Guest post: Thai telecom law & the 3G debacle
Not for lack of interest, but instead lack of time online, I’ve been somewhat quiet on the subject of 3G despite a number of important processes and decisions taking place of late.
Thankfully, there are a great many (brighter minds) keeping a keen eye on the ball, the following post comes anonymously from “an industry expert with deep insight into Thai telecommunication laws and regulations”.
Given this morning’s news, this contribution is particularly timely.
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Insight into Thai telecom law & the 3G debacle
The whole purpose of this law is to enable private companies to become licensed telecommunication operators, without having to enter into a contract with a state enterprise (i.e. concession agreement).
However, as you can see from section 79 and 80 (posted below), every effort has been made (by CAT & TOT lobbyists) to ensure that TOT & CAT can continue to gain revenue from the private sector as before, for as long as the concession agreements remain valid. If liberalization was the real goal, all concession agreements should naturally have been declared null and void, and the private companies would have been permitted to apply for a license from the regulator instead.
Prior to this law came into effect, only TOT and CAT who are both 100% owned by That Government were permitted to provide telecommunication services. Thy could however legally enter into concession agreements with private companies, whereby the private companies acted as a service provider to TOT or CAT.
These agreements were very discriminatory and mostly in the form of Build-Transfer-Operate (BTO), meaning that the private company had to invest in, then build the network, after which the network ownership had to be transferred to TOT or CAT, before the private company was allowed to operate it.
As a thank you for the private company paying for the whole network, CAT and TOT then ensured that they were granted a high revenue-share from the private company without adding any value to the operation whatsoever. To add insult to the injury, there are minimum revenue-share amounts that have to be paid every year throughout the concession agreement period length, and if the private company withdraws from the agreement prematurely, it has to pay very high penalties. In some of the BTO agreements, it is even TOT that collects the money from the end-customer before paying the reminding share to the private company actually operating the business.
As you realize, if any private company (i.e. AIS, DTAC, TRUE) wants to terminate their concession agreement with TOT or CAT, they will be left with no network, and substantial penalties to be paid for many years to come.
Even so, AIS, DTAC and TRUE has obviously seen a business case in applying for a 3G licenses, whereby they have calculated that to build a completely new network and operate under the planned 15-year license period will still be an acceptable business result for their shareholders. This way, they could finally break the shackles of TOT or CAT that they have been carrying since their inception.
Still, CAT and TOT are prepared to fight until death to be able to continue their monopolistic discriminatory practises, and sadly the courts seem to be as corrupt and backward as these companies.
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REFERENCE: Excerpt from Telecommunications Business Act, B.E. 2544 (A.D.2001)
The Commission shall issue licenses to engage in a telecommunications business under this Act to the Communications Authority of Thailand and the Telephone Organization of Thailand according to the description and category of the businesses and the scope of service together with the rights in providing telecommunications services to the extent that they have responsibility on the date this Act comes into force within 180 days from the date the Commission announces the rules for granting permission under Section 8.
In issuing the licenses under paragraph one, the Commission shall attach suitable conditions for doing the businesses of the Communications Authority of Thailand and the Telephone Organization of Thailand by paying due regard to the interests of the public that have been receiving their services and development so that the services have quality and are efficient or for other things, in order to achieve the objectives of this Act.
The Communications Authority of Thailand and the Telephone Organization of Thailand shall notify the Commission of the details and information involving their telecommunications businesses within thirty days from the date this Act comes into force.
Pending issuance of the license under paragraph one, the Communications Authority of Thailand and the Telephone Organization of Thailand can continue to undertake their telecommunications businesses.
Any person who holds a license, permit or concession or has been awarded a contract from or by the Communications Authority of Thailand or the Telephone Organization of Thailand according to Section 79 to engage in a telecommunications business prior to the date this Act comes into force shall have the right to continue to do such business according to the same scope and rights as before until the license, permit or concession or contract comes to an end.
The operating of a telecommunications business by a person who holds a license or concession or has been awarded a contract under paragraph one is subject to the rules of this Act and the conditions attached by the Commission, based on the principles of free competition and fairness. In this regard, it shall be deemed that such a person has the same rights, duties and responsibilities as a license holder under this Act. Any offences under this Act shall be deemed grounds for the Commission to have the power to revoke the license. If a person who holds a license, permit or concession or has been awarded a contract commits an offence, the Commission shall have the power to revoke the license, permit or concession, or the contract.
Making an agreement to change the conditions attached to granting permission, or under the concession or contract without reducing or limiting the right to undertake the telecommunications business within the time remaining, shall not be deemed an act that has an adverse effect on the validity thereof.
Where any license holder or a person holding a concession or awarded a contract makes an agreement with Communications Authority of Thailand or the Telephone Organization of Thailand to change the license, concession or contract to be a license under
this Act, the Commission shall proceed to issue the license to such person together with the same right to undertake the telecommunications business and same scope of service as agreed for the time remaining, but only to the extent that such is not contrary hereto or inconsistent herewith. In issuing the license, the provisions of Section 79 shall apply mutatis mutandis.
The provisions of this Section shall apply mutatis mutandis to any person granted permission, and any person holding a concession or awarded a contract from or by another State agency existing on the day this Act comes into force.
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