Published on December 25, 2007
With the expected return of consumer confidence after the general election and rising number of subscribers, one telecom analyst forecast that spending on cellular services next year would grow by 11.6 per cent from the roughly Bt151 billion expected this year.
Advanced Info Service (AIS), the biggest cellular-service operator, conservatively forecast that such spending would reach Bt159 billion, versus Bt151 billion this year and Bt144 billion last year. The total number of mobile-phone connections is expected to reach 64 million next year, up from 52 million by the end of this year.
Sigve Brekke, chief executive of industry No 2 Total Access Communication (DTAC), is upbeat that the industry will see revenues growing strongly again after low growth in the last three years due to price wars.
Meanwhile, True Move chief executive Supachai Chearava-nont sees next year as a time to tap different market segments, not for price wars.
DTAC chief commercial officer Thana Thienachariya said the competition among cellular operators would shift from acquiring new users to maintaining existing customers in response to the virtual maturing of the market.
AIS has more than 23 million subscribers, DTAC more than 16 million and True Move more than 12 million. There are also more than one million broadband Internet subscribers in Thailand, of whom 600,000 are with True and around 200,000 with TOT.
On the regulatory side, AIS president Wichian Mektra-karn summed up his view of the industry next year in two words: "a mess".
He said the National Tele-communications Commission (NTC) had yet to grant the long-awaited new spectrum licences for third-generation (3G) or WiMax broadband wireless to telecom operators so that they could invest in the new technologies, which would boost the economy. Cellular operators hope to use the broadband wireless technology to offer new data services and boost revenue.
And even if the NTC does grant WiMax and 3G spectrum licences next year, these wireless broadband services will not be widely adopted before 2009, according to Kaneungjit Suriyathumrongkul, senior director of business development of Qualcomm Thailand, a market leader in the Code Division Multiple Access (CDMA) 2000-1x cellular technology.
NTC commissioner Setha-porn Cusripituck said the NTC expected to issue the 3G and WiMax licences next year. The regulator is in the process of hiring UK firm Interconnection Communications as a consultant to draw up the licensing terms and conditions for the 3G spectrum.
"We need time to carefully consider the number of licences and the allocation method to ensure maximum national interest," he added.
However, a telecom expert said he did not expect to see the NTC launching new spectrum licences or risking the possibility of legal action because it was supposed allocate telecom and broadcasting spectrums jointly with the yet-to-be formed National Broadcasting Commission (NBC).
The formation of the NBC was stalled in 2005 after the Central Administrative Court nullified the selection of 14 candidates for the seven posts because the selection process was unconstitutional.
Brekke of DTAC expects both 3G licences and mobile-number portability policy next year. These will drive the industry in the right direction towards a liberalised, level playing field, he said.
Number portability means telecom subscribers can keep their existing phone numbers even if they switch to another network.
Besides waiting for the new cellular licences, the industry has an existing problem to clear: the conflict between the NTC's interconnection fee regulations and TOT's access charge regulations.
The NTC imposed the interconnection regulations in November 2006; they require telecom operators to share voice and data revenue from calls between their networks on a fair basis under bilateral agreements. The more one network sends out call traffic, the greater the interconnection fee it has to pay to the receiving network.
This means that telecom operators whose networks get dumped with incoming traffic will be compensated. The high interconnection fee will also discourage telecom operators from dumping call traffic on other networks.
TOT opposed the regulations after DTAC and True Move stopped paying access charges to TOT and adopted the interconnection regulations instead. TOT retaliated by filing civil suits to demand from DTAC and True Move a combined overdue access charge of more than Bt14 billion.
The access charge is what DTAC, True Move and Digital Phone Co, all CAT concession-holders, have paid TOT to connect through its facilities. TOT earns more than Bt14 billion from access charges each year.
TOT also filed a lawsuit in the Central Administrative Court to revoke the interconnection regulations, citing the effect on its business. Many in the telecom business expect it will take years before a ruling is delivered.
AIS is not subject to the access charge because it holds a TOT concession. However, it is also feeling the impact of the access-charge dispute because TOT does not allow it to book interconnection revenue. AIS is estimated to earn net revenue of between Bt2 billion and Bt3 billion from interconnection fees per year.
Tomorrow: Electrical appliances