International internet gateway (IIG) operators and telecom veterans have poured scorn on the telecom regulator's request to categorise internet traffic by local or over-the-top service, calling the idea impractical, a breach of user data and a barrier to Thailand's digital economy development.
The initiative by the National Broadcasting and Telecommunications Commission (NBTC) is seen as "using a sledgehammer to crack a nut" or, in Thai parlance, "riding an elephant to chase a grasshopper", said Weeradej Panichwisai, telecom research manager and head of operations at IDC Thailand.
The criticism came after the NBTC on Wednesday floated a plan to impose a network bandwidth usage surcharge on internet traffic provided by over-the-top (OTT) service providers like Facebook, YouTube, Line and Netflix, which offer video streaming that takes up an outsize portion of internet traffic. The surcharge would be based on the amount of OTT bandwidth used.
DIGITAL DISRUPTER
Vichai Bencharongkul, honorary president of the Telecommunication Association of Thailand, said the NBTC's idea of collecting OTT charges via IIGs would create a barrier to development of the digital economy, reflecting the fact that Thailand leads Asean in digital cross-border traffic but not in digital development itself.
He said the regulator needs to focus on fair and equal access to bandwidth and transparency, rather than just collecting revenue.
"From a technical perspective, it is hard to classify data in a network -- which type of data is OTT and what is for other purposes -- for consumers or businesses, as data traffic is like water in a tube that can be used for drinking or many other purposes," Mr Vichai said.
Thailand could lead by example for the telecom industry in Asean as a standard for harmonisation of frequency management, right of way and roaming tariffs, he said.
The NBTC needs to redefine its role and change its mindset to encourage innovation and business development through proper rules and regulations, rather than thinking about how to make revenue without evaluating real economic value, Mr Vichai said.
For example, digital TV licences make a large amount of money at auction, but networks aren't held accountable for mistakes.
Mr Vichai said that if the NBTC would like to help telecom network operators, it should consider bringing down international network costs and opening more international network gateways to connect to Thailand, instead of traffic now having to pass through servers in Hong Kong and Singapore.
The NBTC could also use an economically feasible model for frequency auctions, rather than the use of high prices at previous auctions that resulted in no operators being interested.
"New auction frequencies might make the price reasonable according to third-party experts and be calculated by type of service and business opportunities available, rather than the use of proviso auction prices only," Mr Vichai said.
Revenue collection should be assigned to the Revenue Department and Finance Ministry, he said, using a tax regime to withhold VAT for every transaction.
For example, every time a consumer uses a foreign operator such as Netflix, instead of paying the foreign operator, the payment can be made to the Bank of Thailand, which oversees both financial institutions and non-bank institutions.
In addition, e-wallets and financial settlements that businesses need to pass transactions through, like Visa and Mastercard, can be tracked.
Mr Weeradej said the NBTC's idea is creative but impractical, as it requires IIGs to monitor all data traffic, leading to privacy concerns.
In China, the state blocks large amounts of traffic and websites because it's hard to sort out types of data. Blocking traffic outright is a simpler solution.
Mr Weeradej said policymakers should consider using the tax regime properly to collect the revenue lost by OTT services instead.
In order to facilitate 5G deployment, mobile operators need to find real business use cases and not simply acquire the high frequency through auctions with high network investment costs, he said.
Suthikorn Kingkaew, director of Thammasat Consulting, agreed that the policy would put up hurdles for the creative industry.
OTT players could generate up to 40 billion baht for the economy from exporting domestic content while creating new jobs, he said. YouTubers could earn revenue from their creative content on an OTT platform.
If the NBTC implements the policy, those OTT players might pass on the costs to consumers instead, Mr Suthikorn said.
Consumers already pay for data usage through mobile internet packages. Classifying data and calculating fees will also be difficult and complicated because IIGs must discern between domestic and international content traffic.
The policy may create extra income for network service providers but not increase fairness, Mr Suthikorn said. Instead, the NBTC could reduce licence costs for telecoms and digital TV operators to stimulate innovation and collect taxes from those new business operators.
MORE DETAILS NEEDED
Chakkrit Urairat, deputy director for regulatory issues at True Corporation, said the planned OTT fees should be smoothly implemented between IIG operators and giant OTT platform providers abroad.
But Mr Chakkrit said it's too early to comment on an idea that is still "up in the air", and he needs more details.
"The concept involves several important parties, as well as technical issues, especially how IIG operators can collect fees from OTT platforms before passing them on to the telecom regulator," he said.
Narupon Rattanasamaharn, senior vice-president for the regulatory division at Total Access Communication (DTAC), said the company doesn't yet understand the full details of the plan.
Mr Narupon said he isn't sure whether the new idea will affect existing business agreements between IIG operators and OTT providers.
FAIRNESS PLUS REVENUE
NBTC secretary-general Takorn Tantasith said the regulator began considering in more detail its latest idea to draft regulatory conditions to make OTT providers pay what it calls a "network bandwidth usage surcharge".
He said the move will implement a measure of fairness between telecom operators that spent abundant resources to create the network and OTT providers that disproportionately use network bandwidth, while also generating revenue for the state coffers.
Under the concept, small OTTs will not be affected, while big OTT providers that consume huge volumes of international internet traffic on IIG networks will pay usage fees to IIG operators at a progressive rate.
It remains unclear how the fees will be divided between IIGs and the state.
First, the NBTC will collaborate with IIG operators to classify OTT operators, depending on the volume of traffic usage. This will divide OTT providers into two types: small and large.
Second, the NBTC will draft details of regulatory conditions to be added to the IIG licence regulations for determining the fees OTTs have to pay to IIG providers, based on the volume of international internet traffic used.
Third, the regulatory draft will state how IIG operators collect fees from OTTs before passing them on to the state coffers. The costs incurred by IIG operators collecting fees could then be used to reduce their annual licence fees to the NBTC.
Fourth, the fee from OTT providers, which is passed to the NBTC and state coffers, will help the NBTC to determine a low reserve price for 5G spectrum licence auctions in the future.
Consumers and small OTTs won't be affected, Mr Takorn said, while the service of big OTTs wouldn't be blocked, with companies paying a fee for data usage instead.
"If big OTT service providers consume traffic usage beyond their caps, they will have to pay a progressive fee to avoid a speed limit imposed on their services," he said.
Currently there are 17 IIG operators in the country, of which four major players dominate the market: CAT Telecom, TIC, Advanced Wireless Network and CS LoxInfo.