Decision Time for Thailand’s Communication Future

Craig W. Smith

The decision to be made about how to license 3G in Thailand has huge consequences. Broadband has become the overall driver of social and economic change in Asia. Thailand’s pathway into broadband will help determine whether the economy will be competitive in the 21st century and whether its distinct culture can survive. This is the conclusion of the 127-page Chulalongkorn University report on “Meaningful Broadband” (see URL below). It has three implications for the 3G licensing process, as follows:

Let’s Do It: Any issues raised in this hearing should not hold back the immediate licensing. The NTC has overcome considerable hurdles to initiate licensing of 3.9G. Though Thailand is a latecomer to this 10-year-old technology, it has the latecomer’s advantage. All conditions are in place for Thai business and government to join into massive upgrading from 2G to 3G for 80% of the population. Moving ahead will support the government’s “national reconciliation” plan, showing that this economy is not rigged to the benefit of Bangkok elites.

Our report shows that the low-income population can increase their income by 22% by 2015 as a result of financial and educational services they receive through 3G-enabled devices. Yes, other modes of broadband eventually will be introduced. But none can match 3G to quickly benefit the mass population. Licensing of 3G opens the path for mobile data services for low-income mobile users. These apps need not be entertainment, but services that transmit wealth and learning to the low-income population. Such a campaign presents the cheapest, fastest and best opportunity for the government to reduce the gaps between rich and poor.

Cut the price: It is understandable that the government would want to generate maximum revenue from licensing. But the opening bid price of 10 billion baht is so high that it will cause market developers to focus on the same affluent Bangkok market as they have in the past. “Affordability” is the primary criterion for bringing the benefits of broadband to the nation. Yet the high price may have the unintended effect of causing local telecom operators to simply import apps designed for the global market. Thailand’s mass population would be excluded.

Our team recommends an opening price of 5 billion baht. That falls within the GSM Association’s benchmark and it fits our analysis of Thai demographics. It is low enough to bring 3G to 80% of the population by 2015, but high enough to provide the revenue needed for government to invest in R&D for meaningful broadband.

The 10-billion-baht price is based on two mistakes:

– The assumption that the national treasury will gain through imposing high licence fees on operators. In fact, the opposite outcome will occur. The overwhelming evidence from our 60-nation analysis is that, although the Thai government may gain as much at 60 billion baht in the short term from high-cost licensing, it will forego as much as 750 billion baht by 2015 in lost revenue and savings that would result a “broadband-stimulus” effect. The effect combines a virtuous circle of benefits to the government: a spike in consumption, new investments, cost savings through enhanced productivity of both business and government, and a 22% rise in the tax base.

– The well-intentioned argument of consumer advocates that the Thai public will be served by forcing the big telecom companies to pay high licence fees upfront. Wrong. International data show that low licence fees would drive operators to the 40% of Thais who live in rural villages, causing operators to innovate to serve the poor. The “carrot” of low licence fees should be combined with the “stick” of stiff taxation and more regulation. The government should not hesitate to send the message that, unless licensees use the gift of broadband to strengthen rural Thailand, they have no right to remain in business. However, if the companies show that they can help achieve a more equitable nation, they should be rewarded.

Licensing isn’t enough: We congratulate the NTC for including the provision that 80% of the entire population must be brought within range of 3G cell towers by 2015 – or licensees will face severe penalties. That is a brilliant move. But the NTC must go further to alter market forces so that rural 3G cell towers are fully used. It must assure that universities, government and the private sector are all incorporated into an R&D agenda that will generate demand for mobile services in the upcountry mass population.

The NTC can use innovative Universal Service Obligation (USO) and Wi-Max policies and public-private partnerships to reward and stimulate the private sector. As partners with Thai carriers, foreign multinationals such as Google and Facebook would innovate to serve the fundamental needs of Thais and strengthen Thai culture and Thailand could emerge as a global hub for such technologies.

The NTC, facing its sunset, is now stronger than ever, under the leadership of its chairman, Prof Prasit Prapinmongkolkarn and Dr Natee Sukolrat, who heads the 3G licensing process. It should use its strength to coax the Finance Ministry to integrate 3G deployment into its huge Stimulus II initiative.

The recent political crisis has created rare political will for a more equitable economy. At last, all sectors have the incentives to bring the benefits of the modern Thai economy to the poor. If it has to go out of business soon, the NTC could do so in a moment of glory.(The Chulalongkorn University report can be downloaded from: http://www.stc.arts.chula.ac.th/MBR2.0-broadband-Thailand-2015.pdf)

Prof Craig Warren Smith, a visiting professor and Director of the Digital Divide Institute at Chulalongkorn University, is the senior adviser of the Human Interface Technology Laboratory of the University of Washington and a former professor at Harvard University’s Kennedy School of Government. He has advised multinational corporations (Microsoft, Intel, IBM, Nokia), philanthropic institutions (Ford, Rockefeller and Kellogg Foundations), ministers of emerging markets (India, Indonesia, Thailand), and helped establish the United Nations ICT Task Force, for former UN secretary-general Kofi Anan. Email: craig.w@chula.ac.th


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