ISSUES IN THAILAND
…AND HOW TO SOLVE THEM
UPDATE TO THE PRESENTATION AT
่ ยุคของการเปลียนแปลงในธุ รกิจโทรคมนาคม งานวิศวกรรมแห่งชาติ 2560
PRESENTATION BY ALLAN RASMUSSEN
THAILAND’S TELECOM MARKET – AN UNLEVEL PLAYING FIELD
MOBILE OPERATORS PLAYING FIELD
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MVNO’S PLAYING FIELD
Without some form of regulatory measures and changes as described in this presentation, Thailand’s telecoms market will remain an unleveled playing field, where competition and innovation of mobile services, and thereby the digital economy, may not evolve as it should - or at all. The Government has provided the platform for private industries to participate and form the final stages of Thailand 4.0 – however the current regulation from NBTC - or lack off, has not been able to follow suit, but only concentrated on the existing silos in the market instead of getting all the wheels to spin.
MVNO’S IN THAILAND – WHY IT FAILED
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In 2009 five MVNO’s where given a license by the telecom regulator NBTC to operate as MVNO’s on the state enterprise telecom operator TOT
AS OF JANUARY 2018 ONLY 2 MVNO ARE LEFT i-Kool 3G (Loxley) & Buzzme (formerly IEC3G)
THE FIRST MVNO’S IN THAILAND FAILED BECAUSE OF THE FOLLOWING REASONS
INSUFFICIENT NETWORK CAPACITY AT LAUNCH
UNLEVEL PLAYING FIELD – (UNRESOLVED)
INSUFFICIENT MVNO EXPERIENCE AND QUALITY
POOR PLANNING AND EXECUTION
POOR MVNO CONTRACTS AND REGULATION
LEGACY SYSTEMS AND RED-TAPE
THAILAND’S “SUPERBOARD” FAULTS THE REGULATOR NBTC FOR MVNO FAILURE
In 2016, The Inspection and Evaluations Commission (also known as the “Superboard”) of the National Broadcasting and Telecommunications Commission (NBTC), failed the telecom regulator and concluded that:
“…NBTC should issues regulations for mobile virtual operators to support more of them in the Industry, which should benefit consumers.”
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WHAT HAS THE REGULATOR NBTC DONE ABOUT IT?
Pronoun not anything; no single thing. Adjective having no prospect of progress; of no value
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BUT CONTINUES TO SELL MVNO LICENSES
MVNO LICENSES ISSUED IN THAILAND AS OF APRIL 2018
54 COMPANIES HAVE OBTAINED A MVNO LICENSE IN THAILAND ONLY 9 HAVE LAUNCHED – 6 ARE STILL ALIVE
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BEHIND THE NUMBERS
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APPROXIMATELY
1/3 OF THE COMPANIES WHO HAVE OBTAINED A MVNO LICENSE IN THAILAND HAVE FOREIGN INVESTMENT/SHAREHOLDERS
SOME OF THE NAMES BEHIND THE MVNO LICENSES
•
SB Telecom (Thailand) Co., Ltd. - Softbank
•
Mobile Innovation Co., Ltd. - NTT DoCoMo
•
NTT Comm. (Thailand) Co., Ltd. - NTT
•
VM Digital (Thailand) Co., Ltd. - Axiata
•
BT Siam Co., Ltd. - British Telecom
•
Tune Talk (Thailand) Co., Ltd.- Celcom
•
Lyca Mobile (Thailand) Co., Ltd. - Lycamobile
•
J-Communications Service Co., Ltd. - KCS Japan
•
Tesco Mobile (Thailand) Co., Ltd. – Tesco Mobile
•
Advanced Wireless Network Co., Ltd. - AWN (AIS)
•
Advanced Info Service (AIS) PCL. - AIS
•
UIH Co., Ltd. - DTAC founder/Chairman
•
Acumen Co., Ltd. - JASMINE
•
Real Move Co., Ltd. - TRUE
•
Loxley PCL - LOXLEY
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MVNOS, ARE AN INTEGRAL PART OF THE GLOBAL MOBILE LANDSCAPE
Over the past 18 years, MVNOs have helped stimulate competition in the mobile market, launching innovative tariffs and services and attracting niche consumer segments at a lower cost than mobile network operators (MNOs). In Europe virtually every cable and fixed-line operator has a mobility strategy, largely based on MVNO
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With a predicted compound annual growth rate (CAGR) of over 10% in the forecast period to year 2020, the Asia Pacific region is home to the world’s fastest growing MVNO sector, even more than the highly competitive MVNO markets of Europe and North America. Grand View Research
TODAY, MVNOS HAVE REACHED 214 MILLION USERS WORLDWIDE, AND IS ESTIMATED TO GROW TO 300 MILLION USERS AND A $70 BILLION VALUE IN 2020
Overall connection growth for mobile phone service around the world was about 4.5% end of 2015. MVNO connections are growing at about 18% per annum 4 times faster than the average rate for the mobile industry.
