Obstacle course ahead of NTC on 3G licensing

The national telecom regulator faces a host of obstacles that could derail its plan to auction four 3G-2.1GHz spectrum licences in December.

One of the hurdles is whether the National Telecommunications Commission has the authority to grant the licences.

Recently Pornchai Meemak, a former member of the TOT labour union, filed a lawsuit against the NTC at the Central Administrative Court. He argued it was the authority of the broadcasting and telecom regulators to jointly allocate the new spectrum licences, and not that of the NTC alone.

The court has yet to accept the case, but Pornchai said his move suggested the NTC could face a spate of lawsuits if it pressed ahead with the auction of the 3G licences.

The question of NTC's licensing authority has haunted the watchdog since 2005, when the Central Administrative Court nullified the process of selecting 14 candidates for the seven seats on the National Broadcasting Commission (NBC), citing unconstitutionality.

The frequency allocation law mandates that a joint quorum of the NTC and the NBC is needed to draw up the telecom and broadcasting spectrum table and prescribe the use of the spectra.

In 2006, the watchdog consulted the Council of State over whether it has the authority to grant the new spectra without the NBC. The council said the NTC might be able to do so by referring to the spectrum table of the International Telecom Union in drawing its own table.

However, the Lawyers Council of Thailand recently pointed out that the council's ruling was delivered in 2006, before the inception of the 2007 Constitution, which mandates the establishment of a new and single broadcasting and telecommunications regulator.

The establishment of the single watchdog has therefore added a new question of whether it is more appropriate for the NTC to let the new entity grant the new spectrum licences.

The NTC plans to consult with the Council of State again on the question of its licensing authority.

Moreover, it has been suggested that it would be more appropriate for the NTC to wait for its four new members to take office first before it proceeds with the auction.

The two NTC member selection panels recently completed the processes of selecting a combined eight candidates to replace the four incumbent commissioners. The Senate might be able to appoint four of them to the NTC seats before the parliamentary session ends in November.

One commissioner, Artorn Chandavimol, resigned from the post before his term ended. Three other NTC members were then balloted out from the seats in 2006 after three years in office, in accordance with the frequency allocation law. However, these three remain in office until they are replaced.

Telecom industry observers said the new commissioners might ask to review or even delay the auction plan.

The private and state sectors have also said the planned auction process and conditions would financially hurt TOT and CAT Telecom and favour cash-rich firms - especially those with state foreign shareholders - over smaller players.

One auction condition requires the bid winners to pay for the licences on a one-off basis, instead of by instalment. The NTC argues that the ability to pay in this way suggested a bidder's capacity to substantially develop a cash-hungry 3G business.

TOT has strongly opposed the licensing, saying that it would pave way for the private mobile concessions to migrate subscribers from the existing concessions to the 3G licences in order to save on regulatory costs. This would lead to a decline in its concession revenue.

TOT received Bt19 billion in concession fees from Advanced Info Service last year.

A major point of contention is that the auction would pave the way for foreign state telecom firms that are major shareholders in Thai telecom operators to grab the precious 3G licences and dominate the Thai market.

The NTC argued that it would refer to the Foreign Business Act and the Telecom Business Act when selecting the qualified 3G licence bidders. The two laws each limit foreign telecom companies' shareholdings in Thai telecom firms at 49 per cent.

Another key criticism is that the bid winners, after spending heavily to get the licences in the auction, would later pass on the cost to 3G users by imposing high service charges.

A telecom scholar has argued, however, that the NTC has the authority to set a maximum service fee.