Colloquium: Telecom Regulatory Environment Study- Thailand

Posted on September 9, 2008 / 5 Comments

The study was conducted by Deuden Nikomborirak and Saowalak Cheevasittiyananond.

The total numbers of subscribers have increased significantly since 2001 with the entrance of the 3rd player into the telecom sector. This is the concept of the disruptive new entrant. Until 2001, a duopoly existed and there was a system of price fixing. This changed with the entrance of the new player.

The independent regulator (NTC) came into play in 2004.
HHI in mobile seems to be falling while both broadband and fixed line is rising.

Helani: what is happening in the broadband market?
Deunden: TelecomAsia was able to expand their services, as no real competitors exist. So the large operator just seems to be capturing a larger part of the market.

Fixed line market seems to be following the same trend as before. The HHI continues to rise. The fixed HHI is divided into provincial and metropolitan.

The main channels used to send out the questionnaire were through fax, using public events and through associations.

Deunden: If you have rights of way you can provide the service. There are network licenses, these allows you to provide any of the three services. This includes the access network as well.

Rohan: are the fees made public?
Deunden: yes they are…

Rohan: are there limits on the number of licenses that the NTC can issue?
Deunden: no there is not. Thailand allows for resale of services, however, the type 3 license does not come with 3G spectrum. This may change in the future.

Market entry sees issues with the licensing regime, 3G and wi-max licenses and number portability issue
Access to scarce resources: main issues were delayed number portability, delayed 3G license and discriminatory licensing.

Interconnection:
Fixed: subject to terms/ conditions that are set out in concession contracts and so there does not seem to be interconnection.

Rohan: how long is the concession contract valid?

Deunden: 25 years, the customer needs to pay 200 baht every month. No termination fees. They refused to pay the access fees as they were already paying the interconnection charge.

Mobile: state- owned enterprises are not subject to NTC interconnection rule. NTC seems to fail to protect small players in the settings of interconnection charges by large players.

Tariff:
In 2008, price ceilings were established according to fee schedules submitted by operators.

Rohan: Do have any information on price changes over time? Have prices come down?
Deunden: We do not have price related data. But prices seem to have gone down. The prices of fixed lines are not liberalized and are kept artificially low.

Anti-competitive practices: Main concerns were that there were no clear competition rules and no definition for a dominant provider.

Rohan: do have any information on price changes over time? Have prices come down?
Deunden: We do not have price related data. But prices seem to have down. The prices of fixed lines are not liberalized and are kept artificially low.

USO: Received the second lowest score.
Fixed: The NTC has not passed clear rules concerning the operation and management of USO.
Mobile: Have to contribute 4% of total revenue.

Quality of Service: NTC has failed to implement any QoS and so there is no information on quality of service.
There are a lot of problems with broadband provided by Telecom Asia but there is no way of assessing the quality.

Concluding comments: there seems to be a negative perception of the NTC and this can be explained by the unfavorable regulatory environment. There also seems to be a lack of transparency and political interferences.

Lessons learnt: independence is not a stand alone factor. There are other areas that need to be addressed as well. Need clear and transparent rules and regulations. NTC has to realize that competition can help in alleviating poverty.

Rohan: independence by itself does not achieve anything but rather is a tool for doing regulation. They have a large number of employees (about 800). There seems to be very complex rules that have been adopted from Europe. NTC should be given some credit issuing licenses and creating an environment conducive to competition.

5 Comments

harsha de silva
September 9, 2008, 1:42 pm
would be good to have a comparison with the previous TRE scores.
harsha de silva
September 9, 2008, 2:11 pm
lara, did you see my comment??
Shamistra
September 9, 2008, 2:21 pm
Harsha, the TRE scores from the last study in Thailand had no respondents from category 2 – therefore they were not reflective of the perceptions of all stakeholders and were not used in any further studies.
H. Omba
September 9, 2008, 3:37 pm
what about interconnection? was the 3rd operator allowed to gain smooth entry despite the history of collusion by the original players? was regulator intervention required?
Deunden
September 10, 2008, 11:39 am
I would like to respond to H. Omba as follows. Thank you for the question.

The third operator, True Move, entered in the year 2000. At that time, there was no interconnection charge as there was not a regulatory body. Hence, every mobile operator complied to the concession rule and paid access charge of 200 baht per post-paid subscriber to the TOT, the fixed line state operator that own all the domestic network. Interconnection was not mentioned in the concession but presumed to be mandatory under the concession. AIS was the only player that did not have to pay the access charge because it receives concession from the TOT itself and already shares its revenue with the TOT. Other two players, DTAC and True Move share their revenue with CAT, the state overseas operator not TOT, and so and to pay the 200 baht. But as mentioned, these two stopped paying the fee in November 2006. In February 2007, all three concessionaires were able to settle their bilateral IC rates.