Underwater cables not approved: No foreign ownership allowed
Underwater cables needed for cheaper internet but companies with expertise are foreign & rules say CAT Telecom must be owner of all assets so foreign partnership not possible.
Underwater cables needed for cheaper internet but companies with expertise are foreign & rules say CAT Telecom must be owner of all assets so foreign partnership not possible.
DIGITAL ECONOMY
Underwater cables not approved: No foreign ownership allowed
11/07/2016
Komsan Tortermvasana
The Budget Bureau has put the brakes on the 5-billion-baht sub- marine (underwater) cable construction project, saying it violates the state's procurement regulations.
Thailand's procurement rules stipulate that any state agencies in a public-private partnership (PPP) must be the sole owner of the asset in the investment project.
MORE SUB-MARINE CABLES, CHEAPER INTERNET
Having additional sub-marine cable routes in the country could reduce connection costs to internet service providers (ISPs) in order to lower the cost of domestic internet services.
This could in turn promote broadband internet access, thus narrowing the digital divide.
The cable project is also part of efforts to promote Thailand to be an Asean digital gateway.
BOOSTING DATA CAPACITY URGENT
Currently, CAT owns six submarine cables, while TOT Plc has two.
CAT's six submarine routes, meanwhile, have nearly reached full capacity of 10 terabits per second.
Boosting capacity via sub-marine cables and links is essential to handling greater domestic internet traffic.
In the past nine years, Thailand's international internet traffic had increased by 81% to two terabits a second in August 2015 and the rate is expected to reach 38 terabits per second by 2020.
WHY FOREIGN PARTNERS?
The sub-marine cable industry is dominated by global players.
So the idea of the Information and Communication Technology (ICT) Ministry had was that the submarine cable investment was to be a global development through an international consortium business model.
Highly skilled foreign workers would also be needed for the project.
FURTHER DELAYS IN DIGITAL ECONOMY PROJECT
Some believe that the delay of the submarine construction project could trigger a domino effect among other digital infrastructure projects involving hardware (hard digital infrastructure).
These delays could eventually lead to further delay in the development of the country's digital economy.
Thailand's digital economy would not be able to get off the ground if the hard digital infrastructure is insufficient, according to ICT Minister Uttama Savanayana.
BUDGET FOR DIGITAL ECONOMY INFRASTRUCTURE
In March, the government had approved the allocation of 20 billion baht from its fiscal budget to the ICT Ministry to construct hard infrastructure under the digital economy scheme.
Of the total, 15 billion baht is slated to be invested in broadband internet networks for 39,000 villages nationwide.
The remaining 5 billion is for the construction of sub-marine cables.
FOREIGN OWNERSHIP VIOLATES GOVT PROCUREMENT RULES
CAT Telecom was assigned by the ICT Ministry to take responsibility for the sub-marine cable construction project through an international consortium business model.
The Budget Bureau, however, said that the business model violated the state's procurement rules.
Surapan Meknavin, a director on the CAT board, conceded that the submarine project could not be made through the international consortium model as it would be in violation of the Budget Bureau's procurement rules.
ALTERNATIVES: CAT SOLE OWNER OR REWRITE THE LAWS
Therefore, CAT plans to propose two alternative public-private partnership (PPP) models to the government.
First, the government might directly allocate the 5-billion-baht budget to CAT to construct the submarine cables, adding to its existing six routes, without needing any foreign partnership.
This proposal could end the restriction on the procurement rules as CAT would be the sole owner of the submarine cable asset.
The second option is for the government to amend procurement rules to allow for international consortiums and partial foreign ownership of assets in public-private partnership (PPP) investment projects.
CAT Tower in Bang Rak district of central Bangkok is one of the state telecom's main offices. CAT was assigned responsibility for the now-halted submarine cable project and looks unlikely to deliver.?(Photo by Panupong Changchai)
http://www.bangkokpost.com/business/news/1032945/budget-bureau-suspends-submarine-cable-project
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