On hold, as usual

Thailand's telecommunications industry continues to be a casualty of politics, to the point that poor neighbours Laos and Cambodia today can even boast some technologies and services that Thailand lacks.

Attempts to develop third-generation or 3G mobile services in Thailand began several years ago but only this year were the first baby steps take. The excuse, as it has been for nearly 10 years now, was the lack of a national regulator to oversee the converged fields of telecoms and broadcasting.

The four-year-old National Telecommunications Commission (NTC) has steered the industry with some success, but refuses to issue 3G licences because they involve a broadcasting component that it is not in a position to regulate. This was supposed to be the job of the National Broadcasting Commission or NBC, which has never been formed.

However, in the new environment stipulated by the Frequency Management Bill, a single regulator will handle both telecommunications and broadcasting licensing. It merge the existing NTC into a new National Broadcasting and Telecommunications Commission (NBTC).

The NBTC will have 10 members - two each from radio and television, four from telecommunications, and two qualified experts. The cabinet will nominate the NBTC and then forward the names to the Senate for approval. The NBTC will then become the single national regulator under the present Constitution. The process is supposed to take three months. Then again, forming the NTC was supposed to take three months as well - and that was back in 1998.

Because the bill is still undergoing legislative procedures, the NTC will do the job of drawing up the 3G licensing framework and allow operators to upgrade their networks using existing bandwidth.

The 3G licensing regulation is expected within the third quarter of this year.

NTC member Sethaporn Cusripituck said the regulator had received a positive interpretation from the Council of State, the government's legal adviser, on guidelines for telecom licensing.

In addition, the Council of State also said that since the NTC still did not have a table of frequency allocations, it could use the frequency allocation table of the International Telecommunications Union as a guideline.

The NTC has hired a British telecom consulting firm to study the Thai industry and devise a frequency table for allocation to operators to provide 3G services. The result of the study was expected at the end of June.

Local mobile operators have always shown a flair for marketing, this floating refill service from DTAC being one of many examples. But now that they’ve put mobile phones into the hands of nearly everyone in Thailand, they want to get each of those users spending more on value-added services.

Thai Mobile, the struggling cellular joint venture of TOT and CAT Telecom, was allocated frequencies under the 2000 MHz spectrum to provide 3G since 1999. But Thai Mobile today is six billion baht in debt and the two state telecoms are still arguing about a sale that would allow one of them to control the business.

Political intervention in the boards of directors of both TOT and CAT Telecom was blamed on the failure of Thai Mobile in the past, as well as the huge interest that was involved in the operations.

But the current political instability could become a major deterrent to the smooth migration to 3G or mobile broadband services again.

Information and Communication Technology Minister Mun Patanotai has admitted that politics was main reason for a lack of progress, as well as disputes between state telecoms and their private concessionaires.

But he made clear that he would push for mobile broadband services within the next six to 12 months - if the current government survives.

However, Mr Mun has given hope to private operators, who are taking tentative steps toward 3G while they wait for the legal and regulatory fog to lift.

Mr Mun admitted that TOT Plc and CAT Telecom could never compete with private operators in bringing out 3G services, citing the entangled laws and regulations on joint investment.

He pointed to Thai Mobile, held 58% by TOT and 42% by CAT, which has gone nowhere for six years - it has fewer than 60,000 customers in a market of 55 million.

THis month CAT offered to buy back the 58% stake from TOT at 3.3 billion baht with payment over five years, countering TOT to buy CAT's 42% stake at 2.4 billion baht but with payment spanning 15 years. TOT subsequently offered a five-year repayment term but there have been no fresh negotiations.

The failure of Thai Mobile as a cellular service aside, it has highly valuable 3G bandwidth and a licence, with no need to await NTC licensing. But even if 3G could be launched by a state telecom, questions persist about the joint-venture model and the strategic partners.

Advanced Info Service became the first to launch commercial tests of 3G on the HSPA platform in Chiang Mai.

