Limited 3G roll-out to educate the market

All three of the major cellular operators will launch the third-generation service in many provinces on the existing spectra, with Bangkok and Phuket the competitive hot spots. However, they will roll out only a few base stations, due to spectrum constraints or insufficient spectrum bandwidth.

The launch is merely in-tended to educate the market before the National Telecom-munications Commission (NTC) grants 2.1GHz spectrum licences, which is expected by the middle of next year.

The 3G technology enables broadband mobile access by compatible laptop computers or 3G phones.

Advanced Info Service's (AIS) vice president for marketing analysis and planning, Pornrat Janejarassakul, said last week that once AIS got the 2.1GHz licence, it would increase its annual network spending to Bt25 billion for three years, from the present Bt15 billion per year. Most of the spending will be for the build-up of the 3G network using 2.1GHz.

He added that AIS had a huge cash flow to finance the roll-out. Last year, its operating cash flow stood at Bt34.325 billion, of which Bt15.105 billion was spent on second-generation network expansion.

AIS, which is eager to acquire the 15MHz bandwidth of the 2.1GHz spectrum, targets about 1 million 3G-users within three or four years.

Total Access Communica-tion (DTAC) chief executive Sigve Brekke said his company might not want to use 2.1GHz, as it could be that its existing 850MHz spectrum was sufficient to provide the 3G service.

In the next few years it might utilise its 1800MHz spectrum to provide the service, alongside 850MHz.

One telecom analyst said that if AIS could get the 5MHz bandwidth of the 1900MHz spectrum from its concession owner TOT, this would lead to intense competition between it and DTAC.

"If AIS fails to clinch the additional bandwidth to back up its 900MHz in offering 3G service, DTAC will decide to be aggressive in its 3G service launch to acquire high-end users ahead of AIS," the analyst said.

AIS, DTAC, and True Move will spend a combined Bt8.3 billion in the first phase on the roll-out of 3G base stations using existing spectra.

Telecom industrialists do not believe the three will spend heavily on 3G networks using existing spectra, under which they still have to pay about 25 per cent of their annual concession revenue - including 3G revenue - to their state concession-owners, TOT and CAT Telecom.

The three companies believe the cost of 2.1GHz licences will be lower than their concession fees, although the NTC has yet to finalise the licensing cost and has also still to decide whether the licences will be granted via auction.

However, waiting for 2.1GHz licences from the NTC is not without risk for the companies. The country is in the process of establishing a new regulator - the National Broadcasting and Telecommunications Commission (NBTC) - to replace the NTC.

NTC member Sethaporn Cusripituck said last week that the NTC might state clearly in the licensing conditions that the licensing results are subject to any change by the new regulator. This would prevent the licence-winners from taking the NTC to court if the NBTC later made any changes.