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Operators gearing up for privatisationWith the long-awaited liberalisation of the telecommunications market now scheduled for October, operators in the industry are preparing for increased competition. Vivat Prateepchaikul As the Thai telecommunications market moves towards liberalisation in October this year, there have been signs of improvements in the industry during the past six months and adjustments by the private sector to prepare for competition. Reporting improved market sentiment are two major private operators, Advanced Info Service (AIS) and Total Access Communication (TAC) who are dominant players controlling over 90% of the approximately 2.5 million subscribers. Both operators reported sales of mobile handsets picking up satisfactorily during the past five months, citing the country's gradual recovery from the 1997 economic nightmare. AIS adjusted its sales target to 350,000 new subscribers from an earlier target of 200,000 in the wake of better-than-expected first-quarter sales. Meanwhile, the number of mobile phone subscribers to all six systems, including those operated by TOT, CAT, Digital Phone Co and Tawan Mobile Telecom, was also close to 2.6 million. More than 20% cellular growth from last year's 16% was expected. Both operators admitted some of their target groups had switched from cellular phones to the small, handy cordless phones commercially known as PCT. The PCT (personal communications telephone) service was launched late last year by Asia Wireless Communications, a subsidiary of TelecomAsia Corporation, operator of the 2.6 million fixed-lines in Bangkok Metropolis. PCT was in service for over two years before its commercial launch. However it was merely a trial period and its original 110,000 subscribers enjoyed using their handsets free of charge for local calls. The PCT service received an enthusiastic response from the public with over 100,000 new subscribers signing up during the first few weeks of the launch in November. At latest count, subscriber numbers have shot up to 330,000, with a target of 400,000 by the end of this year. Although PCT is being pitched as a value-added service on top of fixed-line services, it also is treated as a mobile service. AIS and TAC executives insist that PCT has a different target group, but industry sources said the emergence of PCT could shake the balance of the current cellular duopoly held by AIS and TAC. Though PCT has mobility and coverage limitations, it has becomes a major mobile phone alternative because of low handset prices, which start at 4,800 baht, and tariffs that are below cellular. TA targets PCT as a niche in the mass market, not competing head-on with cellular services. However cellular operators didn't stay put and waged lavish promotion campaigns with a view to direct competition with PCT. Reacting promptly to PCT was Digital Phone Co, a new mobile phone arm of Shin Corporations, taken over from Samart Corporation in a five billion baht deal struck in February this year. DPC offered a low monthly fee of just 300 baht and cheap air time to compete head-on with PCT. PCT was unshaken by the promotions. The latest count of PCT subscribers in June showed they are reaching the 250,000 range, though PCT has been in the market commercially for less than five months. Contributing to PCT's success was its ÒBangkok is your Home'' marketing concept, in which a PCT phone uses the phone number of a fixed-line phone, so subscribers can enjoy taking their home phone anywhere in Bangkok. The Òone number'' concept is a reality with this medium because users do not have to switch between fixed-line and cellular numbers or divert their calls. Users have the option of receiving calls via PCT when it is switched on, or using the private operator mode that lets the caller select between PCT and fixed-line phones.
