Online and upwards

Thailand’s grand ICT plans may have stalled but the sector is showing signs of a fightback
by Liam Aran Barnes
Back in the spring of 2006, concurrent with the launch of the Asia-America Gateway, a 20,000km submarine communication cable, the Thai Ministry of Information and Communication Technology announced its intentions to become the new ICT hub of Asean within a few years. Various governments have since come to power, bringing their own visions for the direction of the sector. As 2013 progresses, however, the telecoms sector remains one of Thailand’s bottlenecks and, on several key measures, continues to slip behind regional counterparts in the great technology race.

There has been some material progress over the last few years, namely the introduction of the Frequency Act 2010, whereby operators are licensed directly by regulator the National Broadcasting and Telecommunications Commission (NBTC). There was also last October’s long-awaited 3G auction, which allowed for direct licensing.
Complications and delays plagued the proposed license auction for the best part of a decade, casting Thailand adrift as one of the region’s only countries without widespread 3G access. Although an auction had previously been slated for 2011, the move was blocked by state-owned CAT Telecom, which argued that the NBTC’s predecessor, the NTC, lacked the authority to conduct bidding.
“Thailand spent too long getting into the mainstream of wireless technology. But I am pretty confident that the 3G network in Thailand will expand at the fastest speed in Asean except for Singapore,” said Pisut Ngamvijitvong, an analyst at CIMB Securities (Thailand). “Thai telcos will have a higher incentive – both economically and regulatorily – than Asean telcos to roll out the 3G network as quickly as possible. Unlike other countries, the faster the telcos [are] able to migrate revenue from 2G networks onto 3G networks, the cheaper the regulatory cost they have to bear.”
Pisut added that pent-up consumer demand for 3G services, lack of fixed household broadband – which, according to global business research and consulting firm Frost & Sullivan, stands at less than 10% – and the popularity of social media applications are also contributing factors in the embracement of the technology.
However, the auction was not without controversy. Critics slammed the event for its low reserve – which, according to the NBTC, was about 30% below the estimated value – its lack of competitive bidding and suspected collusion.
“This auction appears to have been more favourable to incumbent operators than the government and consumers,” admitted Pisut, referring to private operators AIS, DTAC and True Corp.
The Office of the Ombudsman Thailand subsequently lost an Administrative Court action to conduct an inquiry into whether the auction successfully met competition requirements.
However, some industry experts believe that, while questions were raised regarding transparency, October’s auction signals a step in the right direction for the industry.
“Thailand’s telecoms regulatory scene is in the best shape it has been in a decade.  The recent 3G spectrum auction will promote a more level playing field between private companies and state-owned enterprises,” said Nicole McCormick, senior broadband analyst at global telecom consultancy Ovum. “Vested telco interests expressed criticism, but this time around, the auction proceeded and this is good news for private operators in the form of lower regulatory costs and potential to increase data revenue from the new 3G services.”
The NBTC’s foreign dominance notification, which limits new foreign entrants to the sector, means that for now only local operators can realistically compete with established companies – although they are unlikely to have the financial clout to threaten market leaders.
While new overseas telecom firms are unable to penetrate the Thai market, local companies have started to look further afield, especially as the Asean Economic Community (AEC) draws closer.
Thaicom has already moved into both Laos’ and Cambodia’s mobile market in recent years (although it recently pulled out of the latter), while AIS and True, in addition to more than 90 international companies, have expressed strong interest in the expanding Myanmar market. Moreover, the Thai Board of Investment recently began to promote outbound investment, which should help strengthen the industry domestically, according to an industry commentator, who wished to remain anonymous.
“We see some real possibilities for Thai companies to do well, provided the mutual collaboration is there. A new mindset at the Software Industry Promotion Agency and enlightened Thai industry organisations such as the Association of Thai ICT Industry will also support this,” the expert said. “There are more IT startups but the lack of available finance may kill them.”
The commentator added that external forces, such as the introduction of the AEC, may also encourage Thailand to put its 4G ambitions into action and place the Kingdom back on track to become a leading ICT hub in Asean.
Spectrum re-farming plans are already in the pipeline, according to the NBTC, which would allow frequencies optimal for 4G to be available next year. If the slated scheme comes to fruition on
schedule, Thailand’s ambitions of becoming a regional ICT hub could finally be taken more seriously.