• • • • • •
1000+ INDEPENDENT MVNOS WORLDWIDE MVNOS INCREASED 70% BETWEEN 2010 AND 2015 73 COUNTRIES HAVE MVNOS IN OPERATION MVNOS ACCOUNT FOR 14% OF THE TOTAL EU MARKET EUROPE IS HOME TO: 600 MVNOS, APAC: 140, US: 111 1 OUT OF 10 PEOPLE IN AUSTRALIA IS A MVNO CUSTOMER
Ovum predicts that nearly 24% of all new subscriber connections over the next 5 years will come from MVNO subscribers. Although the current market represents less than 10% of these connections, they expect it triple
By 2020, IDC predicts that 30% of the top 500 companies in Thailand will see the majority of their business depend on the ability to create digitallyenhanced products, services and experiences Source IDC Thailand
…AND HAVE DELIVERED
THE RATIONALE FOR THE INTRODUCTION OF MVNO, INCLUDE - BUT ARE NOT LIMITED TO:
Stimulate competition, Efficient utilization of network resources, Introduce new or better services aligned to lifestyle propositions currently unserved/underserved, Promote investment opportunities for local and international businesses in the telecom market.
Consequently, MVNOs are intended to support innovation, bridge digital divide, and contribute to the growth in the ICT sector to ensure the achievement of the broader industry and DIGITAL ECONOMY OBJECTIVES.
THE CLEAR INTERNATIONAL EVIDENCE IS THAT MVNOs HAVE DELIVERED:
More consumer choice Innovative pricing plans Innovative products and services innovation in, and better customer service
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Meanwhile back in Thailand‌
THAILAND’S TELECOM ECOSYSTEM – THE MOBILE NETWORK OPERATORS
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THE MOBILE NETWORK OPERATORS AIS, DTAC AND TRUE + THE TWO STATE ENTERPRISE OPERATORS: CAT TELECOM AND TOT
STATE ENTERPRISE
STATE ENTERPRISE
THAILAND’S TELECOM ECOSYSTEM – THE TELECOM REGULATOR
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THE NATIONAL BROADCAST AND TELECOM COMMISION (NBTC) IS IN CHARGE OF SPECTRUM, LICENSES AND REGULATION
STATE ENTERPRISE
STATE ENTERPRISE
470MHz 1500MHz 2100MHz 2300MHz
900MHz 1800MHz 2100MHz
900MHz 1800MHz 2100MHz
850MHz 1800MHz 2100MHz
850MHz 1800MHz
THAILAND’S TELECOM ECOSYSTEM - SPECTRUM CAPACITY TO MVNO’S
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MVNO
10%
10%
10% STATE ENTERPRISE
STATE ENTERPRISE
470MHz 1500MHz 2100MHz 2300MHz
900MHz 1800MHz 2100MHz
900MHz 1800MHz 2100MHz
850MHz 1800MHz 2100MHz
900MHz, 1800MHz & 2100MHz SPECTRUM LICENSES STATES 10% OF THE CAPACITY MUST GO TO MVNO’S
850MHz 1800MHz
HOWEVER IT IS ONLY CAT TELECOM (850MHz) AND TOT (2100/2300MHz) WHO HOST MVNO’S MVNO
STATE ENTERPRISE
STATE ENTERPRISE
470MHz 1500MHz 2100MHz 2300MHz
900MHz 1800MHz 2100MHz
900MHz 1800MHz 2100MHz
850MHz 1800MHz 2100MHz
900MHz, 1800MHz & 2100MHz SPECTRUM LICENSES STATES 10% OF THE CAPACITY MUST GO TO MVNO’S
850MHz 1800MHz
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HOW MVNO’S CONNECT 1 OF 2
MNO
MVNO MVNO
MNO
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MVNA
MVNO
MVNO
MVNO’S CAN CONNECT TO MNO’S DIRECTLY
MVNO’S CAN CONNECT TO MNO’S THROUGH A MVNA
The MVNO enters into an agreement with the MNO to obtain access to airtime at
A MVNA is an entity, who buys large bulk of airtime from the MNO, and then
wholesale rates, and then sets its own retail price and service. The MVNO either has
wholesale it to several MVNOs (Economies of scale). The MVNOs buys the
to invest in its own telecom operational systems or employ the services of a MVNE.
