NERA: Spectra should be cheaper

NERA: Spectra should be cheaper

The National Broadcasting and Telecommunications Commission (NBTC) has been urged by a consultancy to limit the prices of the upcoming auction of the 900- and 1800-megahertz spectrum licences to within the reserve prices of 2015.

"The excessive price in frequency auctions will cause the country to lose competitiveness, and also harm consumers," said Hans-Martin Ihle, senior consultant at global economic consultancy NERA.

NERA's research has found that the prices bid upon in the previous auction in 2015 of the 900MHz and the 1800MHz spectra in Thailand were the highest in the world.

The reserve price for the 900MHz frequency auction was six times higher than the median final price in other countries, NERA said.

Moreover, the final auction price in 2015 did not indicate the market value as indicated by Jasmine -- the new entrant that could not afford the bids -- while True and AIS were forced to buy above the market price.

The reserve price of the 1800MHz spectrum in Thailand was also three times higher than median final prices in other countries.

Setting the reserve price for the 2018 licence auction at an inflated level will create risks or even more "warehoused" spectra if AIS and True decline to take part in the 1800MHz spectrum auction, Mr Ihle said.

"This may affect the network quality, as mobile operators have will to pay for expensive licences but will see low returns, so they may not able to improve their network quality and the mobile data packages will not be competitive," he said. "The impact will fall onto consumers, who will not use mobile broadband as much due to unaffordable prices."

The high prices are inherently risky and are likely to cause inefficient allocation.

The International Telecommunication Union (ITU) found that the higher licence prices would push up the retail price of mobile data.

Thailand's package price for five gigabytes of data is US$5.95 (193 baht), higher than for Bangladesh ($5.02), Myanmar ($4.85), Singapore ($4.84) and Malaysia ($2.95). Thailand is already behind its peers in terms of 4G speed and quality.

"We estimate that if the NBTC reduces the reserve price by 80%, Thais will save 3,643 baht per person over the 15-year licence term," Mr Ihle said.

He said the upcoming reserve price should be determined by the market mechanism.

Thailand has not released any new spectra for 4G and is lagging far behind developing economies and many other Asian markets in releasing spectra to meet growing consumer demand for mobile broadband.

Mr Ihle said the NBTC should offer spectra in smaller units that can be aggregated to form contiguous blocks to foster competition, as done in the 2600MHz auction.

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