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NTC THAILAND

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Market and price regulation development in Thailand

NBTC THAILAND

Session 10

NTC THAILAND

Agenda

� Telecommunication sector role in Thai economic

� Development of Thai telecommunication markets

� Price regulation development

� Toward convergence sector

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NBTC THAILAND

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NTC THAILAND

Telecommunication sector role in

Thai economic

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NBTC THAILAND

NTC THAILAND

Telecoms sector plays vital role in Thais economic

� Telecoms service is necessary services

� Consumption in Telecoms contributes 0.12% of GDPs

� In(GDP) = 12.65 + 0.12ln(Private Telecoms expenditure)

� 4.16 % of Total expenditure spend in telecoms sector

� Telecoms contribution 3.73% of total GDP

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NTC THAILAND

Thais consume Telecoms service more

1.89

4.16

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Growth rate 1993-2009

- Private consumption expenditure: 63.21%

- Post&Telecom expenditure: 268.10%

Average growth per year

- Private consumption expenditure: 3.22%

- Post&Telecom expenditure: 9.02%

Source: NESDB

Ratio of Telecommunications Expenditure to

Total Annual Private Consumption Expenditure

NBTC THAILAND

NTC THAILAND

Market development - Growing Telecommunication Sector

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NTC THAILAND

Mandatory Infrastructure couple with 93% coverage

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NBTC THAILAND

NTC THAILAND

Fixed line market status quo

8

0%

5%

10%

15%

20%

25%

30%

35%

40%

2003 2004 2005 2006 2007 2008 2009 2010

10.28%

37.83%

Population penetration Household penetration

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NTC THAILAND

Mobile Penetration has Increased Markedly

9

0%

20%

40%

60%

80%

100%

1Q

02

2Q

02

3Q

02

4Q

02

1Q

03

2Q

03

3Q

03

4Q

03

1Q

04

2Q

04

3Q

04

4Q

04

1Q

05

2Q

05

3Q

05

4Q

05

1Q

06

2Q

06

3Q

06

4Q

06

1Q

07

2Q

07

3Q

07

4Q

07

1Q

08

2Q

08

3Q

08

4Q

08

1Q

09

2Q

09

3Q

09

4Q

09

1Q

10

2Q

10

3Q

10

93.43%

10.73%

Pre-Paid Post-Paid

NBTC THAILAND

NTC THAILAND

Broadband Market also Expand Rapidly

10

-

500'000

1'000'000

1'500'000

2'000'000

2'500'000

3'000'000

1Q

03

2Q

03

3Q

03

4Q

03

1Q

04

2Q

04

3Q

04

4Q

04

1Q

05

2Q

05

3Q

05

4Q

05

1Q

06

2Q

06

3Q

06

4Q

06

1Q

07

2Q

07

3Q

07

4Q

07

1Q

08

2Q

08

3Q

08

4Q

08

1Q

09

2Q

09

3Q

09

4Q

09

1Q

10

2Q

10

3Q

10

2'672'573

-Broadband subscriber @ 2010: 2.7 million subscribers

- Population penetration:3.99%

- Household penetration: 14.70%

-Growth rate year on year: 28%

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NTC THAILAND

Huge opportunity in Broadband Market

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- Broadband/ Fixed line: 38.86 %

- 62% of Fixed line waiting for new

investment

- Almost 4.2 million number is a room for

xDSL

investment

- Local loop unbundling have been announce

since November 2010

-

1'000'000

2'000'000

3'000'000

4'000'000

5'000'000

6'000'000

7'000'000

8'000'000

2003 2004 2005 2006 2007 2008 2009 2010

2'672'573

6'876'852

Broadband subscriber Fixed subscribers

0.18%2.53%

8.14%

13.09%

18.10%

25.18%

32.67%

38.86%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

2003 2004 2005 2006 2007 2008 2009 2010

Broadband/Fixed lin

NBTC THAILAND

NTC THAILAND

Well facilities for the future

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0

100'000

200'000

300'000

400'000

500'000

600'000

700'000

800'000

1Q

00

3Q

00

1Q

01

3Q

01

1Q

02

3Q

02

1Q

03

3Q

03

1Q

04

3Q

04

1Q

05

3Q

05

1Q

06

3Q

06

1Q

07

3Q

07

1Q

08

3Q

08

1Q

09

3Q

09

1Q

10

Domestic Bandwidth International Bandwidth

Rapid Growth in one quarter during 3Q09 – 4Q09

- NIX: 127%

- IIG: 50%

Current bandwidth

- NIX: 721 Gbps

- IIG: 158 Gbps

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NTC THAILAND

Non-voice: the new revenue stream

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10.86%

13.58%

0%

2%

4%

6%

8%

10%

12%

14%

16%

1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10

Voice

revenue

1,012 m$

Non-voice

revenue

152 m$

Voice

revenue

969m$

Non-voice

revenue

185 m$

- Non-voice revenue grew 16% in one year

- According to our research, non-voice service trend to be necessary service

NBTC THAILAND

NTC THAILAND

Thais ready to be information society

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- 5'000'000 10'000'000 15'000'000 20'000'000 25'000'000