airtime from the MVNA and sets its own retail price and service to end-users.
HOW MVNO’S CONNECT 2 OF 2
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MVNO MNO
MVNE
MVNO MNO
MVNA/MVNE
MVNO
MVNO
MVNO’S CAN CONNECT TO MNO’S THROUGH A MVNE
MVNO
MVNO’S CAN CONNECT TO MNO’S THROUGH A MVNA/MVNE
The MVNE provides infrastructure and services to both the MNO and MVNOs,
The MVNA/MVNE purchases airtime in bulk from the MNO, adds the
which enables MVNOs to offer their services on the MNOs network. The MVNE
operational telecom components on top, and then wholesales the airtime
provides services, such as billing, product setup, service delivery, customer care,
and service as a full turnkey solution to MVNOs. The MVNA/MVNE also
fraud management, reporting, sale platforms, device and SIM management, etc.
offers guidance during launch and operation as well as value added services.
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PROBLEM #1 IN THAILAND
THE MNO WALL
THE MNO WALL OF THAILAND
Somehow, and for some reason, none of the three MNOs AIS, TRUE or DTAC has had any MVNOs operating on their networks, since the introduction of MVNOs in Thailand in 2009
NO MVNO’S
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DESPITE THE MVNO CRITERIA AND CAPACITY ON THE 2100MHz LICENSES Prior to Thailand's 2100 MHz 3G auction in 2012, the NBTC released the following criteria and procedure for the spectrum 16.5.1 The Licensee shall provide telecommunications network service with the minimum capacity of 10 percent of its networks to the MVNO who is not the Connected Person in the Shareholding Structure with any licensee when receiving such service request
2100 MHz
2100 MHz
2100 MHz
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AND DESPITE THE MVNO CRITERIA AND CAPACITY ON THE 900MHz & 1800MHz LICENSES
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As with the 2100 MHz spectrum, the NBTC also added a MVNO clause in the terms for the 900 MHz and the 1800MHz licenses (2015/2016) (1) The Licensee shall comply with the Commission’s Notification Regarding Mobile Virtual Network Operator Service 2013. (2) The Licensee shall provide telecommunications network service at least 10 percent of its network’s capacity to MVNO(s) that is/are not the connected person(s) with any licensee under this Notification, upon receiving such service request.
900 MHz
1800 MHz
900 MHz
1800 MHz
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Yet, no MVNO’s have launched on AIS, DTAC or TRUE
HOWEVER, ALL THREE MNO’S HAVE LAUNCHED THEIR OWN MVNO’S ON CAT AND TOT TRUE subsidary TrueMove is a MVNO on CAT’s 850MHz
AIS subsidary SBN is a MVNO on TOT’s 2100MHz
DTAC subsidary DTN is a MVNO on TOT’s 2300MHz
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THE MNO WALL SOLUTION
THE MNO WALL SOLUTION Dear NBTC, if you seek (with the words from your own strategy statement) to manage spectrum allocation efficiently, Create equality in communication infrastructure access and digital opportunity, develop competition, fairness and efficiency in communication resource management toward Thailand's digital community and support and promote innovation and networking…
“THEN OPEN THIS GATE - TEAR DOWN THIS WALL”
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THE MNO WALL SOLUTION
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1. The NBTC should publish a clear policy statement requiring the telecom network operators to provision MVNOs on their network. 2. The NBTC should exercise its regulatory mandate to monitor the market and the negotiations to ensure that mobile network operators conduct negotiations fairly and in good faith - and that the policy objectives of the mobile market are fulfilled. 3. The detailed terms and conditions of MVNO provisioning should first be left to the parties to negotiate on a purely commercial basis 4. It would be in the public interest for the NBTC to intervene, and assist the parties - or if necessary, settle and resolve in case a mobile network operator is acting in bad faith, engaging in any form of anticompetitive conduct, or if, after a reasonable period (1 months) of ingood-faith negotiations, a commercial agreement cannot be reached between the parties.
