Thailand's 3G auction temporarily set for October 2012 will likely go ahead due to the absence of "legitimacy" concerns over organizing committee and 3G demand but minor roadblocks still exist.
Singapore-based Lim Chuan Wei, partner at Analysys Mason, noted that the auction will likely be conducted as the National Broadcasting and Telecommunications Commission (NBTC)--a unified regulator formed last October--has "legitimacy" over the impending auction. He added that none of the NBTC commissioners are nearing the end of their terms, in contrast to its predecessor National Telecommunications Commission (NTC).
Previously, the Thai supreme court suspended the 2010 auction planned by NTC. The court questioned NTC's authority "due to the absence of another independent body to regulate broadcasting businesses that were supposed to work together with the NTC in allocating frequencies".
Nicole McCormick, senior analyst of telco strategy at Ovum, agreed that the auction will likely proceed this year. "There is considerably more regulatory certainty this time around concerning Thailand's 3G auction. It appears the auction is on track for October 2012, although you can never rule out any last minute moves to delay the auction," she said.
Besides the legitimacy of the current commission, Lim said the upcoming expiry of the concessions for telcos True Move and Advanced Info Service (AIS) as well as the increase in concession rates for Total Access Communication (DTAC), means it is in the interest of all the private operators to push for the auction.
"Other interested stakeholders on the other hand will find it more difficult to disrupt the auctions," he said. He explained that the state-owned telcos will want to delay the launch of 3G services as the concession revenues from private telcos will drop when traffic is directed to 3G.
Currently, private mobile operators are providing services using the assets of state concession owners TOT and CAT Telecom. These private telcos operate on a revenue-sharing basis and will have to return the assets when the concession expires.
Govt can no longer delay auction
Serene Chan, industry analyst of Asia-Pacific ICT practice at Frost & Sullivan, explained that while Thailand was one of the first countries in the region to talk about deploying 3G services ten years ago, it was delayed due to a number of issues such as the legal provisions governing the auction of 3G spectrum and complications associated with establishing an independent regulator.
Now the county is among the last in the Asia-Pacific region to carry out its 3G auction while its neighbors have already launched long-term evolution services, said Chan.
Despite the lack of an auction, major operators have gone ahead and launched 3G services due to popular demand from subscribers, she said.
"Hence, the government could no longer delay the process any further and they are likely to be experiencing the pressure from the various stakeholders," Chan said. "Delaying the 3G auction any further would only compromise subscribers' experience, quality of service, the range of mobile services that they could enjoy and of course, the increase in revenue that operators could potentially generate."
Minor roadblocks ahead
Lim noted that for the auction to be formalized, the information memorandum needs to be finalized and published in the Royal Gazette.
According to McCormick, the NBTC has clarified a 49 percent direct foreign ownership limit as a pre-qualification for the auction. "We await ratification from the NBTC that all three prospective bidders--AIS, DTAC and True Move---meet this limit but we expect there will be no issues here however," she noted.
Lim added that the probability of the foreign dominance law affecting the auction is "quite small" as it would end up with only one bidder in the auction. DTAC and AIS are partly foreign-owned by Norway's Telenor; and Singapore's Temasek Holdings and Singapore Telecommunications (SingTel) respectively, while True Move is owned by Thai-base conglomerate True Corp.
Chan added that having greater certainty to the government's policies would enable the operators to determine their next move."For example, whether the expiring 2G spectrum would be returned to the state-owned telecom operators or re-allocated for 4G usage to all interested operators," she said, adding that this would impact the operators' decision on the amount of spectrum that they plan to obtain in the upcoming 3G auction.
Thai telecom regulator has announced that 45 megahertz (MHz) of spectrum will be divided into nine 5MHz slots for auction. While there were worries this might cause a duopoly with the two larger players, AIS and DTAC, having 20MHz each, Lim said both players have publicly noted that they will be happy with 15 MHz each.
Asked if the Thai operators should jump ahead to LTE due to previous problems with 3G allocation, Lim said that is not an option.
"This is not about technology. It is about business," he said. "For LTE to be really efficient, you need to have 2x20MHz lots."
"Given the current state of play with respect to spectrum availability, with the exception of DTAC, no other player can deploy LTE efficiently unless NBTC makes available new spectrum," he added.