The mobile telecommunications industry in Thailand is both dynamic and undergoing a period of profound change. This article takes a look at the current Thai mobile landscape and investigates what the future holds in store for a country where mobile ownership is still in its infancy. Written in 2005.

Someone who knows something about the mobile phone scene in Thailand, but for all the wrong reasons, is world champion golfer Tiger Woods. Back in 2000 he was well on the way to winning his next several million at the Johnnie Walker Classic in Bangkok only to have his concentration broken several times by the cacophony of myriad handsets going off in the crowd and the subsequent oblivious loud conversations. Apparently Woods backed off his putt several times, giving long, hard glares at the overtly auditory audience. I doubt Mr Woods ire would have been eased had his caddy explained to him that his audience consists of 25-49 year olds who just coincidently happen to be the highest users of mobile phones in Thailand and that, in actual fact, about 90% of Thailand’s 62 million people have yet to discover the wonders of wireless.

Whilst in other Asian countries mobile ownership has spread to all sectors of the community, mobile penetration here is curiously smaller than the Philippines where per capita income is barely half of that of Thailand. A recent report by the Thai Development Research Institute might have the answer. It revealed that mobile markets in the Kingdom are “under-competitive and dominated by a small number of players resulting in a lack of competition compared to the markets in neighbouring countries”. The survey also found that Thais pay more for their cellular phone services than other Asian nationals. As an example, based on the same call volume of 200 minutes per month, local users will pay between Bt1, 164 and Bt1, 242 monthly whilst Singapore Telecom users can talk to their hearts content for the equivalent of Bt682. Why the ‘rip-off’?

Until now the Thai wireless market has somewhat resembled a private golf club open to privileged members only. It’s dominated by just two main players that between then control approximately 90% of the market. One is Total Access Communications (DTAC) of which 40% is owned by Norwegian telecomm company Telenor and the other is Advanced Information Service (AIS), a joint venture between Singapore Telecommunications and Shin Corp, a company belonging to Thai Prime Minister Thaksin Shinawatra. AIS’s network covers about 90% of the country but DTAC’s only roughly half, leaving an awful lot of people with a choice of only one network – if they can afford it.

That’s not to say competition between the two has not been fierce where the two networks overlap. Just last year Boonchai Bencharongkul, Chairman of DTAC got down and dirty in a paddy field in order to publicise the Company’s campaign to persuade the country’s 43 million farmers, most of whom had managed to scrape by without SMS, that a mobile was just as essential as a good harvest. By introducing low cost mobile phones and a new pricing structure, DTAC almost collapsed under the 30,000 new customers joining every day. Not to be outdone, AIS also slashed its rates and the two between them added more new customers at the end of 2000 and beginning of 2001 (1.8 million) than in the previous four years combined. Unfortunately their already overworked networks were not prepared for such an onslaught and began to buckle under the pressure of so many new users resulting in complaints of dropped calls and billing problems.

To their credit both are doing their best to improve infrastructure. AIS have invested heavily in network upgrades by signing a deal worth over U$50 million with Nokia to expand and improve its GSM network. Nokia will supply AIS with GSM radio and core network equipment, including Nokia Ultra Site base stations, base station controller upgrades, a mobile switching centre and all the other GPRS, EDGE and WCDMA paraphernalia needed to support AIS’s 7 million subscribers.

Regardless of better networks and lower prices, a choice of two is not much of a choice at all. That’s what the marketing men at UK mobile giant Orange must have thought when, in collaboration with Thai conglomerate CP Group, they decided to cut themselves a slice of the Thai wireless pie and grab a 34% stake in Wireless Communications Services, another of the country’s smaller mobile companies. CP Orange’s opening shot across the bows of this cosy duopoly has been to award a $2 million contract to Gamma Projects for the building and management of a GPRS network, the first of its type in Thailand. CP Orange will use Gamma Project’s Net One software for building and managing a GSM 1800 MHz wireless system on which it will offer a range of 2.5G services under the Orange brand name.

