Why 850, American-style 3G? Why now? Why True? Blame it on the new Frequency Allocation Act and its failure to separate the state owned enterprises (CAT and TOT) from the revenue share drug that has keeping them alive.
The day the Frequency Allocation Act was ratified by parliament, the order books for 850 MHz 3G equipment went through the roof according to one domestic telecommunications equipment manufacturer. Everyone was hovering around 850 3G but nobody was committing themselves as they wanted a proper licence at a much lower cost. Why pay 30 percent to CAT when a telco can pay 6 percent to the National Telecommunications Commission? Only when it was clear that the NTC’s auction was not happening any time soon, did things get into gear on 850.
The original draft frequency allocation act had, as part of its article 78, a one year transition from the status quo, where the state enterprises take between 20 to 25 (soon to be 30) percent of revenue (and use it up on nebulous projects and give the spare change to the exchequer) as part of the concession’s revenue share agreement. The version that was handed down by the senate had significant changes.
As I wrote back in early December
Years of negotiations centred around article 84 (was 78 in the drafts). Namely, the de-coupling of revenue share (a state domain asset) from the state owned enterprises, CAT and TOT. The draft that the house passed did that and called for the 2G revenue share to be severed from the SOEs and directed to the Ministry of Finance. However, at the senate level, the one year’s grace period (for accounting purposes) was not only extended to three years, but worse, a provision was added that allowed SOEs to withhold “costs” and USO projects thereafter.
With the concession revenue share continuing, effectively forever, this means that CAT and TOT will have an interest in seeing commercial 3G licencing delayed as much as possible. It also opens up Thailand to the prospect of retaliatory tariffs by governments under the WTO framework.
So what has happened is that True has realised that for the next three years CAT and TOT will do everything in its power to lobby to stop commercial 2.1 GHz 3G licensing so that it can hold on to the juicy revenue share money. Instead of aiming for a licence (which has a 6 percent licence fee, much less than the 30 percent revenue share) True decided to go with CAT today. Since they are unlikely to get a licence anytime soon, might as well dance with the devil and get a head start on everyone else.
As they say, a bird in the hand is worth two in the bush. Or in this case, an oddball 3G spectrum in the hand is worth more than a standard 3G slice that will not be available for at least a couple of years.
All this would be fine if it were not for article 305 of the 2007 constitution which prohibits any new allocation of frequency until the new governing body (the National Broadcasting and Telecommunications Commission) is up and running.
The reason is that there are clauses in the latter articles of the frequency allocation act that say that anyone with a legal licence on the day the act comes into force is implicitly granted a licence. It also says that any frequencies not under concession or licence will be given an arbitrary date by the NBTC and thereafter treated as if it were under concession which would end at that date.
Here is where it gets messy and fun.
So Cat wants to stake a claim for the next 15 or 25 years on its 800 MHz spectrum by using it and licencing it out to True / Real. But in doing so, the problem is that it highlights the duplicity of Cat’s own decision making process and probably breaks article 305.
Dtac was the first to tell Cat it was going to upgrade its 1G AMPS network to 3G HSPA back in 2007. Four years later, Cat has still not decided whether or not to allow it. It has not said no, but it has not said yes and only recently has it agreed to let Dtac do non-commercial testing on the band.
This is spectrum Dtac has had and has been using since the dawn of time. Spectrum for those clunky thermos-bottle sized 1G AMPS phones.
But the same Cat seems to think that allowing True to buy out Hutch and switching from CDMA (and CDMA EV-DO 3G in some areas) is fine. Buying out Hutch adds one extra step to the decision process and it defies logic that one decision can take more than four years while the other, even more complicated decision (as it involves the takeover of a company) can be deemed an upgrade in a matter of months.
Cat’s definition of fairness aside, the other problem is that it goes against 305. No new frequency is to be allocated and that it to give the new NBTC authority to regulate the industry as it sees fit. By re-allocating frequency now, Cat is pre-empting the frequency master plan. Perhaps the plan will say that we should go European and use 900 for 3G and 800 for LTE 4G? By doing what they are doing now, the Cat and its master is pre-empting, nay, usurping, the NBTC and sowing the seeds for a frequency allocation roadmap string ball that will make today’s 3G drama seem like an interlude by comparison.
It highlights again, not that we need more highlighting, the fact that the Cat is playing god, is playing regulator.
Is it better than nothing? In the short term, perhaps. In the long term, not only will it tangle up the frequency map of Thailand worse than the other border dispute we are having, it will shake investor confidence in the economy and ultimately mean bad service and high prices for the consumer.
As for TOT? Oh, that is even more fun. More next week.