It was also awaiting permission to import more HSPA equipment to expand services in other major cities, including Bangkok.

DTAC and True Move received permits to import HSPA only recently, or several months behind AIS, due to red tape in CAT which wanted them to accept three conditions first.

All of the conditions were accepted by DTAC and True Move: they must operate international direct dialling service using CAT's international gateway; DTAC has to allocate some of its 850 MHz bandwidth to CAT; and that they have to promote CAT services on the HSPA platform.

But although the private operators are jumping on the 3G bandwagon, they are reluctant to invest heavily due to the many restrictions on HSPA technology running on the existing networks.

AIS has made clear it would not invest further, while DTAC also was likely to await for new licensing that would be much more investment-worthy than just upgrading its present network to provide 3G services.

NEW TECHNOLOGY

Operators walk before they can run with 3G

SRISAMORN PHOOSUPHANUSORN

Third-generation (3G) development has been the hottest issue for Thailand's telecoms industry this year as operators rush to play a leading role despite an uncertain environment.

AIS has made a splash with 3G service in Chiang Mai but its reach is limited.

Operators the mobile market is highly saturated, so they need to shift from highly competitive, low-margin voice-based service to high-margin data communications to further increase the range of service offerings.

Industry veterans note that that the rush toward 3G - even though there is no guarantee it will make money - also represents an attempt by operators to escape from the current concession "prisons" run by the two state telecom enterprises, TOT and CAT Telecom.

Telecom analysts said there was no real marketing reason for 3G in Thailand as long as the ratio of data usage to voice was so tiny, unlike in Japan and Korea.

Yet, most believe that 3G will inevitably happen in Thailand, but it will not be because of market demand for high-speed data or higher-density voice calls.

Advanced Info Service (AIS) , the country's largest operator, got a head start by launching 3G commercial mobile broadband services in Chiang Mai, on top of its existing 900 Megahertz frequency with high-speed packet access (HSPA) technology. Further expansion is planned in Bangkok and 20 major cities in the third and fourth quarters of 2008.

Second-ranked DTAC has a 3G plan in pipeline through upgrading its analogue 850 MHz bandwidth to HSDPA. But it awaits approval from its concession holder, CAT Telecom, to import equipment.

Third-ranked True Move is seen to be in the weakest position as it has no available frequencies, so it could face potentially lengthy talks with CAT Telecom.

3G is expected to add an invaluable mobile dimension to services that are already becoming an integral part of modern business life: high-speed internet and intranet access, video-conferencing, and interactive application sharing.

It provides mobile access to internet-based services at a speed of 7.2 megabits per second, about 45 times faster than GPRS and Edge systems.

AIS president Wichian Mektrakarn admitted his company did not expect much revenue from 3G, which would be a complementary offering at first.

DTAC CEO Sigve Brekke, meanwhile, said 3G could have an enormous impact on the country's social and economic development by reaching underserved rural areas that now lacked access to high-speed broadband internet.

With its current low internet penetration of 13% compared to 21.4% in Vietnam and 60% in Malaysia, Mr Brekke said Thailand's internet market had a lot of room to grow, particularly in rural areas.

A study by the consultancy Deloitte for the Telenor Group (DTAC's major shareholder) in six emerging economies - Serbia, Ukraine, Bangladesh, Malaysia, Pakistan and Thailand - shows how the mobile communications industry in Thailand has brought about extensive economic and social benefits.

Of the six countries studied, the economic impact was highest in Thailand, contributing 393 billion baht to growth in 2007, equivalent to 4.7% of GDP.

Mr Brekke said there were more than 55 million mobile subscribers in Thailand, representing to a penetration rate of 85%. "It is anticipated that the rate would be more than double the average penetration rate for the region."

He said DTAC expected to launch full 3G commercial service in Bangkok by the second quarter of 2009 and to go nationwide by the end of next year, if CAT approves its network upgrade plan.

"We expect to have two million and three million HSPA subscribers, using both handsets and notebooks, by the end of 2010." said Mr Brekke.