19911992199319941995199619971998199920002001200220032004200520062007200820092010

13'416'000

16'100'000

18'300'000

22'000'000

- Almost 35% of Thais is able to access to internet

- During 2000-2010, average internet user growth per year: 30%

- Recent year internet user growth: 20%

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NTC THAILAND

Thais ready to be information society

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� Recently, Thais Facebook account is almost 8 million accounts

� Mobile internet user is almost 12 million users in recent year

� Skyrocket growth in smart phones (230% in last year)

� Thailand is in rank 7 of Asia for Tweeter usage

� Mobile non-voice revenue is very high growth and trend to be necessary

service in near future

� Broadband is one of Thai Government agenda

NBTC THAILAND

NTC THAILAND

Price regulation development

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DiscretionaryRate of Return

Price cap Deregulate

Retail price regulation development

Maximum rate notification

Steps of regulation

(1) Regulate all telecom services

(2) Focus only basic services – Fixed, Mobile, International, Internet

(3) Focus on SMP operators

(4) Begin with ROR regulation to ensure cost-based and fair rates of early stage of regulation

(5) Moving toward price cap and deregulation approach

Present

NTC THAILAND

Price trends in Fixed line service

Operators

TOT Nation wide

TRUE Bangkok and Metro

TT&T Regional

11.0610.96

10.67

10.41

9.92 9.92

9.609.92

9.409.24

9.34

1Q2008

2Q2008

3Q2008

4Q2008

1Q2009

2Q2009

3Q2009

4Q2009

1Q2010

2Q2010

3Q2010

US$ pe

r Mon

th per U

sers ARPU

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NTC THAILAND

Price trends in Mobile service

Operators

2G 3G

AIS TOT

DTAC i-KooL 3G

TRUE MOVE 365

HUTCH i-mobile 3G

IEC 3G

MOJO 3G

0.000

0.020

0.040

0.060

0.080

1Q2008 2Q2008 3Q2008 4Q2008 1Q2009 2Q2009 3Q2009 4Q2009 1Q2010 2Q2010 3Q2010 4Q2010

US$//M

inute

Voice services

Postpaid Prepaid Industry

0

0.05

0.1

0.15

0.2

1Q2008 2Q2008 3Q2008 4Q2008 1Q2009 2Q2009 3Q2009 4Q2009 1Q2010 2Q2010 3Q2010 4Q2010

Non-voice services

SMS (US$/Message) MMS (US$/Message) GPRS/EDGE (US$/Hour)

NTC THAILAND

Price trends in Broadband internet

0.042 0.0410.036 0.036 0.034 0.033 0.033

0.030 0.029 0.029 0.029 0.028

0.000

0.020

0.040

0.060

1Q2008 2Q2008 3Q2008 4Q2008 1Q2009 2Q2009 3Q2009 4Q2009 1Q2010 2Q2010 3Q2010 4Q2010

US$/Kbp

s

Average rate

YearRate per

Month (US$)Speed

2008 19.19 1 Mbps./512Kbps.

2009 19.19 2 Mbps./512Kbps.

2010 19.19 6Mbps./512Kbps.

Operators

Narrow band Broadband

105 licenses

TOT

TRUE

3BB

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Wholesale price regulation development

CAT

Truemove

True

TT&T

AIS

DPC

TOT

DTAC� Symmetric regulation

� Level playing field

� Negotiate based

� Non-discrimination

� Transparent

� Equal treatment

� Cost oriented interconnection charge - LRIC

� International best practice

Wholesale price regulation development

Network ownerInterconnection

seekerDispute Resolution

CommitteeNTC

Submit RIOLRIC based

Announce approved RIO

Request for interconnection

Negotiate base onApproved RIO

(90 days)

NTC approve RIO(90 days)

Correct RIO

Submit Interconnection

Contract to NTC within10 days

Approve

Interconnectioncontract

agreeDispute resolution

Cannot agree

approve

notapprove

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Wholesale price regulation development

Interconnection charge ($US)

RIO (2006) Interim (2010) % decrease

Fixed

Termination 0.042 0.012 71%

Origination 0.100 0.016 84%

Transit 0.017 0.003 84%

Mobile

Termination 0.036 0.017 53%

Transit 0.017 0.007 60%

Standard LRAIC calculation

� Efficient investment

� Current cost

� Economic asset life times

� Annualisation methodology (Tilted annuity)

� Suitable Opex and Common costs allowed

Wholesale price regulation development

IC and Access notification

Access (LRIC)

Roaming MVNO LLU

IC

(LRIC)

IC and Access notification

Access (LRIC)

Roaming MVNO

IC (LRIC)

LLU

IC LLU Roaming MVNO

Retail

minus

Cost-based

More specific regulation

Promote competition

Balance between reduce barriers to market entry and encourage investment in network infrastructure

Capture technology development and international best practice of regulation

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NTC THAILAND

Toward Convergent Regulator

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NBTC THAILAND

NTC THAILAND

NBC

Toward convergent regulatorNBTC THAILAND

NTC

Joint

committee

Telecom regulator

Broadcast regulator

Spectrummanagement

NBTC(Convergent regulator)

- NBC has not been establish since 2000

- NTC has been establish since 2004

- No new spectrum assignment for 10 years

- Broadcasting sector has not had

independent regulator

- All in one organization

- Spectrum management

- Telecommunication regulator

- Broadcasting regulator

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NTC THAILAND

Q & A

Welcome to THAILAND

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NBTC THAILAND