The outcome of the second day of Thailand's first fourth-generation (4G) spectrum auctions far exceeded the national telecom regulator's expectations in terms of bidding.
Offers had risen to 80.9/ billion baht as of 7pm yesterday.
The two licences were split between the country's two major mobile operators: Advanced Info Service Plc (AIS) and True Move.
Jasmine International and second-ranked mobile operator Total Access Communication Plc (DTAC) failed to win the marathon bids.
After 86 rounds in almost 30 hours of bidding over two days, as expected the country's largest mobile operator AIS led with 41 billion baht for the second licence on the 1800-MHz spectrum to provide 4G service for 18 years, 158% above the reserve price.
True Move won the first licence with 39.89 billion baht, 150% higher than the reserve price.
The bidding was declared over. The National Broadcasting and Telecommunications Commission (NBTC) had expected total proceeds of 40.98 billion baht.
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4G commercial service is expected to become available next February, with at least 20 million users migrating from 3G on the True and AIS networks within two years.
The price of 40 billion baht for a 1800-MHz licence is high relative to international standards and the country's population.
"Based on the 80 billion baht for the 30 MHz of bandwidth on the 1800-MHz spectrum, the bid is 18 baht per megahertz per person," NBTC secretary-general Takorn Tantasith said. "This figure is equal to those in developed countries."
Col Settapong Malisuwan, chairman of the NBTC's telecom committee, said spectrum bids in developed countries averaged six baht per MHz per person.
The reserve price for a 1800-MHz licence was 15.9 billion baht, equal to 11 baht per MHz per person.
Mr Takorn insists the NBTC will not ease its regulations governing 4G tariff rates, saying operators must cut overhead costs and expenses instead of raising mobile service charges.
"Operators must cut costs without passing the burden on to consumers," he said.
Although the bids of the two licences of the 1800-MHz spectrum went high, the winning bidders of the 1800-MHz spectrum auctions must provide 4G service lower than 69 satang a minute for voice service and 26 satang per megabyte for data service.
"The tariff conditions have already been identified in the draft auction rules," Mr Takorn said.
Commercial 4G service on the 1800-MHz spectrum is expected to be launched by next January.
Mr Takorn said the winners of the 1800-MHz licences must also provide special tariff packages for low-income earners and disabled citizens as a condition of receiving a licence.
To further promote wireless broadband use, Mr Takorn said the NBTC planned to set new regulations governing maximum tariff rates for 4G service in the areas of voice, data and multimedia service charges. The new rules are expected to take effect early next year.
"4G operators cannot charge customers above the rates we have set, no matter how much their costs soar or whatever the price of the 4G licence they get," Mr Takorn said.
Reason and logic
Col Settapong said he accepted that the bids went beyond expectations.
"The term of 18 years for the expiry date of the 1800-MHz spectrum could be a crucial reason why bidders acted as they did, as bidders will have a long-enough time to provide 4G service and turn a profit," he said.
In comparison, the NBTC granted 15-year licences to provide 3G service.
More importantly, development of 4G long-term evolution service is compatible with the 1800-MHz band, which can also support future 5G networks.
Tom Kruesophon, the managing director of Tune Insurance and former country manager of Nortel Networks (Thailand), called the bids at the 1800-MHz auctions "reasonable".
"As operators, [bidders] already have a solid base of customers without having to roll out an entire new cellular network infrastructure, and the country's demand for wireless broadband service is skyrocketing. That's why operators are vying for a licence," Mr Tom said.
Another industry veteran said the number of mobile data users would increase by three or four times within five years, driven by the emerging Internet of Things and development of Thailand's digital economy.
NBTC member Prawit Leesathapornwongsa said operators could survive in the business because they had strong experience in mobile operations and management.
Somkiat Tangkitvanich, president of the Thailand Development Research Institute, said the fierce competition for the 1800-MHz band arose with the entry of new player Jasmine International, which secured a foreign strategic partner, as well as the postponement of the 900-MHz spectrum auctions from Nov 12 to Dec 15.
The bidding prices this week were not the highest in the world and were even lower than in some other Asian countries, he said.
Mr Somkiat said the high bidding prices would not affect consumer service fees, adding: "Supply and demand in a competitive market determine the price of mobile services."
In the wake of the marathon 1800-MHz auctions, the NBTC plans to reduce the bidding phase of each round from 20 minutes to 10 minutes for the auctions of two licences on the 900-MHz spectrum scheduled for Dec 15.
The plan is aimed at avoiding overnight auctions, Mr Prawit said.
Under the existing bidding instructions of the 1800- and 900-MHz auctions, each round lasts 20 minutes.
The first round is 20 minutes of bidding, while each subsequent round is 15 minutes of bidding and five minutes for the NBTC to report the previous round.
The new rule will make each round five minutes of bidding and five minutes for the NBTC to report the previous round.