Court kills Thai 3G auction

OvumThailand’s 3G auctions, originally scheduled for Monday this week, have been indefinitely delayed by legal action. This has derailed Thailand’s 3G growth strategy, putting private operators under growing capacity pressure.
This week’s 3G auctions in Thailand were officially suspended yesterday. The National Telecommunications Commission was unable to overturn government-owned CAT Telecom’s injunction against the auctions.
CAT had argued that the yet-to-be-created National Broadcasting and Telecommunications Commission (NBTC) had constitutional responsibility for the auctions, not the existing National Telecommunications Commission (NTC).
Thailand’s 3G auction could now be delayed until 2012, or even longer. And that’s bad news for the country’s private operators – AIS, DTAC, and True Move.
Two months ago, things were looking rosy for Thailand’s 3G auction. In July 2010, the NTC published its 3G plan in the Royal Gazette, and Thailand’s 3G auction rules became law. The NTC set an auction date of 20 September 2010.
This was a major breakthrough for the NTC – the country’s 3G auction plan had been debated for five years. On 14 September 2010, AIS, DTAC, and True Move all qualified to participate in the auction, after a last-minute scare about foreign ownership rules.
With a week to go until the auction, government-owned CAT Telecom and TOT were still quiet. But the threat of a potential lawsuit by CAT or TOT lurked in the background.
Their unhappiness with the auctions was a consequence of new 3G licensing rules, under which 3G operation licensing fees were to be paid to the NTC and not them. Currently, AIS, DTAC, and True Move pay more than 20% of their annual 2G revenues to government-owned CAT and TOT.
CAT launched legal action the week before the auction, and on 16 September Thailand’s Central Administrative Court granted CAT an injunction halting the planned auction. The injunction was granted on the grounds that the revamped constitution of 2007 stipulates that the NTC be replaced by a new unified regulator, the NBTC.
The NTC’s appeal was overturned yesterday by the Supreme Administrative Court. The Constitution Court will now take several months to decide whether the existing regulator has the legal right to conduct the auction. If not, management of the 3G auction process will fall to the new unified regulator, which lacks enabling legislation at the moment.
If the final verdict in the Constitution Court is a win for CAT, the 3G auction process will be conducted by the NBTC, which still needs its enabling legislation ratified by the Thai parliament.
Even if the government rushes this through the House of Representatives so that it can meet its year-end or early 2011 deadline, finalizing the appointment of the NBTC’s commissioners will probably take months.
Then the NBTC has to begin the grueling task of drawing up its frequency master plan and other 3G auction details, which could take several more months.
Thailand’s 3G auction could be pushed back until 2012. The delay could be even longer – AIS chief executive Wichian Mektrakarn has reportedly predicted that it could take at least three years for the NBTC to be established.
The best that the private operators can hope for is that the NTC prevails against CAT in the Constitution Court. Even if this happens, the auctions will have been delayed for months. Meanwhile, AIS, DTAC, and True Move are stuck in a 2G time-warp, relying on GPRS/EDGE to support customer demand for increasingly advanced and bandwidth-hungry applications.
The government is now reportedly considering allowing commercial 3G services to be rolled out in 2G spectrum under the existing 2G concessions. Operators currently offer in-band 3G services on a non-commercial trial basis.
Significantly, these services are provided under existing concession arrangements with TOT/CAT, requiring operators to continue paying high 2G revenue-sharing payments.
And the final insult? TOT-owned 3G operator Thai Mobile is reportedly preparing to ask Cabinet for permission to expand its 3G network – which is used by several MVNOs – nationwide next week. Meanwhile, the private operators watch on helplessly.
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