Telecoms industry fears new 3G holdup

Court to be asked to stall network auction again

Next week's planned auction of third-generation wireless licences could be suspended due to a last-minute challenge from the Administrative Court. Telecommunications expert Anuparp Thiralarp said he would lodge a legal suit Wednesday, asking the Administrative Court to suspend the 3G licence auction.

The filing will ask the court to suspend the auction until the National Broadcasting and Telecommunications Commission (NBTC) amends its regulations to "better benefit the public in compliance with the constitution", Mr Anuparp said.

The NBTC plans to auction off bandwidth in the 2100 megahertz band on Oct 16. The three main private mobile operators - Advanced Info Service (AIS), Dtac and True Move - all are expected to bid for spectrum.

While all three currently offer limited 3G services using the 850 MHz band, the shift to the 2100 MHz frequency would move the country's telecommunications infrastructure closer to international standards. More importantly, all three providers would be able to offer services outside of the constraints and revenue-sharing deals made under their current telecom concessions with state-owned TOT Plc and CAT Telecom.

Telecom analysts and experts warned that further delays in the auction of 3G licences would be highly negative for the industry's development as well as for investor confidence.

A prior attempt to auction licences in 2010 by the NBTC's predecessor, the National Telecom Commission, was also derailed at the last moment due to a court injunction.

But Mr Anuparp said the current auction process lacked four key conditions that would help ensure the public's interest was served, starting with bandwidth standards that would clearly stipulate the faster speeds and benefits consumers would receive from 3G.

He said the NBTC also lacks rules that would regulate pricing of data transmissions charged by operator, a loophole that could result in licence holders increasing data charges at the expense of consumers.

Thirdly, he said, the auction framework does not specify the responsibility of licence holders to provide services to the disadvantaged or consumers in remote areas. Mr Anuparp said that in other countries, telecom regulators generally stipulate minimum service requirements for licence holders to ensure widespread coverage, but the NBTC has ignored this issue altogether.

Mr Anuparp also argued that the NBTC has not stipulated what it will do with the tens of billions of baht potentially to be gained from the sale of 3G licences, whether it be to remit the proceeds to the government or reinvest the funds into public services and infrastructure.

"The public is the owner of this frequency. Yet the 3G auction does not maximise the benefits for the public, as required by the constitution," he said.

But NBTC commissioner Pravit Leesatapornwongsa questioned whether Mr Anuparp had standing to file a suit, as he had no direct interest in the auction.

Mr Pravit said the situation differed considerably from the 2010 auction, which was delayed by a court injunction based on a suit filed by CAT Telecom, which did have an interest in the case.

Regardless, the NBTC plans to announce the names of the qualified bidders Monday. A disqualified applicant will have three days to appeal. The auction schedule calls for bids to be submitted on Oct 16, with winners announced on Oct 22. Up for auction are nine 5-MHz blocks of spectrum, with the reserve price for each block set at 4.5 billion baht.

Industry executives expressed dismay at the prospect that the auction could fail. Wichian Metrakarn, the chief executive of market leader AIS, said: "It would be a disaster for the country if the auction cannot be held on schedule," he said.

Somkiat Tangkitvanich, a telecoms expert and the president of the Thailand Development Research Institute, questioned whether Mr Anuparp's argument was sufficient to block the auction.

Regarding the proceeds of the auction, he said the NBTC was normally obliged to revert any excess revenues to the Finance Ministry.

The NBTC also had a clear mandate to regulate tariffs, and Dr Somkiat said it was not necessary to stipulate ceilings right from the start.

"Personally, I don't agree with the [challenge]. But it will be up to the court to decide," he said.

Market analysts warned that a failed auction would hurt investor sentiment and the country's competitiveness.

Kongkiat Opaswongkarn, chief executive of Asia Plus Securities, said a delay would hinder the country's growth.

"Thailand needs a more developed telecoms infrastructure," he said. "3G doesn't just benefit [the operators]. The benefits of faster bandwidth are numerous, whether it be in terms of worker mobility or remote education."

Pichai Lertsupongkit, an assistant managing director at Thanachart Securities, said market sentiment would be clearly affected in trade Monday.

"If the court does issue an injunction on the auction, expect to see panic selling in telecom stocks," he said, as current share valuations are already based on a successful 3G licence auction.

Sukit Udomsirikul, a managing director and head of research at Maybank Kim Eng Securities, agreed, noting that telecom share prices fell sharply following the failed auction in 2010.

After the court intervened in September 2010, shares of all three main mobile operators fell sharply, with True Corp, the parent of TrueMove, losing 25 per cent in value in one day.

About the author

Writer: Komsan Tortermvasana, Darana Chudasri and Nuntawun Polkuamdee