Parties need to work together to break deadlock | Bangkok Post: tech

Four parties need to work together to break the deadlock in the telecommunications sector and allow the 3G auction to achieve its full potential, according to a leading think-tank.

TDRI Vice-President Dr Somkiat Tangkitvanich.

In an exclusive interview, Dr Somkiat Tangkitvanich, vice-president and research director of the Thailand Development Research Institute (TDRI) said that concession conversion - ending the current telecommunications concessions and converting them into licences - will help simplify the industry so that all players will be playing by the same rules under a licensing system and can move on to 3G with clarity and equality.

However, four parties - the Ministry of Finance, the Ministry of ICT, the National Telecommunications Commission (NTC) and the operators - need to agree for this to happen.

"Today the Ministry of Finance, the ICT Ministry and Dtac are talking, but what about the others? The NTC seem to want to hurry up with the auction," he noted.

Somkiat explained that the real reason for the rush for a September auction is that it might be now or never. Three NTC commissioners will be retiring and thereafter be caretaker commissioners. The legitimacy of an auction approved by a caretaker Commission (pending the National Broadcasting and Telecommunications Commission, or NBTC, as per the frequency allocation act which is about to be enacted ) itself comprised of caretaker commissioners would be on very shaky ground.

Even if everyone agrees, the Finance Ministry's plan will also face a technical hurdle. The recently passed frequency allocation bill has put a limit on licence fees at two percent. Lawmakers decided to limit the amount that the NTC can take in to curb their spending spree. Currently, this stands at 2.5 percent licence fee and 4 percent universal service fund (USO) contribution.

How the MOF proposal for a 12.5 percent fee can take flight in light of that law is unclear.

Somkiat also said that the big question mark was how much the entry fees will be for each player for concession conversion and reserved further comment until more figures are evident.

Earlier, a Senate sub-committee had quoted the TDRI in a much publicised letter to the NTC saying that the opening bid for the 3G auction (at 12.8 billion baht) was far too low and that the figure should be more than 110 billion baht each. Dr Somkiat explained that the TDRI had been somewhat mis-quoted.

The TDRI had itself not done a study on the value of the licences. What he had done was quote a number of finance houses who had estimated the value for investment purposes for the stock markets. The figure of 330 billion baht quoted was by Credit Lyonnais (CLSA) and that was at the highest end of the spectrum. That report said AIS alone would save 80 billion baht from the regime change by taking the difference in the 6.5% percent licence fee and 25 or 30 percent revenue share under the old system and converting it to present values.

Somkiat said that even a conservative estimate would put the the combined value of licenses at more than 100 billion, how high depends on how well the NTC conducts the auction and allows market forces to take hold and there is no collusion. The starting price does not matter if the bid is open as market forces will take hold.

His primary concern was the 80 percent coverage requirement in four years. Eighty percent coverage will mean a lot of infrastructure needed in remote, rural areas and was verging on itself being a universal service obligation programme. This would lead to lots of unproductive investments and lessen the values investors would commit to auction. In the public hearings, none of the operators voiced concern about this, he noted.

Infrastructure re-use must be sorted out with more clarity too.

Somkiat said that he has never agreed with the argument for nationalism in the mobile telecommunications sector. Nationalistic policies will only reduce competition and the costs will be passed on to the consumer. The 50 percent local ownership laws might have been circumvented by nominees, but recent events have put nominees under the spotlight and made getting away with it harder. Furthermore, both Temasek (AIS) and Telenor (Dtac) are affiliated or part controlled or owned by the governments of Singapore and Norway, which means that they are especially careful in negotiating foreign ownership issues to avoid diplomatic embarrassments.

Asked about his view on so-called 3.9G, Dr Somkiat dismissed it as a marketing gimmick to make Thailand look not like it is falling too far behind. The intention in the bid is clearly for 3G, not 3.9G.

Asked for his ideas on Broadband Wireless Access, Dr Somkiat added his voice to the chorus of opposition to the NTC's plan for provincial licensing.