The NBTC should follow up on a monthly basis to see if there is a progress in on-boarding MVNOs, and take measures if not. In addition, and as a last resort only, if no progress is made - a regulatory mechanism allowing the NBTC to intervene, to: • • • •
Ensure fair and reasonable terms for access Safeguard fair and non-discriminatory competitive behavior Bring parties to the negotiating table at the earliest opportunity Introduce and safeguard the principle of in-good-faith commercial negotiations.
i.e., the mobile network operator shall enter into a wholesale agreement with the MVNO, within a period of 1 months from the date of issuing a Letter of Intent (LoI) or Memorandum of Understanding (MoU) and submit a copy of the same to the NBTC (licensor). NBTC would have the power to intervene in the agreement if deemed necessary by one of the parties. The Regulations/Directives/Orders of NBTC in this regard would be binding on the telecom network operators and the MVNO.
THE MNO WALL SOLUTION NO MVNO = NO NEW LICENSE The NBTC has been very active in making sure that terms and conditions, such as minimum roll out coverage, license payments, maximum retail pricing, etc. has been followed by the 900/1800/2100MHz auction winners, while zero attention - nor consequences has been given regarding the MVNO capacity. NBTC is planning an auction for one 850MHz and three 1800MHz spectrum licenses in 2018. It would suit the regulator well to live up to its reason to exist, by facing the issue of un-used MVNO capacity among the three existing spectrum license holders. One suggestion would be to add to the auction terms and conditions, that in order to participate in the upcoming spectrum auction, an existing license holder, who has not yet lived up to the terms and conditions in its previous spectrum license regarding MVNO capacity, would have to launch at least one MVNO, on their networks in order to participate in the spectrum auctions. The mobile network operators should be given a maximum period of 60 days to present an MVNO proposal.
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PROBLEM #2 IN THAILAND
NO FULL MVNO
NO FULL MVNO’S ALLOWED IN THAILAND = NO CONTROL OF THEIR OWN BUSINESS
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This table from the NBTC shows which elements are allowed and not in Thailand for MVNA’s and MVNO’s
ELEMENTS / LICENSE TYPES SPECTRUM
FULL MVNO
MEDIUM MVNO
THIN MVNO
MVNA
N/A
No
No
No
No No No No No No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes
No No No No No No No No No No No Yes Yes Yes Yes Yes Yes Yes
No No No No No No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes
NETWORK ELEMENTS
SWITCHING AND DATA NETWORK
SUBSCRIBER REGISTRATION, VAS, INTERNET, APPLICATION PLATFORMS
RETAIL ELEMENT
SIM BRANDING
BTS/Node B BSC/RNC MSC/GMSC SGSN GGSN HLR/AUC/EIR Voice Mail SMSC VAS IN IP Router Billing Customer Care Customer Ownership Tariff & Product Development Brand visibility to end user Retail sale
N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
FULL MVNO = CONTROL AND FLEXIBILITY TO PROVIDE INNOVATIVE SERVICES
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A Full MVNO has complete control over its own business, SIMs, customers and services due to certain core network elements such as:
ELEMENT
MSC
FUNCTION
Mobile Switching Centre
• •
Controls call routing Generates usage information
•
Handles all packet switched data within the network, i.e. the mobility management and authentication of the users. Charging Functions
SGSN
Serving GPRS Support Node
GGSN
Gateway GPRS Support Node
•
Manages subscriber access to Internet network
Home Location Register
• • • •
Registers SIM cards Stores subscriber information and privileges Maps internet access point to each subscriber Shares subscriber information when roaming
HLR
ADVANTAGE TO FULL MVNO •
Ability to have independent wholesale relationships for voice / SMS routing
• • •
Location information (current cell, current VLR) and user profiles (IMSI, addresses) Session Management Authentication and Identity Check
• •
Map and control internet gateways Monitor / control data usage
•
Own dedicated IMSI series, Allocate special numbers, activate / deactivate services like SMS, outgoing calls, roaming, international calling etc. Management of internet AP
Full MVNO’s can: • • • •
Have their own roaming and interconnect agreements with other MNOs. Gain insights into customer or machine (M2M/IoT) profile. Create ‘stickiness’ with customers, where the customer will be under greater control of the MVNO. Offer a fixed line convergence proposition, where technical integration may be important.
