Arthur Morse is Special Advisor to the Permanent Secretary, Ministry of ICT in Bangkok, Thailand. He held executive positions in BT, United Kingdom in the fields of research, development, planning, operations, personnel, general management and consulting before becoming an independent consultant in 1984. He has worked as a manager and director of telecommunications and energy projects in ten countries in Europe, Middle East and Asia. He led the ITU Asia and Pacific Centre of Excellence project from 1999 to July 2003. He holds a BSc degree in electrical and electronic engineering and MSc and PhD degrees in microwave physics. His special interests include management and institutional development in ICT, e-Government and human capacity building in policy and regulation. Don Sambandaraksa has been a systems analyst at the Ministry of Information and Communication Technology in Bangkok, Thailand since the inception of the Ministry in late 2002. His many projects at the MICT focus mainly on ICT policy papers and research of ongoing global ICT trends and activities to bring in an international perspective to incorporate into the MICT’s initiatives. A few examples include papers on the ICT Budget PC, the Clean Internet Initiative, GoodNet – the Internet Café reform, Cyber Security, Telecom Regulation and the digital divide. Additionally, he is a contributing author of IT articles to regional IT publications. He holds a BBA in Information Systems from Thammasat University, Thailand and a MSc in Computer Science from the University of Salford, UK.
The start of liberalisation and privatisation of Thailand's telecom market has stimulated the doubling of mobile usage in each of the past two years. Nevertheless, regulatory and licensing restrictions hamper the introduction of new technologies and the spread of data communications. Licensing authority has been passed from Thailand's Post and Telegraph Department (PTD) to its National Telecommunications Commission, but since the NTC is not operating and is not issuing licences, the growth and modernisation of the sector is threatened.
Six years ago when Thailand's currency collapsed, a recession began: the Tom Yam Kung crisis spread throughout the region. Thailand's telecommunications sector suffered during this crisis and it missed the late nineties' mobile boom in other parts of the world. At that time, though, Thailand ushered in a new constitution and committed itself to liberalise and open its markets in line with its WTO commitments and to build Thailand's economy. Six years later, Thailand is beginning to reap the benefits. Mobile usage has more than doubled in each of the past two years. In just three years, Thailand's mobile population has surpassed most of her neighbours and in terms of percentages, even China. To understand how this happened one must look back to 1997 and the new constitution. Players Thailand, despite the many operators in evidence, has, in fact, only two telecommunications operators – TOT Corporation, formerly the Telephone Organisation of Thailand and CAT Telecom, the telecommunications half of what was formerly the Communications Authority of Thailand. These two former state enterprises once looked after domestic telephone and international connections, respectively. CAT handled the international calls, but evolved to handle data as well. Both companies are now public corporations. TOT Corporation is considering an initial public offering of its stock in early 2004. The two operators have informally divided the market between themselves. TOT provides the local fixed-line infrastructure and international overland connections and CAT Telecom supplies all voice and data trunks except the overland lines to neighbouring countries. The organisations compete in the wireless service market. CAT first used CDMA-based technology and TOT offered GSM. Today, though, CAT has switched to GSM 1800. Nowadays, all four major 2G technologies (GSM900, GSM1800, GSM 1900 and CDMA2000) are being offered in Thailand. The Ministry of ICT – Information and Communication Technology – ended this gentleman's agreement between CAT Telecom and TOT CORPORATION, as of November 2003. In the coming year one can expect these companies to move into each other's markets – TOT to aggressively expand overseas and data networks and CAT Telecom to begin providing last mile connections, especially for broadband. A visitor viewing Thailand's cellular market does not see CAT and TOT, but this does not include companies like Advanced Info Service, DTAC and, more recently, Orange. All of these networks operate under Build-Transfer-Operate (BTO) agreements. These agreements are not concessions, only the state can grant a concession; the concessions belong to CAT Telecom and TOT Corporation. Since the two cannot ‘sub-let’ their concessions, private sector investment takes the form of an agreement. The bottom line is that, although Thailand's 21 million mobile users think they subscribe to AIS, DTAC or Orange, their networks are owned by TOT and CAT. Regulation Until the 1997 constitution, the Post and Telegraph Department (PTD) was responsible for regulating the telecommunications sector. The PTD reported to the Ministry of Transport and Communi-cations (MoTC), but since October 2002, it has reported to the new Ministry of Information and Communication Technology (MICT). In the past, both CAT and TOT, in addition to being operators, had regulatory roles. The roles of the state agencies are not clear-cut. The PTD is regulator, but not tax collector. CAT and TOT recently levied taxes and concession fees as part of their operations. These revenues, though, were first used to offset the losses of CAT's postal service division; only the remainder was put into State coffers. TOT controlled the numbering of telephones and CAT was Thailand's Internet watchdog. The 1997 constitution created an independent regulatory body, the National Telecommunications Commission (NTC). Subsequently, legislation that passed took the PTD's licensing authority and passed it to the NTC. A ‘no new licence rule’ applies to fixed-line networks and Internet Service Providers (ISPs). Both TelecomAsia (Bangkok) and TT&T (provincial), private fixed-line providers, operate under BTO agreements with the TOT. Both have agreements to expand the domestic fixed line networks and both are now nearing the limit of new lines they can install – two million for TA, one million for TT&T. Since the NTC has not issued new licences, new investment has been seriously restricted. Under the new constitution, the NTC will pave the way for a free and open market. An open, competitive market could boost growth, benefit consumers and generate economic activity. The long awaited regulatory framework is not expected until 2004, but despite that – or perhaps because of that – Thailand has witnessed phenomenal