Expanding broadband: Moves afoot to enable the sector to reach its full potential

While the Ministry of Information and Communication Technology (MICT) has promoted ADSL connections since the first national information and communications technology (ICT) plan (2002-08), significant growth in broadband services only started in 2006 as fixed-line operators extended their copper network in larger urban areas. “Broadband penetration is still low, at only 3.5% of households and roughly 12% of the population, mainly in metropolitan areas and large cities,” Thares Punsri, the chairman of the National Broadcast and Telecommunication Commission (NBTC), the sector’s regulator, told OBG. “This has led to an inequality of access – a digital divide – that hinders the development of the market in the long run.”

CURRENT MARKET: While 125 internet service providers (ISPs) are licensed, only about 20 are active. The major providers include CS Loxinfo (a subsidiary of InTouch), INET, ISSP, Ji-Net, KSC, 3BB Broadband, Pacnet, Samarts, TOT and True Corporation. TOT holds the largest market share, about 41% in 2011, followed by the other two landline operators, True (38%) and TT&T (20%). As of late 2011, ADSL connections cost on average BT600 ($19) a month, with prices varying from BT400 ($13) for entry-level services to BT2000 ($64) for the fastest connections, still prohibitively high for a majority of Thais, particularly compared to mobile data connections. Despite these constraints, Thai broadband connectivity grew at the fourth-fastest pace in the South and East Asian region in 2011, with roughly 50,000 new subscribers added each quarter, according to Point Topic’s World Broadband Statistics.

FUTURE GOALS: The MICT has taken steps to boost broadband penetration rates, including implementation of the National Broadband Initiative, launched in 2010. “We have a goal of pushing broadband penetration to 80% in the next four years under our ‘Smart Thailand’ vision,” Anudit Nakornthap, the minister of ICT, told OBG. “There are many ways to do this aside from fibre alone, and we are looking at wireless in particular. We have started tests of 4G and high-speed wireless (LTE) networks and will do more.” Indeed, the government is supporting the expansion of broadband through a mixture of fibre-to-the-home, LTE networks and satellite connections, which should reduce the price of high-speed connectivity. The government expects the number of broadband connections to reach 6m by 2016.

BENEFITS: The World Bank has forecast that on average a 10 percentage point rise in broadband connectivity would boost GDP growth by 1.38 percentage points. These estimates, based on the findings of a 2010 report by the Digital Divide Institute, project that the expansion of e-commerce, faster corporate communications and the development of cloud computing software would all contribute to an acceleration of growth. In all, the International Telecommunication Union estimates that expanding broadband access nationwide could add a full 2.4 percentage points to the economy’s growth rate.

The expansion of broadband services would likely create social benefits, such as establishing e-government services nationwide by 2015, providing broadband to SMEs, schools and hospitals, and enabling more effective disaster warning systems. One election pledge of the Pheu Thai government already enacted in early January 2012 was the launch of 20,000 free 2 MB ps Wi-Fi hotspots in public areas such as government offices, hospitals, police stations and parks as part of the first phase of the “Smart Thailand” scheme. The second phase of the BT30bn ($957m) project will involve rolling out an additional 20,000 hotspots to provide coverage for 88% of districts in all 77 provinces.

As a key element supporting successive governments’ efforts to encourage innovation and drive the economy up the value chain of production, resolving the broadband bottleneck in both the fixed and mobile segments could have significant multiplier effects. Moreover, in the medium term, the development of broadband and high-speed wireless data connections will likely prove an important driver of growth in operators’ profitability as voice revenue gradually declines.