Nine years with the NBTC – The operation was successful, but the patient died

Nine years with NBTC has given the big three control of the market

As part of its nine-year anniversary, Thailand’s national broadcasting and telecom regulator (NBTC), is commemorating itself by sharing what they call key achievements over the years.

The “achievements”, which the NBTC highlights themselves are: Spectrum management and spectrum/license auctions for telecom and broadcasting. Digital set-top box coupons giveaway, Mandatory SIM card registration, Putting cables underground, Village Internet, Auctioning of special phone numbers and one month of Covid-19 relief package.

The NBTC say these have been done to achieve free and fair competition, protect the interests of the country and the people in order to use efficient services across the country.

Has it?

The Operation was Successful, but the Patient Died

I am not sure what qualifies the above mentioned as “achievements”. I.e. the first telecom auction for 3G (2100MHz) was aborted, delayed and lacked competition. Another auction had a bidder who raised the bids but could not pay, resulting in false, highly inflated prices in following auctions. Many households never redeemed the set-top box coupons and digital TV stations dropped like flies. The village internet, is still not up to par today – and the mandatory in-person SIM registration has resulted in problems with online sales.

But even if looking beyond those issues and putting on the “nevermind hat” – the patient died – because the latter part of NBTC’s statement “free and fair competition” and “in the interest of the people”, has not happened – the opposite did. Today the market is completely controlled by the oligopoly of the three mobile operators AIS, DTAC and TRUE.

From Concession to Licensing to Oligopoly

The NBTC was introduced about the same time as telecommunication in Thailand went from years of build-transfer-operate (BTO) concessions, into a licensing scheme.

Prior to the 2100MHz (3G) auction, that finally took place in 2012, the mobile operators had BTO concession agreements with the two state telecom operators TOT and CAT Telecom. AIS was on TOT and DTAC and TRUE was on CAT Telecom.

With the introduction of the licensing scheme, TRUE decided to enter into a network access agreement with its concessionaire, CAT Telecom to piggyback on CAT’s network. The setup was not in line with the telecom act but after a few amendments, it was cleared and classified, as a form of Mobile Virtual Network Operator (MVNO) setup.

The NBTC, not 100 percent knowledgably about the MVNO concept, came up with its own notification regarding MVNO, which (still today) looked like something a bride should wear at her wedding = “Something old, something new, something borrowed, something blue”.

NBTC also added to the 2100MHz license terms and conditions (and in every spectrum action since) that minimum 10 percent of the capacity should go to MVNOs. But, as usually NBTC never followed up.

In 2009, five companies (besides TRUE) applied and received MVNO licenses in Thailand and launched on the two state enterprise operators TOT/CAT. All five are gone today. In total 65+ companies have achieved MVNO licenses in Thailand, nine have launched, three are more or less in operation today with less than 45,000 subscribers in total.

Meanwhile the big three, AIS, DTAC and TRUE all have quasi-MVNO agreements with the two state enterprises CAT and TOT today. The agreements are based on the first TRUE/CAT setup where the private operator also provide access to its network to TOT/CAT and in reverse buys access to TOT/CAT’s network.

However, in reality they are now controlling TOT and CAT’s coverage in the market, as well as the wholesale rates and thereby the failure of competition entering the market = MVNOs.

I.e. AIS is providing TOT with access to its 2100MHz network and TOT has to pay AIS for this access. In reverse AIS is paying TOT for access to TOT’s 2100MHz network.

AIS sets the price TOT has to pay to access to its network, thereby also controlling the wholesale rate that TOT can give to MVNOs – and TRUE does the same at CAT Telecom, thereby effectively controlling the market.

No MVNO has yet launched on AIS, DTAC or TRUE’s network, despite the license conditions that 10 percent of their capacity has to go to MVNOs.

So, the operation of going from concession to a licensing scheme might have been successful on paper, but the patient died, and no free nor fair competition has entered the market. Instead the big three now control the market, including the two state enterprises.

And that, is nine years of NBTC in a nutshell. It might have achieved its own defined obligations on paper, but have failed in reality, by not following up and regulate.

If no changes are made, the country’s goal of digital economy and becoming a leader in the region, will depend solely on the three gatekeepers, AIS, DTAC and TRUE.

Here’s to another nine years…
Author: Allan Rasmussen
Managing director at Yozzo. Allan is a MVNA/MVNE/MVNO specialist with hands-on experience from more than 60 projects in both competitive and greenfield markets. His expertise includes business case development, execution, launch and growth strategies. Advisor and consultant to mobile network operators, MVNA, MVNE, MVNO, National Regulatory Authorities, Government Agencies, Broadcast Companies, TMT Industry Associations, Innovation and Investment Banks.
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