TA is in the process of expanding its network capacity to 32 kilobits per second (Kbps) from the current 16.6 Kbps to allow PCT users to connect to the Internet. The mobile Internet is still in a testing period. Aware of upcoming Internet technology through PCT handsets, cellular operators will not be standing by waiting to be beaten. WAP Technology Mobile operators are now working with their equipment suppliers to test a global standard known as WAP (wireless application protocol) to allow mobile phone users to access the Internet. After testing, they are scheduled to launch WAP-based or mobile Internet services by the end of this year. One telecom industry source warned that although WAP has been heralded as the way forward in the rapidly-changing telecom race, and much of the region will eventually catch on, most mobile phone users in Thailand have no idea of WAP. They will continue to use their mobile phones just for voice and short messages. Industry sources also said that WAP technology has not yet fully evolved. For this reason, some manufacturers such as Dutch electronics maker Philips, are still reluctant to release WAP phones. Philips, for its part, is focusing on mobile phones with voice control, though Ericsson expects half of all wireless phones in the world to use WAP technology by 2001. In Thailand, the market or the end user have not yet been fully educated and the demand does not truly exist. With these underlying facts _ no demand for access to high-speed data transmissions, lack of content support, no aggressive promotional campaigns to the mass market, and the expected high access charges for WAP phone users _ the popularity of WAP phones will be held back at least a year, one industry source said. However Thai operators cannot resist the global trend as wireless technology evolves. WAP is the first step towards international mobile Internet and third-generation (3G) technology, which will combine high-speed access and Internet-protocol based services, enabling a user to view video while browsing the Internet. Current WAP access is text-based, being too slow for video and graphics. WAP phones now are limited to data transmission speeds of 9.6 Kbps, far slower than the speeds available through conventional modems on today's PCs. WAP-enabled phone manufacturers like Nokia, Ericsson, Motorola, Seimens and Alcatel were fast to try to educate the Thai market through the introduction and promotion of various models of WAP phones and their advantages. They were also cooperating with content developers to provide compatible products and services across a wide variety of platforms. _ Handset Prices: Meanwhile, the first half of the year also saw politically-motivated pressure to force private mobile operators to lower their 500-baht monthly fee after almost two years of unsuccessful persuasion. TOT and CAT were assigned to step up the pressure by inviting representatives to negotiate, but all attempts failed again when operators ignored the call. Operators argued that the state should also allow them to reduce revenue-sharing payments of an average 20% under their build-transfer-operate concessions if they have to lower the fee. The state gave no positive response to the operators' call. TOT and CAT again pressed further, under guidance from Transport and Communications Minister Suthep Thaugsuban, calling on private operators to cease their lavish promotion campaigns which they said badly affected their revenues. TOT claimed revenue generated from long-distance calls dropped sharply when people turned to use mobile phones rather than using fixed-lines because of cheaper airtime rates. TOT therefore also offered three choices of monthly fee payments on its fixed lines with discounts on local and long-distance calls as incentives to encourage fixed-line use. However there was little publicity and very few respondents, while private fixed-line operators offered no cooperation. The private mobile operators continued to defy the call, claiming promotions were necessary in such a competitive market. They said they usually gain more new subscribers during promotion periods. Moreover the rising number of new subscribers would eventually generate more money to the state in terms of taxes, they claimed. Failing to persuade operators to cease lavish promotions, the TOT then diverted public attention to handset prices which it said were expensive. It called on them to lower prices, but operators responded by placing week-long commercials in printed media claiming that their handset prices were reasonable and cheaper than many countries in the region when taking into account other criteria in a package deal. Instead, they said the prices of handsets has actually declined gradually though the exchange rate now is less favourable. Currently network operators AIS and TAC have a duopoly on the handset market through imports made solely by their subsidiaries. They claimed the BTO concession allows them to be sole importers. Handset manufacturers wanting to import their own handsets for sale had to use the operators' import channels instead and pay an appropriate sum to access their systems. TOT threatened to wreck the duopoly by announcing that it would stop allocating mobile phone numbers to private operators. Any person wanting to import their own handset for use could apply for a mobile phone number from TOT. The measure didn't work because of the fact that the operators control the network, and access to their system needs prior permission from them. So far none of the handset manufacturers _ notably Nokia, Motorola, Ericsson, Seimens and Alcatel _ have been willing to import their own handsets for distribution. One handset vendor ridiculed the idea as absurd. ``So what' If operators bar you from accessing their networks, the phone will be merely a useless box.'' Handset manufacturers preferred using the operators' distribution channels to market their products, saying they were more professional. Moreover it wasn't worthwhile to import handsets as it means unforeseeable expenditure and no promotion privileges, unlike buying from operators. |
TA is now introducing more value-added services to its PCT system. The most challenging is Internet access.© Copyright The Post Publishing Public Co., Ltd. 2000
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