Lobby group warns NBTC over potential 5G auction pitfalls
Thailand should not repeat its mistakes by trying to maximise revenue for 5G spectrum, which could risk harming consumers and inefficiently using a scarce resource, warns a report by the mobile operator lobbying group GSMA.
"Auctions can and do fail when poorly designed," said Brett Tarnutzer, head of spectrum at GSMA.
"We're seeing a worrying trend of badly run spectrum awards that could seriously impact the potential of 5G before we get started. It's important Thailand doesn't repeat these mistakes, and place maximising revenues from the country's upcoming spectrum awards above the connectivity of its citizens."
The National Broadcasting and Telecommunications Commission (NBTC) is planning to award 700-megahertz licences to operators this month with a reserve price of 17.58 billion baht per 10MHz bandwidth. Further auctions are planned for 5G spectrum on the 2.6-gigahertz and mmWave in the coming year.
Thailand has some of the highest spectrum prices in the world for a country of its size. The regulator routinely bumps heads with the three major mobile operators over spectrum pricing.
The GSMA's report points to some key concerns from recent 4G and 5G spectrum awards globally and offers recommendations to government regulators. This includes addressing a trend towards governments making decisions that "artificially inflate" spectrum prices, which risk limiting subsequent network investment and harming consumers.
These bad decisions include artificially restricting the amount of spectrum operators can access, through set-asides or by poorly chosen lot sizes, or by setting high reserve prices.
For its recommendations, the paper urges governments to put a top priority in making spectrum auctions affordable to encourage high-quality mobile services, and not to maximise revenues. Governments also do not necessarily have to use auctions and could use other models if suitable.
The regulator should also offer a sufficiently large amount of spectrum and publish roadmaps to support mobile services, while the auction's designs should not create unnecessary risk and uncertainty for bidders. Poorly chosen allotment sizes and inflexible packages could risk inefficient outcomes.
Thailand's mobile ecosystem generated 4.3% of GDP or US$21.1 billion in value added in 2018, according to GSMA. This could grow to up to $24.5 billion in 2023 if the government sets the right policies, the group said. The government in the form of taxation already retains over one-third of the value added by the mobile ecosystem in Thailand.
"Spectrum is essential fuel for mobile networks and its ineffective use will only lead to bad consequences for consumers," Mr Tarnutzer said. "All governments should recognise that the most important objective of awarding frequencies should not be about making the most money, but rather about ensuring consumers benefit from the best mobile connectivity."
Takorn Tantasith, secretary-general of the NBTC, said allocation of the 700MHz licences for sale is directly targeted at creating assistance to ease the financial burden for existing digital TV operators and the major three telecom operators, after the government invoked Section 44 in April.
The three mobile operators recently rebuffed these claims, calling the 700MHz price too high.
Mr Takorn accepted telecom operators may want to bid for other ranges instead, especially the 2600MHz range, which is now held by state-owned broadcaster MCOT Plc.
The 2600MHz is one spectrum range designated appropriate for 5G by International Telecommunication Union (ITU). Standard bands for 5G tech development comprise low-band, middle-band and high-frequency bands. The low band is around 700MHz, while the middle band is considered 2600- and 3400-3700MHz. High bands are 26,000- and 28,000MHz (or 26- and 28GHz).
NBTC is negotiating the recall of 190MHz of bandwidth on the 2600MHz range from MCOT in exchange for compensation. The regulator plans to auction the 2600MHz together with the 26- and 28GHz through what it calls a multi-band auction sometime this year.
"We have no choice for the 700MHz licence allocation sale, as it will generate direct assistance for existing digital TV operators," Mr Takorn said.
A source in the telecom industry said only a few 5G trials are being conducted via 700MHz, while the 3500MHz range is the most popular for 5G trials and adoption. The 2600MHz range is widely used for 5G trials in China and expected to be a major 5G range globally.