growth over the past six years and experienced triple digit figures in the past two years. Transition TOT was transformed into the TOT Corporation Public Company Limited 2002 and CAT became CAT Telecom and ThailandPost in 2003. Currently, interconnection charges, numbering portability and the Telecommunications Business Act are all under consideration for regulatory changes. The Business Act currently limits foreign participation in telecom companies to 25 per cent and has discouraged potential foreign partners. This restriction will be raised to 49 per cent, in line with general limits on foreign holding in Thai business. The MICT has spent much time grooming the PTD in preparation of future role as secretariat to an independent NTC so that when the NTC is finally running it can commence work immediately. The ITU provided an innovative face-to-face and distance learning course for fifty senior managers and officials on topics directly linked to the daily activities of the future NTC. The subjects included: licensing, industry self-regulation, costing of individual services, convergence, IP telephony and Voice over IP, regulation ‘tools’, universal service obligation, tariffs and price caps, numbering plans, number portability and interconnection policy. Triple-digit Growth Even without the NTC, telecommunications growth in Thailand has been phenomenal – 121.2 per cent and 117.3 per cent in the past two years alone. Prepaid phone service has simply exploded. It was insignificant in 2000, but by September 2003, 85 per cent of AIS's 12 million subscribers are on prepaid, as are 79 per cent of DTAC's 6.2 million subscribers. Prepaid services have managed to unleash the potential of the ‘informal economy’. By eliminating credit checks, those living outside of the financial system were given access to ICT and became part of the digital revolution that had hitherto bypassed them. The legal status of prepaid systems is still a grey area. The Telecommunications Business Act stipulates that operators cannot demand advance payment or deposit from new subscribers. It is unclear whether it applies to prepaid or not. Globally, prepaid phone services are an accepted feature of the mobile phone market, nobody seems to mind – especially without a national regulatory agency to regulate or punish. Wi-Fi and Bluetooth In areas other than mobile telephony, the lack of a NTC has caused some problems. Wireless LAN hotspots (Wi-Fi) and Bluetooth operate on the 2.4GHz band that is unlicensed in most corners of the globe, but not in Thailand. Until recently, Bluetooth or Wi-Fi users had to be licensed by the PTD. Those operating without a license faced stiff penalties. Under public pressure, the MICT issued a decree in October 2003 legalising the 2.4GHz frequency by devices with a power output of less than 100 milliwatts. This legalised what had been in practice for years. Still, the legality of using higher output power devices outdoors – needed for public Wi-Fi hotspots, rural Wi-Fi connectivity and on the 5GHz band for Wi-Fi 802.11A – remains unclear. 3G The same lack of regulatory transparency applies to third generation, 3G, mobile services. Without an NTC, there is no one to issue licences for the 1.9GHz and 2.1GHz frequency spectrum used for 3G WCDMA. Much of the 1.9GHz band is used for second generation GSM. Thailand's smallest mobile operator, ThaiMobile, a joint venture between CAT Telecom and TOT was coincidentally, licensed for the frequencies used internationally for 3G. As a result, it is the only operator that can operate WCDMA. Incumbents AIS and DTAC, which together represent 87 per cent of the 21 million subscriber base, are out in the cold. Nevertheless, ThaiMobile, with its 160,000 subscribers, lacks the base, infrastructure and funding to offer 3G. This might be a blessing in disguise. In the UK, operators paid billions for their 3G licences, but have had limited market success. By the time the NTC is ready to issue 3G licences, perhaps the mistakes of the west will be overcome, the technology will be better and the cost less, so Thailand will be able to join the 3G bandwagon. Internet The lack of a regulatory authority has also hindered the expansion of ISPs in Thailand. Currently, CAT has a virtual monopoly on data operations in the country, although one ISP operates through TOT and through overland connections into Malaysia. A complex arrangement has limited each ISP to 15 million Baht (US$ 375,000) in capital. Without a regulator, no new licences can be issued. Also, one third of any new capital has to be paid to their future competitor, CAT Telecom; however no one is willing to provide the capital. Needless to say, it is hard to run an ISP on 375,000 dollars, let alone invest in the broadband infrastructure and connectivity needed. Funding has to be raised through the debt market at much higher prices. Because of this, despite the fact that CAT has negotiated wholesale Internet connectivity rates that are among the lowest in the region, broadband take-up and retail leased lines remain among the most expensive. Regulations still separate voice and data licensing; IP telephony is not allowed. Many ISPs block VOIP calls because, without a NTC, there are still no licences being issued. In 2002, CAT Telecom warned operators of Virtual Private Networks and proxy services that they were operating illegal ISP services and, potentially, faced up to five years in jail and fines of as much as 10 million baht (US$ 250,000) fine. Trends in the Future: m-government and the Knowledge-based Society PC penetration in Thailand hovers around three per cent according to the ITU, whereas one in three people, 33 per cent, now has a mobile phone. Discounting the elderly and the young, we now have in excess of 50 per cent penetration. The mobile phone might be our best tool to bridge the digital divide. A smartphone, although expensive, costs less than a computer. Given proper content, it can provide ubiquitous access to the online world. Thailand is working hard to bridge the digital divide, with initiatives such as its famous budget PC programme and reformed Internet centres. Thailand is committed to using ICTs to leapfrog years, if not decades, of development and to become a knowledge-based society. The establishment of the Ministry of Information and Communication Technology is part of this effort and the far-ranging e-government project is another. Thailand will, very shortly, issue two million smart-card ID cards and another 60 million will be phased in. This will enable a new level of government services and provide decision-makers with valuable data. E-government will most likely take the form of mobile, m-government services. These will let people access frequently used information and services, not only through an Internet connected PC, but through a mobile smart phone or other device.