Thailand's 3G Debacle

Thailand does not have commercially available 3G right now and nor does the foreseeable future portend a good 3G service. 

"At the same time that the NTC was conducting an international roadshow to attract interest, it was also proposing foreign dominance regulations which would restrict investors’ ability to put its own people into the management of their investment."

3G enters markets with much hype at the best of times. The subsequent reality is usually sobering, but it is nevertheless a technology (although expensive and now with successor technologies which do more) which works.

Thailand does not have commercially available 3G right now and nor does the foreseeable future portend a good 3G service. Don’t believe the claims you read to the contrary!  Unless the appeal decision is somehow overturned, Thai Courts have ruled that the current regulator, the NTC, does not have power to issue new spectrum which would support 3G. Accordingly, the country is left to use 3G on existing, issued spectrum or wait for the new regulator. This is a long way off. 

Some say the whole situation in Thailand is a widely orchestrated conspiracy; others that it is the product of many vested interests acting for their own ends with no overriding, co-ordinating vision or the political will to underpin it. 

What is clear from the debacle is that critical steps were missed in the industry’s development and in the lead up to the auction.

First, Thailand didn’t do its homework and did not implement the essential and planned changes that were staring us in the face. Directly, this has less to do with 3G at all.  

Telecoms started in most countries with government departments managing networks and providing telephony services.  The sector reformed, moving into more competitive structures. In Thailand we started to do that, but did not get far. Various vested interests blocked the way.  In the 1990’s and early in the new millennium, mobile services in Thailand were started by concessions. These were issued to retail providers on different terms. As technology, access to information, society and expectations evolved, it was clear that the unequal and rent-seeking nature of concessions locked in value and also needed to evolve. Thailand had to move to a level playing field, but, today, ‘free and fair competition’ is still an unachieved constitutional requirement. What happened? – As part of the industry’s evolution, the SOEs (CAT and TOT) were allowed to develop the mindset that concession revenue (the income stream moving the enterprises into overall profitability) was some kind of right, and a right which is fiercely clung to under the mantra of acting in the best interests of the enterprise.  

In a globalised industry, we cannot avoid looking at experience elsewhere. Such experience tells us that SOEs need government leaders (not management or other vested interests) to set policy direction, and the government leaders should feel the pressure of user groups wanting better and more cost effective services. Over many years, Thai telecom SOEs have built up a network of supplier and other relationships such that they appear to be locked in at individual levels. How can a state-owned enterprise act to upset the policy direction of the government, which is charged with managing and developing the organs of the state? Unless directed otherwise, the enterprise will surely act in its own selfish best interest and that of its management, and that is precisely what has happened.

Second, for an industry that works in layers, its development has been hampered in terms of both access and culture. There should be cost-based ways in which infrastructure layers are accessible to others who do not want to build their own physical networks. But the push to make this happen has always been weak, and the resistance strong. Furthermore, change of this scale requires the acceptance that not everyone will agree with every move or get a seat at the front table in negotiations. In a society in which the overriding and commanding interests should be those of the economy and the country as a whole, protecting the management interests of some SOEs does not make sense.

Thirdly, Thailand rushed it. Its telecoms sector was nowhere near ready structurally for 3G and there was policy confusion. Was it rushed because some NTC commissioners were due to retire at the end of September and the spectrum needed to be issued while there was still a full deck, were there other intentions

or was it because of the imminent passage of the new frequency legislation (which would establish a merged regulator, the NBTC, and require the regulator to follow policy)? Who knows exactly. The situation was, however, rife with confusing and conflicting policy messages. At the same time that the NTC was conducting an international roadshow to attract interest, it was also proposing foreign dominance regulations which would restrict investors’ ability to put its own people into the management of their investment.

Fourthly, there has been a dearth of investment in the people, businesses and organs of state to fulfill the roles under new terms. Rushed, tick-in-the-box, compliance mentality approach to public hearings does not cut it. Ad hoc and token public hearings are no way to get the kind of industry and citizen education needed to understand and support new systems.  

And finally, there was no-one demonstrably in charge of, and who understood, the whole game. The Prime Minister acknowledged the NTC’s independence (it reports to the Senate), and no-one in cabinet ensured that the necessary steps were taken. The NTC and the SOEs played their own game. The private operators had to do as they were told, within set constraints. 

Yet for all the hype, 3G, a data-based mobile broadband technology and the next evolutionary step from 2G, is not the answer to the nation’s broadband requirements. It is just one technology. The answer lies in a combination of wireline and wireless technologies, with a fixed backbone, and future planning. 

3G does allow greater bandwidth usage, greater interactivity and is in some cases a broadband solution for its areas of coverage. 

In the 3G grouping there are enhancements, such as those dubbed 3.5G. These are an industry standard, and with a base station’s downlink (download if you like) rated at 42 Mbps, effective user rate might be around 4-5 Mbps. However, coverage is generally a subset of 2G and ‘3.9G’ looks like a marketing gimmick to make Thailand look more advanced than it is. 

And whilst Thailand dithers with 3G, many are moving to 4G. Yet the proposed 3G spectrum issuance here does not provide an evolutionary path to 4G. Should we forget about 3G and skip straight to 4G? The answer is about development relativities – will Thailand be able to get ready, turn all the stakeholders around, will handsets be available, will other countries with 3G and 4G support Thai out-roamers? Overall, skipping 3G is not the best solution. Thailand should now be focused, as the overriding priority, on structural changes such as concession conversion, and in making sure that there is a firm path to the development of 4G in parallel with other fixed line and nomadic wireless service technologies, such as WiFi.

Thailand seems to be rushing to enable TOT to provide 3G via some virtual mobile network operators (MVNOs) and locking in the powerful positions of both SOEs. TOT has no 2G service of its own, no 2G roaming agreement and no usable interconnect. Thus its users do not currently have any means to do what is generally expected of a mobile service. Will TOT be allowed to do all this? And largely outside any regulatory environment?  As the Thai parliament continues to argue over the revised frequency bill, (where China was able to wrest something similar from its military and implement over ten years ago), moves to create new monopolistic broadband structures, ostensibly relying on trends toward government largesse, are, it seems, still being pursued.

Unfortunately, the vision of a competitive telecoms sector, providing useful and advanced services for business, individuals, government and most importantly, for a more meaningful role in the economy, is far from being realized. As is a good 3G service. BRT

This article was first published in Business Report Thailand, Issue 1, October 2010