EDITORIAL No reason for telecom talks

A sudden and troubling statement by Finance Minister Korn Chatikavanij on phone concessions has taken the telecommunications industry by surprise. Mr Korn took the roundabout step of announcing via a foreign newspaper that the government is about to try to re-negotiate all concession agreements between the state telecoms duopoly and private telephone firms. He is right that the concessions are chaotic and inherently unfair. But the attempt to make new contracts at this time is wrong on many levels, and requires a different approach.

The concession agreements are part of a legacy policy dating back to the early days of telephone and telegraph operations in this country. In the early days of long-distance telecommunications, the government was a necessary part of the operation. The state enterprise now known as TOT received an iron-clad monopoly to operate all such communications, apart from those required for national security. There have been some changes in that old arrangement, including the addition of a second state enterprise now called CAT Telecom, but the monopoly has remained tightly kept.

In theory and in practice, the government profits from granting a telecom monopoly. TOT and CAT Telecom "contribute" part of their profits each year to the national treasury. These payments have been formidable in the past, and still are no small matter. But there has been one major and fundamental change in the equation. The state's duopoly has become less and less a supplier of communications, as private companies now handle almost all significant telecommunications.

TOT's landline telephones are almost an insignificant market against mobile phones. CAT Telecom's international telephone call business has shrunk annually during this decade, as more users, companies and even government agencies switch to the far cheaper VoIP, or internet-connected lines, to speak with relatives or clients overseas.

During the 1980s and 1990s, the TOT and CAT Telecom signed contracts with private firms which allowed the latter to set up phone companies. In exchange, they agreed to pay the state duopoly significant amounts of their income. To put it simply, consumers pay twice for their mobile phone calls - once to the company for the call, plus a portion of the price which goes to the TOT or CAT Telecom for, essentially, doing nothing.

Mr Korn told the Financial Times newspaper that he and the government want to rewrite these uneven contracts. This will create "free and fair competition", he said. He added that the contracts, and the incessantly delayed auction for 3G telephone service, must also ensure a "fair" return to the government.

The minister is ignoring the spirit of the 1997 people's constitution to return the Thai airwaves to the people of Thailand. Forcing consumers to pay twice for each phone call is not fair. More importantly in the short term, Mr Korn admits his decision to reopen every telecoms concession contract will push back every development by months. That includes the auction for third-generation service licences, a service in which Thailand already is the last country in Asia to develop.

It is time to get on with the business of telecoms. The country is falling too far behind the region and the world. Further delays are unnecessary. They give the impression that the government is more interested in saving TOT and CAT Telecom than in moving the nation ahead.

The government should let 3G proceed, and then develop a substitute system for the concession contracts that would give consumers a better break.