The arrival of Orange marks the beginning of the end for a mobile market seen by many as stifled by state regulation and market protectionism. But all that is set to change by 2006 when the entire industry is to be de-regulated and liberalised. The Thai government is setting up the National Telecommunications Commission to make sure that the cosy status quo disappears like a golf ball being sliced into the wide blue yonder.

Unfortunately, a delay in its implementation has put the entire industry into a state of flux and uncertainty. Until this new overseer is up and running and has declared its plan of action, no one knows what the new lie of the land will be and how best to prepare themselves. What is known is that current state concessions granted to the existing mobile companies by the Telephone Organisation of Thailand (TOT) and Communications Authority of Thailand (CAT) will be converted to licences in a bid to set existing telecom players free from state constraints and allow them to compete on the same footing as any new provider that fancies its chances. One thing is for certain, the two government owned authorities are also to be cut loose from the state apron strings and left to fend for themselves on the newly open market. Whether they flounder around in the rough or come out fighting with a set of shiny new golf clubs is the subject of much speculation in the Thai press.

Both are seen as lumbering, over-staffed and complacent state fat cats who have accumulated between them a portly bt368 million, mostly through the revenues they rake in from their concessions. Such a nice little earner has made them content to sit back on their laurels and let the money role in. “None of the executives (of the TOT or CAT) has marketing experience. They may know how to cut costs but not how to generate revenue,” said a former CAT executive. But generate they must if they are to survive, to which end TOT is launching its own 1900 MHz cellular phone service to compete with the likes of AIS, who are already the country’s largest mobile operator.

One idea floating around is for TOT to commercially offer its existing base stations across the country to other mobile phone operators who would then use TOT’s maintenance service. Some feel the only way each can survive is with a merger so they have a bigger stick to shake at competitors. The latter scenario seems far from possible. Despite both having the same owner – the government of Thailand – they are bitter rivals who seem set to launch competing mobile services. According to some pundits, such competition could destroy both of them because each will have to start fresh in a market already dominated by their own concessionaires. In business terms, the merger makes a lot of sense.

But if pride in their independence doesn’t prevent a shot gun wedding, politics just might. The Prime Minister’s family owns AIS and other private telecom services which could create a conflict of interest at the highest level and leave the two agencies little room for manoeuvre. Already an attempt to create a level putting green by allowing the two agencies to retain all the financial benefits promised to them by the private telecom firms is being sabotaged by the concessionaires themselves who have lobbied to retain large chunks of the revenue that would have gone to the state agencies. Additionally, both sides are claiming ownership of the networks and subscribers after privatisation, though present industry opinion is that the private firms will win possession.

Worse still, where once investment in these monopolies, whose revenue was more or less guaranteed, seemed attractive to foreign speculators, they may now look elsewhere for a Thai partner more used to the cut and thrust of competition. Some say both could end up being taken over by the likes of AIS or DTAC but as far as DTAC is concerned, it would regard other fixed line private firms such as Thai Telephone and Telecommunications Plc a much juicier prospect because it shares a common private organisation culture.

Despite this, the TOT is remaining optimistic and embarking on an investment road show scheduled for September 30 to October 17 of this year to seek funding prior to it’s listing on the stock market in November.

Despite the current uncertainties, the prospect of 90% of the Thai population still being wireless virgins has proved too much of a temptation for overseas investors who, desperate to find fresh meat, see Thailand as fertile ground in which to plant their speculative seeds.

The French, Norwegian, Singaporean and Malaysian foreign feeding frenzy has not gone unnoticed by several Chinese cellular phone network suppliers who also want to get in on the act. The latest entrant is ZTE who are participating in the Bt20 billion network procurement bid of Thai Mobile’s 1900 MHz cellular infrastructure. Ding Mingfeng, the Company’s Vice President announced in June 2002 that ZTE planned to be involved in Thai Mobile’s second phase network procurement bid. Thai Mobile is mainly controlled by our old friend the Telephone Organisation of Thailand. Thai Mobile plans to hold its full commercial launch in October of this year. “ZTE is very confident of establishing a toe-hold in the Thai market because of the reasonable price of its equipment” said Jrarat Pingclasai, Chief Executive of International Engineering Co (IEC), ZTE’s partners in the bid.

