Higher prices for smaller bandwidth

 The National Broadcasting and Telecommunications Commission (NBTC) source said the watchdog was mulling the revisions after listening to the opinions of participants at its first public hearing yesterday on the licensing terms and conditions of the 2.1GHz spectrum, which will be used for third-generation cellular service.
Many attendants at the hearing opposed the 20MHz bandwidth maximum, as they were concerned that if two cash-rich bidders were each able to acquire 20MHz, they would dominate the market at consumers’ expense. Smaller bandwidth holders would also soon fall out of the market, they feared.
Three private cellular operators, Advanced Info Service, True Corp and Total Access Communication (DTAC), each said separately that technically, acquiring 15MHz of the 2.1GHz spectrum was sufficient for them to provide quality wireless broadband service.
The NBTC plans to auction nine slots in the 2.1GHz spectrum, each containing 5MHz of bandwidth, at a reserve price of Bt4.5 billion per slot. Each bidder is allowed to grab a maximum 20MHz. The agency set the maximum to ensure fair competition among bidders. The Bt4.5-billion price is equal to 70 per cent of the assessed value of Bt6.4 billion for 5MHz of bandwidth.
NBTC commissioner Prasert Silphiphat said that in practice, if the watchdog decides to reduce the maximum bandwidth available to each bidder, this could lessen the bid competition if there are three bidders. Therefore, it should also raise the spectrum reserve price.
The source added that if the NBTC decides to adjust the spectrum reserve price, it might raise it to either 80 per cent of the assessed value – or Bt5.120 billion per slot – or 90 per cent, which would be Bt5.76 billion per slot.
DTAC’s senior vice president for the regulatory division, Naruporn Rattanasamaharn, said at the hearing that technically, 15MHz was enough bandwidth for the company to provide an efficient service. He cautioned the NBTC against allowing regulations to become obstacles that keep the industry from moving forward.
True Corp’s associate general counsel Taj Bussadeegarn said True would definitely participate in the bidding, but suggested the watchdog reduce the maximum spectrum bandwidth available to each bidder to 15MHz from 20MHz. Otherwise, cashed-up bidders would snatch huge bandwidth, Taj warned.
AIS chief executive officer Wichian Mektrakarn said on the sidelines of the hearing that for AIS, 15MHz bandwidth was technically sufficient to provide efficient service, given that soon after the 2.1GHz auction, more spectra would become available for sale, including 1,800MHz, 900MHz, 2.3GHz and more.
He was concerned that some parties would seek ways to slow down the NBTC’s planned auction process.
True Corp chief financial officer Noppadol Dej-udom said the spectrum reserve price of Bt4.5 billion per a slot was too high. True also opposed the condition in the licensing draft that bid winners have to pay 50 per cent of the spectrum price within 45 days of the auction. The condition should be relaxed to allow winners to save money for setting up their 3G networks, Noppadol said.
NBTC vice chairman Settapong Malisuwan said he was very confident the auction of the 2.1GHz spectrum would take place as planned in October. The draft licensing terms and conditions are expected to be published in the Royal Gazette in August.
It has been speculated that only AIS, True and DTAC will participate in the bidding.