After much humming and hawing over the past eight months, Thailand’s acting telecoms regulator said it is unable to make a decision on the design of much-anticipated 4G spectrum auctions, which now must wait until a new board is in place to move forwards.
The spectrum going up for sale in the 850MHz and 1.8GHz bands is currently used by third-ranked dtac on a concessionary basis with state-owned CAT Telecom. The concession expires on 15 September.
The National Broadcasting and Telecommunications Commission’s (NBTC) board has been working in an acting capacity since its six-year term ended in October 2017. The new board won’t be named until 19 April at the earliest, and an NBTC source told Bangkok Post “it’s highly possible” the National Legislative Assembly won’t be able to approve all seven members, as some of those recommended have been found not to be qualified.
The best laid plans
The NBTC ambitiously announced plans in September 2017 to hold the auctions in January, some three months earlier than originally planned to ensure continuity of service for dtac after the concession expires. But two months later the planned auction date was pushed back to May. Then in early March a commissioner suggested the auctions couldn’t be held until a new board was named, which meant the sale likely wouldn’t go ahead until after dtac’s concession expired. In a surprise ruling, the country’s State Council determined in late March the board had the authority to hold the auctions.
Despite the nod from the State Council, an advisory body reporting to Thailand’s prime minister on legislative matters, the board is obviously playing it safe as it doesn’t want to be on the hook if any irregularities were uncovered in the auction design. This has happened in the past, so the members are taking the cautious option.
Adding flexibility
A key point in the auction delay is the lingering issue of the lot size in the 1.8GHz band. The original draft of the planned auctions was approved by the NBTC board and passed a public hearing in December 2017. But a revised plan calling for the number of blocks to be increased from three (3x30MHz) to nine (9x10MHz) to make the sale more competitive was never approved as some members disagreed with the change.
Telenor-owned dtac has long pushed for the original plan to be reviewed and improved, noting the larger lots are not practical given mobile operators’ different spectrum demands, and arguing some spectrum will likely go unsold. The operator also complained the reserve price for the 1.8GHz band based on the winning price in a 2015 sale is not appropriate since it was driven up by a bidder (Jas Mobile) which in the end couldn’t pay for the licence.
In November 2017 the NBTC set the reserve price for each 30MHz block in the 1.8GHz band at THB37.45 billion ($1.2 billion), while the base price for the 10MHz block of 850MHz spectrum was set at THB37.98 billion. Operators and analysts complain the prices, which are set at similar levels to 2015, are high compared with international levels.
Relief requested
Strengthening dtac’s price argument, AIS and True Move petitioned the National Council for Peace and Order in September 2017 to relax the payment terms of the 900MHz licences awarded in 2015.
Vichaow Rakphongphairoj, group co-president of True, recently told Bangkok Post the winning prices of the 900MHz licences were six-times higher than the reserve price. In addition, they were the highest in Asia and the second highest in the world after the US.
The regulator ended up reversing a recommendation to ease the payment terms for the winners of the two 900MHz licences after the proposal drew sharp criticism from a research institute and dtac. Under a plan submitted by NBTC, the country’s prime minister was considering using Article 44, or executive order, to give the two operators five-year extensions for paying for the spectrum. The operators each owe the government about THB60 billion, which is due in 2019.
What next?
In the short term, dtac will be at a disadvantage. It didn’t participate in the 2015 auctions and has a total spectrum holding of just 50MHz, so it needs to acquire new spectrum to replace the 35MHz it loses when the 2G concession expires. The 15MHz of 2.1GHz spectrum it owns is unlikely to be enough to support the rapid increase in mobile traffic in future. It apparently foresaw delays and migrated the vast majority of its subscribers off the two 2G bands (GSMA Intelligence data showed it had just 305,000 2G connections at end-March, down from a peak of about 24 million in 2012 and 1 million at the end of 2016).
Dtac, however, is best placed to emerge with new spectrum in the upcoming auction, as both AIS and True Move claim to have limited capital and have adequate spectrum resources for the medium term.
In the longer term, the country is desperate for clarity on its future spectrum roadmap. The telecoms regulator announced plans to allocate 380MHz of spectrum across four bands by 2020.
Given these delays and that NBTC already pushed back ambitious plans (announced in June 2017) to sell 2.6GHz spectrum last year to prepare for the rollout of 5G services in 2020, any auction targets it sets must be taken with a pinch of salt.
It’s anyone’s guess when the 850MHz and 1.8GHz auctions will take place, which certainly must be concluded before 5G spectrum is put on the auction block.
The new NBTC board needs to quickly outline a realistic timeline for future auctions after seriously considering the extensive industry comments provided during past consultation efforts.
The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.
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