TOT’s 2300MHz plan draws five bidders but is it legal?

TOTs 2300MHz plan – is it legal?

Earlier this week TOT meet with AIS, DTAC, True Corp, Mobile LTE and Tantawan Telecommunication for talks on TOTs plan for a 2300MHz partnership. However, the plan raise questions on the legality of the project.

According to The Nation Newspaper, DTAC reportedly asked if TOT has full ownership rights over the 60MHz on the 2300MHz spectrum. TOT replied that the National Broadcasting and Telecommunications Commission (NBTC) had permitted the state agency to hold the bandwidth until 2025.

A reasonable question, because in August 2016 the telecom regulator rejected TOT’s first business plan on the 2300MHz spectrum, citing a lack of strategic planning for management and operations.

Has the NBTC officially approved 60MHz on the 2300MHz spectrum to TOT?

Prawit Leesathapornwongsa, Commissioner of the National Broadcasting and Telecommunications Commission (NBTC) told Bangkok Post back in August 24, 2016: “TOT was given an additional 90 days to create a new draft business plan and resubmit it to the committee for reconsideration,”

“If TOT still fails to come up with a clear business plan in November, we might consider recalling some of its bandwidth on the 2300MHz spectra to reallocate it for other public uses,”.

Mr Prawit said TOT took almost one year to draft a four-page business plan and it was not well organized and failed to describe all aspects of the business. NBTC threatened to take the bandwidth from TOT for auctioning instead, if the state telecom enterprise failed to come up with a more viable second draft within December 2016.

TOT submitted the second draft of its mobile business development plan to the NBTC last month (December) for approval and Rungsun Channarukul, TOT’s SEVP for wireless business told Bangkok Post “We’re confident that the second draft will receive official approval by early 2017”.

While Mr Prawit said, he believes the NBTC’s telecom committee might raise the issue of TOT’s second draft at a meeting for consideration early 2017.

So indeed a reasonable question from DTAC – If TOT has been given ownership rights over the 60MHz on the 2300MHz spectrum officially from the NBTC.

TOT’s 2300MHz model based True and CAT Telecom’s controversial setup

At the Tuesday meeting, AIS and True asked TOT about the proposed business model and legal issues regarding the project, to which TOT replied that, it would adopt a business model similar to that of the True-CAT Telecom partnership in offering the 850 MHz wireless service.

So in other words, not legal as the deal between True-CAT Telecom was ruled illegal by NBTC’s subcommittee, after reaching the decision on 6 June 2012, that the setup violated the country’s Frequency Allocation Act Section 46.

Section 46 in Thailand’s “Act on Organization to Assign Radio Frequency and to Regulate the Broadcasting and Telecommunications Services B.E. 2553” states:

…A spectrum license for telecommunications business is the exclusive rights of the licensee and is not transferable. The licensee who has been authorized to use spectrum for telecommunications services shall carry out the services by himself or herself. Business management either in whole or in part shall not be rendered or permitted to other to act on his/her behalf.

The sub-committee also indicated that BFKT (Thailand), a subsidiary of True contracted to deploy nationwide 3G infrastructure and lease it to CAT, must help CAT comply with the law or else itself be found in breach of Article 67 of the Telecom Business Act (operating a telecommunication business without a license).

The committee found seven points, which had to be amended in the contracts.

  1. CAT must use the 800MHz frequency – “on its own equipment and devices”.
  2. CAT must have full management control over its network operation center.
  3. Mobile data usage and call detail records (CDR) must be in CAT’s possession.
  4. The contracts must indicate clearly that CAT has the authority to manage spectrum.
  5. The contracts must allow CAT to be the sole decision-maker on frequency planning, network rollout and service operations.
  6. CAT must have the authority to negotiate with other operators about inbound roaming and interconnection charges.
  7. The contracts must stipulate that CAT is solely responsible for spectrum control.

Prior to this (In March 2012), the MICT panel (a panel of the Ministry of ICT) found legal irregularities in the CAT-True deals, while the National Anti-Corruption Commission (NACC) declared that state officials involved in the deals had breached the law.

The CAT-True case surfaced again in December 2015 when a report by the State Audit Commission under the Office of the Auditor General into the CAT-True controversial setup, identified at least THB 45,852 billion (U$1.27 billion) of damages as well as any number of rogue cell sites that have not been accounted for. A clear indication that CAT is not in control of the spectrum nor of the business for that matter.

Professor Chaisit Trachoetham, Chairman of the State Audit Commission Office of the Auditor General of Thailand, said a committee had been set up to identify individuals at CAT responsible for the losses so that further disciplinary action, civil lawsuits and criminal lawsuits may be taken.

Once again, a reasonable question from AIS, and especially the representative from True, at TOTs informal meeting last Tuesday on the matter of legal issues.

TOT’s terms of reference – bidders to provide it all, including terms and conditions

Under TOT’s terms of reference, TOT is asking the telecom operators to propose investments that would enable the 2300MHz network to cover 80% of the population within 3 – 5 years.

The bidders will be required to propose technical details and financial terms and conditions. The bid winner will also have to commit to lease 60% of the capacity on the network.

TOT will use the rest remaining capacity to provide its own cellular service and allocate spare capacity to mobile virtual network operators (MVNOs).

TOT is big on bandwidth, but small on subscribers

TOT has the biggest chunk of bandwidth in Thailand with 145MHz across four spectra.

450 MHz – 2 x 10 MHz assigned to TOT and used for wireless local loop.
1500 MHz – TOT use 35 MHz of the frequency for rural telephone and signal transmission service.
2100 MHz – 2 x 15 MHz assigned to TOT for wireless 3G service.
2300 MHz – 60 MHz assigned to TOT for wireless telephony, backhaul and backup links.

However TOT has the lowest market share of mobile subscribers with 0.18% (Including its MVNO’s) representing 163,658 subscribers out of a total market size of 91 million.

Author: Allan Rasmussen
Managing director at Yozzo. Allan’s expertise includes the development and execution of growth strategies, market insights, trends and opportunities, new business models and strategies
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