beyondbrics

(Updated at 12:30 BST)

Thailand has been dubbed the 3G troglodyte, and with reason. The trials and tribulations of the Asian tiger’s telecoms sector never seem to end.

After years of wrangling, the country’s National Telecommunications Commission was finally due to hold an auction for the country’s 3G licences on Monday, but two state-owned companies, that are both competitors and licensing authorities to the country’s privately owned mobile operators in the 2G spectrum are questioning the NTC’s authority, revealing how entrenched the state is in the sector.

The operators of the 2G network pay CAT Telecom, formerly the communications authority of Thailand, and TOT, formerly the telecommunications organisation of Thailand billions of baht each year for the right to operate.

On Thursday, TOT filed a petition asking the country’s administrative court to halt the 3G auction on the grounds that they would lose revenue.

That case joined a similar suit from CAT Telecom, which claims in addition that the National Communications Commission doesn’t have the authority to allocate the 3G spectrum.

The court has yet to rule on either case, but has said that it will not block the sale while it is deliberating.

The irony of one state agency suing another over a development that almost everyone agrees the country desperately needs speaks volumes about the tangled interests that have kept the Thai telecommunications sector hostage to the rapidly cycling fortunes of different political factions.

The long-running 3G saga has become a national embarrassment. Thailand has a fairly robust self image, and being beaten by Cambodia and Laos, both of which have well-developed 3G networks is not part of it.

Not only this but the 2G sector is a mess. Different operators have different concession terms, which means that some operators pay more than others in revenue-sharing costs, the concessions expire at different times, and the concessionaires are expected to hand over their networks to the government when their licences expire.

The 3G system is supposed to level the playing field. The licence holders will pay a flat fee of 6 per cent of revenue to the government, down from the current 25 to 30 per cent, and the licences will be the same for all the operators.

The only serious applicants to take part in the auction were the three dominant local players: AIS, which is owned by Singapore’s Temasek; TrueMove, which is owned by local conglomerate Charoen Pokphand; and Dtac, which is controlled by Norway’s Nortel.

Foreign investors seem to have been put off by the uncertainty that has dogged the sector, as well as the barriers to entry: penetration is already almost 100 per cent, and voice tariffs are going to be low.

If CAT’s bid to block the sale fails, two licences will be knocked down during next week’s auction – being held inexpicably in one of the country’s most upmarket spas — and a third within 90 days.

Given that there are three bidders and three licences on offer, the ultimate outcome is unlikely to be a surprise.

Related reading:
Further delay to 3G licences in Thailand, FT