Both companies are also considering entering the latest round of bidding to lease and market the Communication Authority of Thailand’s Code Division Multiple Access cellular phone network and who can blame them when this joint project with CAT is worth Bt15 billion. As a developer of its own optical, fixed line and broadband networks ZTE is no stranger to the telecoms market. So far it has spent US$1.8 billion on research and development to keep pace with global trends and has populated its offices with the best boffins money can buy. The result of this big splurge has been the introduction of its own 3G mobile phone based on CDMA technology which it will add to over 30 handset models in three systems (GSM, CDMA and Personal Handy Phone System) it already plans to launch world-wide.

So after the dust has settled, apart from cheaper tariffs and a greater choice of providers, what else can tempt the Thais to talk on the move. Could they be wooed with WAP? AIS already have 40,000 subscribers to its ‘Mobile LIFE’ service. Should play get a little dull for the golf fans among them, distractions in the form of email, banking, news, entertainment, shopping, chat, messaging, stock market services and 7000 Internet sites are all downloadable via GPS at 115 megabits per second courtesy of WAP portals such as Siam2You – an interactive services firm based in Bangkok. This Company launched the first bilingual WAP portal in Thailand in May of last year after closing a $6 million deal with Singapore-based Transpac Capital in partnership with U.S.-based Bank Boston Capital. AIS is offering its WAP service in cooperation with Ericsson, which is providing the platform technology. To date, AIS has invested some Bt200 million (US$4.7 million) in WAP technology promotions. AIS have also introduced a roaming feature with its WAP service that will allow users to browse the Internet using their handsets outside Thailand. The company was the first in Thailand to offer such a benefit.

Much like Japan, many Thai citizens are getting their first taste of the Net via their WAP enabled handsets. “The Internet is not a big hit in Thailand,” said Thana Thienachariya, Vice President of Business Development at DTAC. “But mobile Internet is more promising.” That’s because while Internet penetration amounts to less that 2 percent of the country’s 62 million population, mobile phone usage is higher at about 2.5 million handset owners and rising.

But the verdict is still out on whether Thai consumers will buy WAP-equipped handsets. “According to our own survey, about 80 percent of the population in Thailand doesn’t know what WAP is,” said Thana. According to him, Thai consumers would have to become acquainted with technological developments and new products before wireless Internet technology could be considered a viable market in Thailand and revenue deals could be struck.

Surely a service to be welcomed by Thais as well as 55 million other finger fatigued wireless subscribers throughout SE Asia is WebNum. WebNum allows users to access Internet sites rapidly by entering a WebNum shortcut number sequence rather than the sometimes longwinded domain address that could strain even the most practised of texters.

For example, a user who wants to check airfares might type in ‘1-2-3’ to reach an airline’s wireless Web site rather than entering the 50 or more keystrokes a Web address might require. WebNum services can also be of advantage for content providers who can map their established Internet domain names to the wireless environment, extending and protecting their digital brand. At the same time, telecommunications carriers can benefit from these services because they could provide increased revenue opportunities without requiring significant changes to existing telecommunications infrastructure.

Be it 3G, WAP, Webnum or SMS, there’s going to be a large chunk of Siamese public ready and waiting to embrace whatever the unshackled players have to offer. One recent survey predicts that over the next five years, Southeast Asia can expect 60 million new mobile phone subscribers with Thailand accounting for a third of that figure. Evidently each one of those millions thinks that “mobile phones are indispensable to the personal and professional lives of most Asians”, according to Siemens information and Communications Mobile group who conducted 3000 interviews in 7 Asian countries including Thailand. Those providers who can deliver an unbeatable combination of reliable network, cheap tariffs, affordable phones and useful content will be grinning from ear to ear in the Land of Smiles.

But, for now, all the eager potential players in the Thai Wireless Handicap can do is stand on the sidelines and strain to get a tantalising glimpse, through the obscuring trees of bureaucracy, of a whole new competitive landscape whose membership rules, it is hoped, will be somewhat more egalitarian. For Mr Woods the game in Thailand is over but for the mobile companies it’s just beginning.

Photo by Geoff Greenwood on Unsplash