AS WELL AS TACKLING DIVERSE, URGENT AND SIMULTANEOUS DEMANDS ON A HOURLY BASIS
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1 OTT MVNO wants to launch zero rating service on videos from its own portfolio to compete in the market against HBO, Netflix
MVNO 6 Ethnic MVNO wants to launch mothers day promotions before competitor launches its promotions
5 Retail MVNO wants to provide extra bonus points in loyalty program to drive sales this weekend
MVNO
MVNO
MVNO
MVNO MVNO
4 Bank MVNO wants to utilize bulk of sales-force tomorrow to visit its premium customers to make a one-day only offer for rate plan upgrades
2 Travel & Leisure MVNO needs to urgently resolve customer billing disputes before start of Songkran holiday season tomorrow
3 Retail MVNO wants to access its user usage data) to better address the needs and wants of its own customers
10 KEY DRIVERS FOR FULL MVNO
❶
Ownership of the subscriber's mobile phone number
❷
Collection of inbound termination rates
❸
Deliver specific IoT/M2M Solutions
❹
Negotiation of own roaming rates
❺
Create stickiness – reduce churn
❻
Greater technical independence
❼
Access to network intelligence
❽
Ability to monitor data usage
❾
Increased negotiation power
❿
Easier to switch host MNO
INCREASING FOCUS ON DIFFERENTIATION, SEGMENTATION AND CUSTOMER LOYALTY A FULL MVNO DELIVER LONGER TERM VALUE TO THE MNO
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MVNO POSITIONING
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As a FULL MVNO the MVNO can have control over services they can offer in the market, and thereby the flexibility to innovate and compete on new service offerings in the market
INNOVATIVE
SERVICE OFFERING
IoT/M2M MVNO’s
MVNO’s based on value addition
MVNO’s based on convinience
Traditional Mobile Operators
”No frills” MVNO’s
LOW
PRICING
HIGH
NOT ALLOWING FULL MVNO KILLS INNOVATION AND CREATES AN UNLEVEL PLAYING FIELD The MVNOs will not be able to compete on neither services, pricing - or introducing new innovations to the market, thereby giving the traditional mobile network operators an unfair advantage, severely limiting innovation and competition in the market
SERVICE OFFERING
INNOVATIVE
Traditional Mobile Operators
LOW
PRICING
HIGH
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EXAMPLE TODAY
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Let’s say Thailand wins 4-0 over Singapore in football, and the whole country is celebrating the victory on social media. The MVNOs also wants to join the celebrations by providing the customers with a 20% discount on all voice calls
THAILAND vs. SINGAPORE
4-0
IN THAILAND TODAY
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This is how it ”works” today in Thailand if MVNO’s want to introduce new promotions, service - or tackle issues
WEEK 1
WEEK 3
MONTH ?
MONTH ?
