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Shared Network Could Help Thai Mobile Phone Operators Cut High Cost Burden

Posted on: Wednesday, 5 November 2003, 06:00 CST

Nov. 6--Information and Communications Technology Minister Surapong Suebwonglee has proposed that all mobile phone operators share a 3G (third generation) network to avoid huge costs if each were to invest on its own.

Speaking at the opening of the 3G World Congress, in Bangkok, Dr Surapong said 3G service had become a wireless global standard and Thai operators could hardly defy the trend, particularly Thai Mobile, a joint venture between TOT Corp and CAT Telecom.

He said that since investment in a 3G network was very costly, shared resources could be a solution.

3G services enable users to transmit data 40 times faster than second-generation phones, to converse via videophone or download movie clips.

Dr Surapong said his ministry was ready to act as co-ordinator to set up the shared network with interested operators seeking to offer 3G services putting in money to build it, he said.

However, market leader Advanced Info Service disagrees with the idea, citing commercial viability.

"If one wants to do business, he'll think of profit first and everyone wants to run [a business] with his own hands," said Wichien Mektrakarn, AIS's executive vice-president for engineering.

He said that although a shared network for different spectrums was easy to handle technically, it would be very complicated commercially because there were few criteria to determine how much each operator had to chip in. "Should we use subscriber bases to judge how much each has to pay?"

AIS has estimated that it would need to invest at least four billion baht to upgrade its network to provide for the high-speed features of 3G.

Mr Wichien said the network-sharing issue would be even more difficult to resolve than the still unsettled talks over interconnection charges among existing operators.

Besides, he said, sharing a network would further complicate the marketing campaigns of each operator.

But Dr Surapong insisted Thai Mobile had to offer 3G services in order to differentiate itself from its competitors.

However, given the existing problems faced by Thai Mobile, it cannot take the plunge until they are resolved.

One of the problems is the lack of unification and management control as both TOT Corp and CAT Telecom have large stakes of 52 percent and 42 percent respectively.

Another problem is potential conflicts of interest as CAT Telecom also invested in Hutchison CAT Wireless Multimedia which provides the Hutch CDMA service, a potential 3G pioneer in Thailand.

If Thai Mobile were to offer 3G services, then CAT Telecom should pull out of the joint venture, he said.

To do so, the minister proposed three alternatives. First, CAT Telecom could sell off its shares in Thai Mobile to TOT Corp with proper compensation. Second, CAT Telecom might dilute its stake to less than 25 percent to become a silent partner and allow TOT Corp to have full management control. The third option was for both to maintain their holdings, but employ an independent professional team to run the company, reducing their roles to just evaluating the performance of the team.

Dr Surapong said for the first two options, an independent committee would be appointed to assess the values of goodwill and assets and determine the share price of Thai Mobile.

The minister said that while the easiest way out was to hire outsiders to manage, he favoured the toughest choice -- for CAT Telecom to sell off its shares -- because it would minimise conflicts and allow CAT Telecom to focus on upgrading Hutch to offer the 3G services as planned.

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(c) 2003, Bangkok Post, Thailand. Distributed by Knight Ridder/Tribune Business News.

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