Regulator’s long awaited liberalisation proposals disappoint

25 May 2005

Thailand’s new regulator, the National Telecommunications Commission (NTC), has released two sets of draft legislation mapping out the future of the country’s telecoms market, but has failed to satisfy the calls for a level playing field requested by the industry and private players alike. The Thai telecoms sector currently operates under the Telecommunications Business Act of October 2001, which paves the way for the full liberalisation of the market by 2006, a deadline set by the World Trade Organisation (WTO). The 2001 legislation envisioned the immediate creation of the NTC as an independent regulator, but after political wrangling and a change of government, the regulator only finally came into being in September 2004 by which time reform in the sector had all but ground to a halt.

The NTC has now released two draft documents, one containing the proposals for a new licensing framework to replace the controversial current build-transfer-operate (BTO) system, and the other, a telecom master plan, which is up for public discussion and consultation. It is the licensing plan that is of most interest. Whilst the introduction of BTO agreements paved the way for the arrival of private operators into the market in the early 1990s, any prospective provider has had to operate under terms set by TOT and CAT, whilst giving the government ownership of their networks and sharing a large proportion (between 10% and 45%) of their revenues with the state-owned telcos. With TOT and CAT understandably reluctant to lose such a large proportion of their income, private telcos had hoped that the introduction of the NTC would provide a blueprint fair to all parties to move the market forward.

Now those hopes appear to have been dashed. The main concerns surrounding the new licensing proposal is the stipulation that the process of converting a BTO agreement to a full operating concession can only go ahead if the private operator in question can agree terms with the state-run operator with which it is currently contracted (either TOT or CAT). In effect, this footnote puts the concession conversion process back to square one, with the NTC handing responsibility of the situation back to TOT and CAT, both of which are desperate to hold on to their privileged position.

Alongside its proposals, the NTC has finally published a timeframe for the liberalisation of the market, saying that it expects to see new licences issued to both TOT and CAT within the next nine months, with non-network based licensees to be ratified by the same date. It says private network operators will follow before the end of 2006, by which time a cost-based interconnection framework will also have been established. Number portability will be in place by the end of 2007. The regulator has also promised that a new numbering plan – currently seen as a pressing concern for a number of the nation’s cellcos complaining of being unable to meet demand for numbers – will be in place by the end of this year. However, the new legislation is unlikely to speed up the resolving of the situation and, on the contrary, could actually put the WTO’s 2006 market liberalisation deadline in jeopardy.

Thailand, CAT Telecom, TOT