Fax your request to the MNO
Present your case at a meeting with the MNO
Internal meeting at the MNO to approve or not
Wait for result
EXAMPLE TODAY ‌Meanwhile Thailand will have lost to another country in both football and innovation
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HOW COME OPERATOR’S MVNO SUBSIDIARIES ARE ALLOWED TO OPERATE AS FULL MVNO’S? TRUE subsidary TrueMove operates as a FULL MVNO on CAT’s 850MHz
AIS subsidary SBN operates as a FULL MVNO on TOT’s 2100MHz
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DTAC subsidary DTN operates as a FULL MVNO on TOT’s 2300MHz
LINE MOBILE operates as a FULL MVNO
TRUE SUBSIDARY REALMOVE MVNO SETUP ON CAT TELECOM 850MHz
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❹ CAT resells 80% of the network capacity to MVNO RealMove, leaving 20% to CAT itself and its MVNOs
❶
CAT outsource network operations and network management to BFKT
BFKT
MVNO REALMOVE
❷ BFKT builds and operates the network infrastructure CAT Telecom leases the equipment from BFKT 15,000 base stations
❼
TRUE subsidiary
TRUE subsidiary
❸
A new 4G roaming deal between CAT/True Move, will see True pay a rental fee of THB 4.1 bn in cash to CAT within 8 years for the use of CAT’s 850MHz spectrum, and a barter deal (valued at THB 5.2 bn) giving CAT access to some of True’s 4G network on 1800/2100MHz within 10 years. According to True’s conditions, the 4G roaming agreement is exclusively for CAT, i.e. none the MVNOs will be able to use it.
Total remaining network capacity to MVNOs ~2.3 mio subscribers
❻
CAT Telecom’s own retail service MY CAT 1,9 mio subscribers
❺
AIS SUBSIDARY SBN MVNO SETUP ON TOT 2100MHz
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❹ TOT resells 80% network capacity from the 20,320 base station to the MVNO SBN
❶
TOT outsource network build and management to SBN
In September 2016, TOT and AWN, a subsidiary of AIS, signed a 6 month trial contract where AWN would roam on TOT’s 2100MHz network.
Now a permanent deal, agreed and approved by relevant agencies, AWN has added 15,000 base stations to TOT’s existing 5,520 bringing the total to 20.520. AWN purchase 80% on a wholesale/resale basis, of the total bandwidth capacity to serve its own subscribers, and pay TOT an annual fee of THB 3.9 billion. In June 2017 AWN was switched to be Super Broadband Network (SBN) another subsidiary of AIS.
SBN
❷ SBN builds and operates the network infrastructure TOT will be able to use an additional 15,000 base station bringing the total to 20,520
15,000
20,520
TOT will use parts of the remaining 20% capacity for TOT and wholesale the rest to MVNOs.
❸ 3G/4G Base stations
Total 3G/G base stations
AIS SUBSIDIARY
10% 3G/4G network capacity to MVNOs on TOT
❻
10% network capacity to TOT
❺
DTAC AND SUBSIDARY TELEASSET AND DTN MVNO SETUP ON TOT 2300MHz
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❹ TOT Pcl is the 3rd largest shareholder in DTAC with 5.58% shares
TOT outsource network build to TeleAssets
❶
TOT resells 60% of the network capacity to MVNO DTN, leaving 40% to TOT itself and its MVNOs
TeleAsset
MVNO DTN
❷ TeleAssets builds but may not operates the network infrastructure TOT leases the equipment from TeleAssets TOT selected DTAC, as its partner to deploy 4G LTE services using the 64MHz TOT was given by NBTC on the 2300MHz band. The proposal is a copy of the TRUE/CAT 850MHz setup, and involves DTAC’s wholly owned subsidiary TriNet purchasing 60% of TOT’s capacity for a fixed annual payment of THB 4.5 billion.
DTAC SUBSIDIARY
DTAC SUBSIDIARY DTAC TriNet Network (DTN)
❸ Base stations Year 1: 1,769 Year 2: 8,455 Year 3: 14,994 Year 4: 20,367 Year 5: 21,217
20% network capacity to MVNOs on TOT
❻
20% network capacity to TOT
❺
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THE SOLUTION Allow Full MVNO’s to level the playing field, foster innovation and competition - for the benefit of the consumers and Thailand 4.0
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PROBLEM #3 IN THAILAND
DOUBLE / TRIPLE LICENSE FEE
UNFAIR DOUBLE LICENSE FEE HURTING THE MVNO AND CONSUMERS
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In 2009 the NBTC introduced Mobile Virtual Network Operator (MNVO) license along with a license fee scheme up to 1.5% of yearly revenue. However, the setup of the license fees causes the burden to be pushed to the MVNOs and consumers, as the NBTC is charging double fees on one ”signal”.
