Rules change behind auction delay

Corporate July 19, 2014 00:00

By Usanee Mongkolporn,

4,356 Viewed

Junta orders NBTC to put off spectrum sales for one year

The postponement of the planned auctions of telecom spectra by one year is to give time for the regulator to amend some clauses in the telecommunications law and provide room for TOT and CAT Telecom to seek ways to survive, said the secretary-general of the National Broadcasting and Telecommunication Commission.
The delay was ordered on Thursday by the military’s ruling National Council for Peace and Order (NCPO).
The NBTC had originally planned to hold the auctions this year. Private telecom operators yesterday said the delay would not affect their businesses. However, their share prices dropped. Advanced Info Service (AIS) dipped 4.87 per cent to close at Bt215, while shares of True Corp dropped 3.12 per cent to close at Bt12.40. Total Access Communication (DTAC) fell 3.11 per cent to close at Bt109.
Earlier the junta ordered the NBTC to suspend the plans to sell off bands of the 1,800- and 900-megahertz spectra, pending the regulator’s complete clarification of its plans for the auctions. The NBTC had hoped that the suspension would be only for a few months. That hope was dashed on Thursday when the NCPO ordered a year-long delay. 
The NCPO said the reason for the delay was to force the NBTC to plan carefully for the auctions. It also ordered the commission to revise regulations or issue new ones to facilitate this.
The commission’s secretary-general Takorn Tantasit said after meeting with the NCPO that he was still confident that the auctions would take place, probably next July.
He added that the NBTC would also seek ways to help TOT and CAT survive the business competition. 
NBTC telecom committee chairman Settapong Malisuwan said in support of the NCPO order that the spectrum law should be reformed before pressing ahead to auction the spectra.
According to the original schedules, the NBTC planned to auction bands of the 1,800MHz spectrum next month and 900MHz in November. The 1,800MHz bands belong to TrueMove and Digital Phone Co (DPC), whose concessions expired last September, and 900MHz belong to AIS, whose concession will expire in September next year.
Extension to transition period 
The commission permitted both TrueMove and DPC to continue serving customers for one more year after the concession expirations to prevent service disruption. Because of the new NCPO announcement, the NBTC will extend this interim transition period for both operators until the auctions take place, Takorn said.
He added that the NBTC would permit AIS to continue serving customers for one more year if after its concession expires the 900MHz auction has not taken place.
AIS chief executive officer Somchai Lertsutiwong said the delayed auction would not affect the company as it already has a back-up plan. And besides, it looks as thought the NCPO will allow the auctions eventually. 
DTAC CEO Jon Eddy Abdullah said that if the auction takes place within the one-year time frame announced by the NCPO, there would be no immediate impact on DTAC. 
The 1,800MHz spectrum can be used to provide fourth-generation wireless broadband service. True group was the first to launch 4G service but on the 2.1-gigahertz spectrum, followed by DTAC group. AIS group plans to launch 4G on 2.1GHz this year.
A telecom industry observer said the delay in providing new frequencies for 4G might have little effect on AIS. Thailand can wait for 4G until the third quarter of next year. Operators are facing a more challenging issue than whether or not to provide 4G at the moment – how to migrate their customers quickly from the state concession contracts featuring high annual regulatory fees to their NBTC licences featuring lower annual fees.
“The question is not whether you have 4G or not but how you can make money out of it after you do,” he said.
A telecom analyst said that of the three operators, AIS was most desperate for new spectra. However, it is estimated that its 2.1GHz spectrum will be sufficient until late 2015 and thus the one-year delay of the auction should not have material impact on AIS’s 12-month performance. It might lose a certain number of customers to True 4G service but since 4G handset penetration is still low, the impact should not be significant.
The risk is that if the new constitution that is supposed to be enacted by mid-2015 demands a change in the NBTC, the spectrum auction will be further postponed until the new regulator takes office. Thus the one-year delay in the spectrum auction does increase the spectrum-shortage risk for AIS. DTAC and True have sufficient spectra for the next few years and stand to gain market share from AIS if the auction is postponed beyond 2015.