[November 23, 2009] Korn: State must get fair return on 3G Tweet Nov 21, 2009 (Bangkok Post - McClatchy-Tribune Information Services via COMTEX) -- Licensing fees for new third-generation wireless networks must offer "fair compensation" for the state, insists Finance Minister Korn Chatikavanij. "I'm not saying that the government must look to maximise returns [from the auction]. But the issue is fairness [in sharing revenues between the government and the state]," he said yesterday. "We want the private sector to be able to do business. But the industry must also be able to develop itself." The National Telecommunications Commission hopes to hold a 3G licence auction by February, although most industry observers expect further delays due to legal complications. The Finance Ministry, which regulates state enterprises, has also expressed concern about the impact 3G licences might have on existing mobile concessions between private operators and the state-owned TOT Corp and CAT Telecom. The three main mobile operators -- Advanced Info Service, DTAC and True Move -- say they are prepared to invest tens of billions of baht in 3G networks to meet demand for high-speed wireless internet and mobile data transmissions. Mr Korn said issuing 3G licences at a time when existing mobile concessions have yet to be converted raises the potential that operators may simply transfer their existing subscribers to their new 3G networks to the ultimate detriment of the state. Mobile services currently operate under revenue-sharing concessions with TOT Plc and CAT Telecom. But 3G licences will eliminate the revenue-sharing deals in favour of licensing fees. Policymakers have argued that one way to mitigate the problem is to "convert" the existing concessions, where the operators may buy out network assets and terminate the existing contracts from their concession partner. Under the 3G framework, operators pay a licence fee equivalent to just 2.5 percent of revenues, or 6.5 percent once the universal service obligation charges are included. In contrast, existing second-generation mobile concessions call for revenue sharing of 20 percent to 30 percent, a huge gap that would result in massive losses for the state. A study by the State Enterprise Policy Office estimates TOT and CAT could lose 235 billion baht in revenues if the existing mobile operators successfully transferred their existing customers to 3G networks within three years, based on projected revenues over the remaining life of the current concessions. To see more of the Bangkok Post, or to subscribe to the newspaper, go to http://www.bangkokpost.com. Copyright (c) 2009, Bangkok Post, Thailand Distributed by McClatchy-Tribune Information Services. For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. [ Back To TMCnet.com's Homepage ]