The challenge operators faced, he said, was not how to implement the technology or develop more new services, but how to get everyone to recognise the importance of the mobile sector, of fair competition and transparency, and an efficient regulatory process.

He said the government already had a good policy of encouraging broadband, but this needed to be more than a PR exercise, with the political will to make decisions and carry this policy forward.

For Thailand to be more competitive and for the Thai people to enjoy superior communications services, Mr Brekke said regulatory policy needed to be transparent and a level playing field among operators should be established.

However, telecom specialist Anuparb Thiralarp suggested that private operators should ask themselves on what licences they would base 3G, as the regulator under the new law does not yet exist.

He also said that providing services on different frequencies was not a solution to 3G investment as the industry had already learned how overlapping investments in 2G services had caused unnecessarily huge investment costs for all parties concerned.

NEW TECHNOLOGY

Role reversal as CAT moves to front rank

KOMSAN TORTERMVASANA

CAT Telecom has overtaken its state sibling TOT in terms of financial strength, cash flow and operational flexibility, which could have implications for the future development of the country's telecommunications industry.

The immediate cause of TOT's misfortunes was the decision by two private operators under CAT concessions - DTAC and True Move - to stop paying access charges for the use of the TOT network in November 2006. They said the new interconnection-fee regime devised by the National Telecommunications Commission (NTC) should be he standard for the industry instead of concession-based payments.

CAT has also benefited from a degree of management foresight that TOT appears to lack. CAT realised some time ago that international voice calling, over which it had a monopoly for decades, was a sunset industry in the age of Skype. It decided that its future was in broadband and other services that it was well positioned to offer.

CAT has even offered to help its private concessionaires and work with them to develop the business, while TOT engages in endless lawsuits with its erstwhile partners to protect the 14 billion baht a year in revenue-sharing payments it believes are its birthright.

The return to the board of former CAT chairman Sathit Limpongpan this year has also given hope to employees that he would continue to build on CAT's newfound strengths. He has promised to announce major changes in CAT before it celebrates its anniversary on Aug 14.

Mr Sathit has reason to boast, citing not only increased revenues for CAT from DTAC and True Move, but also a debt-free organisation with only 6,000 staff against TOT's 19,000.

CAT also has rich resources in the 800 Megahertz spectrum, particularly after negotiations with DTAC to share the use of some unused frequencies from the second-ranked mobile operator.

Mr Sathit has stressed the need to restructure CAT so that each business unit would have a clearer target and easy assessment of performance, with no overlaps. Each unit would have a head with complete authority, like a chief operating officer.

CAT Telecom also will be rebranded. It will become simply CAT and engage in basically the same businesses as TOT, but will do them better in most cases. The new CAT will offer communications, be it voice, video, or data, the same as private operators that are increasingly moving to convergence.

Rebranding will involve external and internal change. Internal change mens that CAT staff must feel they have changed together with their organisation. "We must be ready to face whatever the organisation faces, dead or alive," he said.

Mobile service will be CAT's core business. It will move toward two technologies: CDMA 2000 1x EV-DO, which Huawei of China has installed in 51 provinces and which CAT will market; and the Hutch service in 25 central provinces, including Bangkok. CAT also intends to provide GSM service via its business allies such as DTAC on the WCDMA platform.

TOT also is gearing up for big changes - as it must. Chairman Teravuti Boonyasopon says survival is the goal in the face of endless disputes with private operators over access charge payments.

He stressed the need for TOT to change from behaving like a regulator as in the past to being an operator so as to enable it to compete. While the organisation is expected to struggle in the short term, Mr Teravuti believes staff dedication and morale are high and that TOT will emerge as a stronger player.

He outlined seven important tasks: human resources development and unity, technology development to international levels, upgrading service quality to satisfy customers, organisational systems to achieve economic value management, co-operation with other state agencies, distribution of wealth and prosperity to the region, and seeking business allies.