Bangkok Post: The world windows to Thailand

OPEN Thought

So now that the 3G dust is settling, one is left to ponder what happened. Finally, after almost two years of dithering, ToT is moving ahead with its 3G network.

For some, moving forward with the CAT and ToT after all that has happened must feel like having their daughter go to the prom with the creepy old guy who abused her. For others, at least the daughter gets married, even if it is a shotgun wedding and we do get 3G.

Gone is all this nonsense about 3.9G. 3.9G is LTE. LTE was not disallowed in the terms of the bid, but it was premature and never going to happen. Later, it was fudged down to dual-channel HSPA, not that anyone was serious about that.

Thailand's knee-jerk reaction to the public outcry demanding 3G could well be borderline illegal and the repercussions will be felt far and wide. In the rush to placate the public, the government obviously forgot about Thailand's commitments to the World Trade Organisation.

On Jan 1, 1998, 69 WTO member governments entered into the fourth protocol on the General Agreement on Trade in Services. This allows for foreign firms to establish a commercial presence and to own and operate independent telecommunications infrastructure.

Progress has been painfully slow, but they have been on the right path with less direct government control and gradual deregulation of the industry and corporatisation with a goal of privatisation of the two state enterprises - until now.

One could argue that the 3G bid was already contrary to WTO in that respect; that it forced operators to use ToT/CAT for their core network. Nobody complained, as things were going well. Now it is just a matter of time before a country negatively affected by this turn of events files a complaint at the WTO. Norway (Dtac), Singapore (AIS) or even Hong Kong (Hutch) could file a complaint that allows their government to retaliate with, say, taxes on Thailand's rice or chicken exports.

By empowering and funding CAT and ToT, the government is turning back a decade of deregulation and moves to reduce trade barriers and protectionism.

Another matter is the court case itself. Suppose for one moment the courts do agree with CAT that there is to be no allocation of frequency until the NBTC is up and running - what about the reallocation that CAT itself did?

CAT did the right thing for the wrong reasons. The NTC was stuck in limbo, based on the 1997 constitution, never completed and further work on its laws and other half, the NBC, stalled in the run-up to the new 2007-based frequency allocation act.

But CAT did not launch the lawsuit because of a matter of principle, it launched it out of greed, arguing that the country would lose income from the revenue share if the auction went ahead. If they succeed, this will set two dangerous precedents.

By accepting CAT as plaintiff, the courts risk messing up the delineation of state domain assets. SDAs are assets owned by state enterprises as part of their role as an organ of state, not as a commercial operation. When PTT was privatised, the courts deemed that the gas supply network was an SDA and thus had to be transferred to the Ministry of Finance and leased back.

There is no way a private company could build up such a pipeline without state power (to expropriate land, for instance). Ergo, the concessions that CAT hold (with Dtac and TrueMove) could never have been signed in a free market without state power (through the telecom duopoly), thus the concessions and their revenue stream are SDAs.

If the court accepts that CAT is the plaintiff and would be damaged by the NTC's auction, it would imply that these are not SDAs and are instead standard operational revenue of CAT. That would in turn derail the frequency allocation act which, in article 78, makes the distinction that the concessions are to be decoupled from CAT and ToT and paid directly to the Ministry of Finance after an operational grace period of either one year (house version) or four years (senate version).

But the other point that is conveniently forgotten is that if there is to be no allocation of frequency without the establishment of the NBTC, what of the reallocation that CAT itself has done?

Dtac believes it has 12.5Mhz of 850 spectrum from its 1G AMPS network. CAT has reallocated this so that Dtac has 10 and given 2.5 to TrueMove, which has combined it with another 2.5Mhz of CAT-owned spectrum so that TrueMove could launch its own test 3G network. True never had 850Mhz spectrum from the 1G analogue days, yet today runs a huge 3G network in Thailand underpinned by CAT's generosity.

That is reallocation, not unlike the 2100 reallocation that CAT says is illegal.

Nobody is saying that this is not fair. If Dtac can have two channels and move a bit so that TrueMove has a channel (each 3G channel is 5Mhz wide), that sounds reasonable, but fair or not it is reallocation, something that Dtac CEO Tore Johnsen warned of back in 2007.

While on the subject of 850Mhz, time and time again Johnsen has said 850, even on 30 percent revenue share, might have an important role in rural coverage, as its range and penetration is much better and thus much more cheaper to roll out than 2100.

CAT could have allowed Dtac to roll out 3G on 850 since 2007, but when Dtac tried to upgrade its network, CAT tried to force Dtac into a contract that went far beyond the original concession. For three years, the project has been stuck in limbo. CAT has not decided one way or the other whether to allow the network upgrade. This is regulation through running the clock out. Something the frequency allocation act and the WTO is trying to get rid of through deregulation.

ToT, or rather ThaiMobile, has had 3G spectrum from the very beginning. The initial roll-out was postponed because of bickering between CAT and ToT over who owns ThaiMobile, an argument that ToT eventually won. Later, it was postponed because the Ministry of Finance and Ministry of ICT said that ToT must not compete with the private sector, hence the stunted network in Bangkok today. With the extra 19 billion, the network will be expanded, but what of the argument of the state not competing with the private sector? What of Thailand's commitments to the WTO and free trade?

The masterminds behind this situation might have played their cards well, but there are jokers in the pack born out of technical progress - Hutch and Dtac.

Hutch, which CAT was supposed to buy for seven billion baht and is now trying to haggle down to four after stonewalling its development, uses valuable 800Mhz spectrum that could be refarmed for 3G or even LTE.

Today, it is possible to buy a CDMA 800 base station from Alcatel and with just a software upgrade, switch it to 3G HSPA or even to 3.9G LTE. Not many people know that and CAT could be aiming at getting 3G on the cheap by buying out Hutch. Both the UK and Germany are to launch commercial LTE on 800Mhz this year.

The other joker is Dtac and Finance Minister Korn Chartikavanij's concession conversion. If concession conversion happens and Dtac gets a licence for 1800Mhz, Tore and his team could suddenly find themselves with a generic licence for spectrum that could be used for LTE. LTE 1800 is becoming a very popular band for the fourth-generation telecommunications standard after 700, 2600 and 800. It is also used for 3G in Japan, but that is very much a niche, one-off network.

Let the games begin.