current concessions based licensing system. The companies will not have revenue sharing obligations with state owned enterprises. Thailand has struggled to deregulate the telecommunications industry, and this auction may be an important step in allowing private companies to have more control over what services they can offer consumers.
The auction garnered low revenues, sparking intense controversy. The Finance Ministry netted 41.6 billion baht in revenues from the NBTC’s sales to Advanced Info, Total Access Communications and True Corp, which is less than 3 percent above the NBCT’s minimum price of 40.5 billion baht and 30 percent below the value of the spectrums as estimated by Chulalongkorn University. The Finance Ministry and media activists believe price collusion and lack of competition are at fault for the suspiciously low revenues, while consumers are concerned that they will not get competitive rates for 3G services. The NBTC responded to this criticism by proposing a price ceiling be utilized to control data rates.
The Finance Ministry informed the NBTC the auction may be in violation of the Price Collusion Act of 2009, though NBTC claims the auction was held legally. Thailand’s Senate Committee on Good Governance will convene a hearing October 25 to determine if collusion occurred, but announced October 24 that they suspected it did. If the auction is indeed in violation of the law, revoking the results could push Thailand even further behind its neighbors in the telecommunications industry. Thailand stands to gain much by modernizing its mobile services, and will lose greatly if they fail to implement auction results. This late in the game, the Finance Ministry should cut its losses, allow Thailand to upgrade to 3G systems and seek to guarantee a more competitive and profitable 4G spectrum auction—currently slated for 2013.
Ms. Alexandra Sander is a researcher with the CSIS Chair for Southeast Asia Studies.