Telecom

The spectrum cap was the most controversial issue in this hearing. There were over 20 participants voicing suggestions and concerns on this issue.  

The Information Memorandum (IM) indicates that bidders who have bandwidth exceeding 60MHz on any spectra can join the 1800MHz license auction. However, if they win their bid, they are required to return bandwidth now held in an amount equal to that won in the auction. If spectrum currently held is under a concession contract, it would be returned to the entity granting the concession. If it is held under license, it must be returned to the NBTC.   

The key question here was why the NBTC wanted to include this ruling in this 1800MHz auction rather than making it a separate issue handled by a specific rule later on.      

The answer from NBTC was that the intention was to send a signal to the public that there is ample unused spectrum owned by state-owned enterprises and private operators available for auction. It believes the most efficient way to do this is to include the rule in this auction rather than separating it out. 

The reserve price (or starting bid) 

The IM states that there will be two licenses up for grabs at the 1800MHz auction, each for ~15MHz with total bandwidth of ~30MHz (including 5MHz from CAT). The starting price for each license will be ~Bt13.920bn for a life of 19 years, i.e. until September 15, 2034. Two conditions can change this starting price. First, if the 5MHz from CAT/DTAC cannot be given to the NBTC prior to September 25. In this case, the starting bid will be reduced to Bt11.6bn as only 12.5MHz will be open for each license rather than 15MHz. The second is if the number of qualified bidders is equal to or less than the number of licenses. In this case, the starting price will be raised to the fair value of Bt19.89bn.  

The response to this was as expected – consumers believe the starting bid is reasonable while the operators, including DTAC and TRUE, see it as too expensive.  

The NBTC responded that pricing has been studied very carefully using examples from over a hundred countries and was set by an independent body, International Telecom Union (or ITU).  

Number of licenses 

The IM says there will be two licenses up auction on 1800MHz, each for ~15MHz.  

The main comment here was why not split the licenses up into 5MHz and set a maximum for each player of not more than 15MHz. This would allow smaller players to participate.   

The NBTC responded that it does not wish small operators to take part after seeing what happened at the last auction. It believes cutting the pie into smaller pieces makes the auction less transparent – as seen in the subsequent investigation of the 2.1GHz auction by the National Anti-Corruption Commission (NACC). The watchdog believes the MVNO format is the best answer for smaller players to get into this business.   

Implication: Less intense arguments during the public hearing means the path toward an auction in November – as hoped by the NBTC - will be smoother. We do, however, still believe politicization will delay the auction by a few months.