First published on that website with a difficult to remember name http://www.amitiae.com/?p=486
The day the Frequency Allocation Act was ratified by parliament, the order books for 850 MHz 3G equipment went through the roof according to one domestic telecommunications equipment manufacturer. Everyone was hovering around 850 3G but nobody was committing themselves as they wanted a proper licence at a much lower cost. Why pay 30 percent to CAT when a telco can pay 6 percent to the National Telecommunications Commission? Only when it was clear that the NTC’s auction was not happening any time soon, did things get into gear on 850.
The original draft frequency allocation act had, as part of its article 78, a one year transition from the status quo, where the state enterprises take between 20 to 25 (soon to be 30) percent of revenue (and use it up on nebulous projects and give the spare change to the exchequer) as part of the concession’s revenue share agreement. The version that was handed down by the senate had significant changes.
As I wrote back in early December
Years of negotiations centred around article 84 (was 78 in the drafts). Namely, the de-coupling of revenue share (a state domain asset) from the state owned enterprises, CAT and TOT. The draft that the house passed did that and called for the 2G revenue share to be severed from the SOEs and directed to the Ministry of Finance. However, at the senate level, the one year’s grace period (for accounting purposes) was not only extended to three years, but worse, a provision was added that allowed SOEs to withhold “costs” and USO projects thereafter.
With the concession revenue share continuing, effectively forever, this means that CAT and TOT will have an interest in seeing commercial 3G licencing delayed as much as possible. It also opens up Thailand to the prospect of retaliatory tariffs by governments under the WTO framework.
So what has happened is that True has realised that for the next three years CAT and TOT will do everything in its power to lobby to stop commercial 2.1 GHz 3G licensing so that it can hold on to the juicy revenue share money. Instead of aiming for a licence (which has a 6 percent licence fee, much less than the 30 percent revenue share) True decided to go with CAT today. Since they are unlikely to get a licence anytime soon, might as well dance with the devil and get a head start on everyone else.
As they say, a bird in the hand is worth two in the bush. Or in this case, an oddball 3G spectrum in the hand is worth more than a standard 3G slice that will not be available for at least a couple of years.
All this would be fine if it were not for article 305 of the 2007 constitution which prohibits any new allocation of frequency until the new governing body (the National Broadcasting and Telecommunications Commission) is up and running.
The reason is that there are clauses in the latter articles of the frequency allocation act that say that anyone with a legal licence on the day the act comes into force is implicitly granted a licence. It also says that any frequencies not under concession or licence will be given an arbitrary date by the NBTC and thereafter treated as if it were under concession which would end at that date.
Here is where it gets messy and fun.
So Cat wants to stake a claim for the next 15 or 25 years on its 800 MHz spectrum by using it and licencing it out to True / Real. But in doing so, the problem is that it highlights the duplicity of Cat’s own decision making process and probably breaks article 305.
Dtac was the first to tell Cat it was going to upgrade its 1G AMPS network to 3G HSPA back in 2007. Four years later, Cat has still not decided whether or not to allow it. It has not said no, but it has not said yes and only recently has it agreed to let Dtac do non-commercial testing on the band.
This is spectrum Dtac has had and has been using since the dawn of time. Spectrum for those clunky thermos-bottle sized 1G AMPS phones.
But the same Cat seems to think that allowing True to buy out Hutch and switching from CDMA (and CDMA EV-DO 3G in some areas) is fine. Buying out Hutch adds one extra step to the decision process and it defies logic that one decision can take more than four years while the other, even more complicated decision (as it involves the takeover of a company) can be deemed an upgrade in a matter of months.
Cat’s definition of fairness aside, the other problem is that it goes against 305. No new frequency is to be allocated and that it to give the new NBTC authority to regulate the industry as it sees fit. By re-allocating frequency now, Cat is pre-empting the frequency master plan. Perhaps the plan will say that we should go European and use 900 for 3G and 800 for LTE 4G? By doing what they are doing now, the Cat and its master is pre-empting, nay, usurping, the NBTC and sowing the seeds for a frequency allocation roadmap string ball that will make today’s 3G drama seem like an interlude by comparison.
It highlights again, not that we need more highlighting, the fact that the Cat is playing god, is playing regulator.
Is it better than nothing? In the short term, perhaps. In the long term, not only will it tangle up the frequency map of Thailand worse than the other border dispute we are having, it will shake investor confidence in the economy and ultimately mean bad service and high prices for the consumer.
As for TOT? Oh, that is even more fun. More next week.
First published on that website with a difficult to remember name http://www.amitiae.com/?p=486
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