Thailand 3G auction delay 'bad news' for private telcos

Country's suspension of 3G mobile licenses will impact service providers struggling to meet demand for mobile Internet access seen across Asia-Pacific region, notes industry analyst.
Written by Jamie Yap, Contributor

As demand for mobile data services continues to increase across Asia, Thailand's indefinite delay of its 3G auction will put more pressure on the country's private operators to satisfy consumer demand for advanced and bandwidth-heavy applications.

According to Nicole McCormick, senior analyst at Ovum, the delay of Thailand's 3G spectrum auction spells "bad news" for the kingdom's private carriers, putting them under increased capacity pressure.

In a statement released Monday, McCormick said the three operators--Advanced Info Service (AIS), Total Access Communication (DTAC) and True Move--are "stuck in a 2G time-warp" and leaves them little choice but to depend on GPRS/EDGE to support customer demand for advanced and bandwidth-hungry applications.

Thailand's supreme court last week agreed with a previous ruling for an injunction against the auction, planned by the National Telecommunications Commission (NTC), amid allegations that the Commission did not have the authority to conduct the event. State-owned CAT Telecom had opposed the auction, arguing instead that the National Broadcasting and Telecommunications Committee (NBTC) had constitutional responsibility for the auctions, not the NTC.

The court ruling led to a fall in the operators' shares, according to a Wall Street Journal report, where True's stocks fell 17 percent while AIS' dipped 1.3 percent.

A date has yet to be set for the auction, leaving Thai mobile users waiting indefinitely for wireless 3G access on their handsets and pushing the kingdom's 3G technology development further behind poorer neighbors such as Laos and Cambodia.

The auctions were officially stalled last week when the National Telecommunications Commission (NTC) was unable to overturn the

McCormick pointed out that that even if CAT wins its appeal and NBTC is given the authority to hold the auction, it will likely take months to finalize the appointment of NBTC's commissioners to oversee the event.

"The NBTC has to then begin the grueling task of drawing up its frequency master plan and other 3G auction details, which could take several more months," she continued.

The Ovum analyst noted that CAT and state-owned Telephone Organization of Thailand (TOT), another opposition to NTC's role in the 3G auction, are not keen on the Commission's involvement because NTC will receive the licensing fees. Currently, private carriers pay more than 20 percent of their annual 2G revenues to the two state-owned telecommunications companies, McCormick said.

Growing demand for mobile data

In a separate report Monday, Ovum said Asia' mobile data services market will see strong revenue growth as more consumers in the region use text, e-mail, video and social media on their phones.

The analyst firm estimated a jump in revenues from US$84 billion in 2010 to US$133 billion in 2015. In comparison, demand for mobile voice services is steadily declining.

According to Ovum, revenues from voice services are expected to fall from US$182 billion this year to US$176 billion by 2015. It attributed the drop to falling average revenue per user (ARPU) in competitive markets, outweighing overall growth in connections and minutes of use.

The decline, however, will not be uniform throughout the region, Ovum noted.

India, China and Indonesia, which have emerging connection markers, will see mobile voice revenues increase, despite falling ARPU. However, more developed markets such as Australia, Hong Kong, Japan and Korea, where connection markets are becoming saturated, are expected to see a rapid decline in mobile voice revenue.

Ovum's Asia-Pacific research director, David Kennedy, noted that "data is now the key driver of the mobile market".

He added that by 2015, the gap between revenues from voice and data will shrink, with data eventually taking the lead, if it continues to grow at its present rate.

Kennedy concluded that the rise of data is "a reflection on the way the market is moving". "Voice services have been commoditized while demand for mobile Internet access has grown rapidly," he added.

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