Stuck in a rut: Thailand’s telecom sector is crying out for reform

With Thailand beset by ongoing political problems on top of a sluggish economy, the country's telecom sector seems to have lost direction.

After almost a decade of strong growth in its telecom sector, Thailand was hit by a serious economic downturn in 2009 as a consequence of the global financial crisis. At the same time the country's ongoing political problems were also continuing to have a negative impact on the national economy, with a significant downturn in investment being a major concern. Not surprisingly, demand for mobile services cooled in 2009 and this continued into 2010. In the meantime, mobile penetration had managed to pass the 100% penetration mark.

Growth in the mobile market was expected to pick up once more in 2011, although there would be no return to the boom years. Fixed-line development was virtually non-existent, despite the government’s keenness in promoting this. There had been some interesting activity however in the broadband Internet market but this was essentially high growth off a relatively small base. The good news was that the surge in broadband which started around 2007 is continuing.

In the wider telecom sector, there was a feeling that a loss of direction was creeping into the market. If any one thing characterises the Thai telecom industry, it is probably the stop-start approach to sector reform and re-regulation. An important step was taken with the Telecommunications Act being adopted as law back in 2000, but the government moved slowly on the implementation of this legislation. Most critically it was not until 2004 that the National Telecommunications Commission was finally set up and working. Some good work was subsequently done in the regulatory area; but the industry continues to be frustrated by delays in reform; the uncertainty that these delays create has been the big concern.

The National Telecommunications Commission has been trying hard for many years but the regulatory environment has not had a sustained period of consistent policy since the commission was established. In the meantime, one of the urgently needed reforms, the long-awaited restructuring of the two state-owned operators, TOT and CAT Telecom, continues to be postponed. This means that the critical task of concession conversion has also been put on hold.

By 2010, the National Telecommunications Commission was starting to look very much like a lame duck regulator with the government finally moving to create the National Broadcasting and Telecommunications Commission. Although this new authority is not likely to be operational until late 2011 and will take time to get up to speed, the National Telecommunications Commission is finding it increasingly more difficult to carry out its role.

The biggest setback was the failure of the National Telecommunications Commission to hold the 3G auctions and to issue these long-awaited licences. The situation with respect to 3G was proving to be a national embarrassment for Thailand. There were also serious concerns in some quarters that the new regulator when finally installed would not be a truly independent authority.

Sign-up to our weekly newsletter

Keep up-to-date with all the latest news, articles, event and product updates posted on Developing Telecoms.
Subscribe to our FREE weekly email newsletters for the latest telecom info in developing and emerging markets globally.
Sending occasional e-mail from 3rd parties about industry white papers, online and live events relevant to subscribers helps us fund this website and free weekly newsletter. We never sell your personal data. Click here to view our privacy policy.