NBTC did its job, but task not yet over

If the public interest is the priority, the telecom committee did the right thing in ratifying the 3G auction. But if the benefits of consumers and the public are really to come to the fore, the committee must assure that it will do all it can to guarantee better service quality and fairness.
Much of the criticism following the 3G auction on Tuesday stemmed from the low bid prices, as the nine slots raised only Bt41.625 billion, less than 3 per cent above the reserve price. This is against the Bt57.96 billion fair value, as calculated by Chulalongkorn University. NBTC was therefore slammed for failing to generate more income for the state.
Critics should remember that NBTC’s telecom committee was not set up to generate revenue for the government; its mission is to ensure “accessible and equal” telecom services. Taking over regulatory control from TOT and CAT Telecom, NBTC should not concern itself with the revenue to be reaped from the national resource – the frequency spectrum – as long as the public interest is assured.
The license auction indeed was a way to end cronyism, which blossomed under the conventional concession system. Thai consumers have learned the hard way that telecom concessions in the past rendered lower-than-expected benefits. TOT and CAT Telecom allocated the national resource to the highest bid winners, who had to quote high service fees to cover the cost. The emergence of the National Telecommunications Commission (before its dissolution and reemergence as part of the NBTC) marked the first time that the authorities had seriously taken public complaints into account.
Given the revenue sharing provided for under the concession system, TOT and CAT Telecom lacked incentives to improve their services for the public’s sake. As a matter of fact, only part of the revenues went to the state coffers – not all of it. As telecom consumers had to shoulder high service costs, only part of the money was spent on improving telecom infrastructure nationwide in areas where it was lacking. State revenue was allocated as the government saw fit, which was not necessarily for the benefit of consumers.
Telecom frequencies are a national resource. But nominal value should be balanced with intangible values like consumers’ benefit. A painful lesson was learned in 2000, when TOT and CAT Telecom were jointly awarded 15megahertz (MHz) of bandwidth on the 1,900MHz spectrum, without bidding being held. Later TOT managed to take over joint spectrum ownership from CAT. Twelve years later, that network caters to around 200,000 users. PricewaterhouseCoopers estimated that the number of 3G users would rise to 19 million within five years, after the auction.
Still, it is the NBTC telecom committee’s duty to ensure that better service quality for all Thais is achieved, despite the low bid prices.
The three bid winners will now pay about Bt40 billion as annual concession fees. Under the bid prices, they are to pay only Bt2.8 billion per annum as licensing fees. Minus investment in the network, their operating costs are lower and this should result in lower services fees.
All this information must be made public, along with the final fee structure – for voice, data and roaming services. The committee should also proceed with its plans to further reduce costs, through such activities as number portability and infrastructure sharing, to ensure greater fairness to consumers and true competition.
NBTC telecom commissioner Prawit Leesatapornwongsa was right to reserve his stance, when the committee voted to ratify the auction result yesterday. As a minority commissioner, he is responsible for consumers’ benefits. But months from now, all five commissioners will have to combine their forces in restoring the public confidence and trust.
If anything, the auction serves as a reminder to the NBTC that its operations are being closely monitored by the public. As more licences are to be auctioned subsequently, it is a must that the NBTC heeds the public’s comments and recommendations and comes up with publicly endorsed practices. There should not be any complications if the public interest is maintained as the priority. For now, let’s show the public that low bid prices do not compromise its main mission.