For years, the sight of tangled utility cables hanging and dangling from electric poles in Bangkok has been a topic of derision for tourists and city residents alike. Now that the Bangkok Metropolitan Administration (BMA) has kicked off a plan to move those eyesores underground, another problem has emerged.
According to the plan, all cables will be gone from public view within two years in what is touted as a major step in beautifying the capital, developing a digital economy and bolstering network connectivity.
Everybody was happy until they learned that the BMA, through its subsidiary Krungthep Thanakom (KT), had awarded a 30-year contract to just one telecom operator, True Corporation (True), to use 80% of the facilities. This contract has triggered an outcry, as many see it as monopolistic behaviour that is more than likely to affect service fees in the future.
In response, six major telecom operators submitted a letter to the prime minister complaining about a lack of transparency in the project.
The letter also cited the unusually long tenure of the contract and how it is unnecessary for the state to build new tunnels across Bangkok because they already exist in some areas.
According to the Thailand Development Research Institute (TDRI), True's competitors may face excessive charges or reduced service speeds. The TDRI also said that True might come up with excuses to justify any interference in its competitors' services -- effectively putting it in a position to eliminate others from the playing field.
Furthermore, the TDRI said that it disagrees with such a contract, saying the raison d'etre for business operator is to make a profit, and giving the contract to one operator may not be fair to the others.
The BMA has dismissed all the accusations.
A high-level source from KT told me that True "didn't win a concession", but a lease that entitles the company to use 80% of the facility for 30 years. The source also said KT had sounded out the idea late last year, asking telecom operators to submit a Request for Proposal (RFP) and elaborate on their need to use the tunnels. Nine out of the 25 invitees registered to participate but True was the only one to submit a proposal, which stated its need to access 80% of the 2,450-kilometre-long tunnel network, which will be built by the state.
"That wasn't a bidding process. We were looking for clients to use our facilities," said the source, explaining that the market sounding was carried out to gauge the demands and specific requirements of the operators, so the state could better cater to their needs.
KT also dismissed concerns that the authorised operator would be able to overcharge its competitors, as service fees will be controlled by the National Broadcasting and Telecommunications Commission (NBTC). It will also remain as the "tunnel keeper" that can rent out the remaining 20% of the tunnels to other operators. In the worst-case scenario, KT could also reclaim the unused part of the 80% assigned to True and give it to other competitors should the need arise in the future.
Telecom operators questioned the RFP process that gave them only three weeks to submit a proposal. A telecom industry source noted that it was "too short notice" for a 20-billion-baht project. They also questioned the 30-year lease for True, because the BMA had only been given a 15-year contract by the NBTC.
In addition, the source also questioned the necessity of building the tunnels, as TOT and CAT already have a network of underground tunnels beneath the city. Ultimately, the cost of building the tunnels will be shouldered by consumers in the form of increased service fees.
The public outcry shows the lack of confidence the people have in KT as well as True.
The concerns about a rise in telecom service fees in the future as a result of a monopoly are not exaggerated. A prime example is the skytrain.
Look at how Bangkok commuters have had to deal with the fact that the BTS Skytrain, as the sole operator, is able to raise fares every few years. The service is unaffordable to many, who have no other choice but to stick with Bangkok's shabby bus services. Over the years, skytrain passengers have had to put up with multiple daily delays and crowded carriages, while the company's profits continue to surge. It is reported that the BTSC, the skytrain operator, made 4.79 billion baht in revenue from last year's operations -- 65% of which came from its mass-transit arm, while the BMA has never even considered not approving a hike in fares. As if this is not enough, the BMA is thinking about awarding the company a 40-year contract extension.
A similar situation will happen to telecom users. It is only a matter of when.
Sirinya Wattanasukchai is a columnist for the Bangkok Post.