❶
❷
The operator pays NBTC 1.50% of revenue in license fee + 3.50% of annual revenue in USO fee - Total 5%
The MVNO also pays NBTC 1.5% of annual revenue in license fee. It does not pay USO fee, as it dosen’t have spectrum. Example: The MVNO sells the now THB 105 worth of voice calling to customers THB 105 + 1.5% fee = THB 106,57
Example: The operator sells THB 100 worth of voice calling to the MVNO which is THB 100 + 5% total fee = THB 105
MNO
MVNO Voice call incl. Fees THB 105
Voice call THB 100
1.50% License Fee 3.50% USO Fee
Unlevel playing field as the MNO can sell directly to its customers for just THB 105 vs. the MVNOs THB 106,57
1 x 1.5% License Fees (MNO) = 1.5% 1 x 1.5% License Fees (MVNO) = 1.5% 1 x 3.5% USO Fee (MNO) = 3.5%
REGULATOR
❸ Voice Call Incl Fee THB 106,57
TOTAL
6.5%
MVNO License Fee 1.5%
As the mobile operator and MVNO each have to pay the license fees of annual revenue, the same mobile signal (voice/sms/data) ends up having double the tax, when it ends up at the MVNO and its customers.
UNFAIR TRIPLE LICENSE FEE HURTING THE MVNO, THE MVNA AND CONSUMERS
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In 2009 the NBTC introduced Mobile Virtual Network Operator (MNVO) license along with a license fee scheme up to 1.5% of yearly revenue. However, the setup of the license fees causes the burden to be pushed to the MVNA, the MVNO and consumers, as the NBTC is charging triple fees on one ”signal”.
❶
The operator pays NBTC 1.50% of revenue in license fee + 3.50% of annual revenue in USO fee - Total 5%
❷
Example: The operator sells THB 100 worth of voice calling to the MVNO which is THB 100 + 5% total fee = THB 105
The MVNA also pays the NBTC 1.5% of annual revenue in license fee Example: The MVNA resells the now THB 105 voice calling to the MVNO. I.e. THB 1,05 + 1.5% fee = THB 106,57
MNO
MVNA
1.50% License Fee 3.50% USO Fee
Unlevel playing field as the MNO can sell directly to its customers for just THB 105 vs. the MVNOs THB 108,17
1 x 1.5% License Fees (MNO) = 1.5% 1 x 1.5% License Fees (MVNA) = 1.5% 1 x 1.5% License Fees (MVNO) = 1.5% 1 x 3.5% USO Fee (MNO) = 3.5%
The MVNO also pays NBTC 1.5% of annual revenue in license fee. Example: The MVNO sells the now THB 105 worth of voice calling to customers THB 105 + 1.5% fee = THB 106,57
MVNO Voice call incl. Fees THB 106,57
Voice call incl. Fees THB 105
Voice call THB 100
❸
MVNO License Fee 1.5%
REGULATOR
❸ Voice Call Incl Fee THB 108,17
MVNO License Fee 1.5%
TOTAL
8%
As the MNO, MVNA and MVNO each have to pay the license fee, the same mobile signal ends up having triple tax, when it arrives at the MVNOs and the consumers
MVNO’S MAKES ITS BUSINESS ON MARGINS
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MVNO The unfair double, and triple taxation changes the timeline significantly for the MVNO to reach financial breakeven – if ever - given that the current fee structure setup not only adds additional costs, but also provides the mobile operators with an unfair pricing advantage
MVNO’s makes its profit on the small margins between the costs of purchasing airtime in wholesale from the MNO (or MVNA) and the retail price. They need to operate a lean and flexible setup, with low operation costs (small staff, low office rentals, cheap distribution) as every baht counts.
VERSUS
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THE SOLUTION Let the MNO and MVNO (and MVNA) split the 1.5% license fee like we do with VAT i.e. MNO 0.75% and MVNO 0.75% = 1.5%
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PROBLEM #4 IN THAILAND
UNFAIR ADVANTAGE RESULTING IN ONE PLAYER BEING ABLE TO PROVIDE LOWER PRICES
MVNO OR NOT
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In June 2017, DTAC launched the sub-brand MVNO LINE MOBILE, and made it available across the 850MHz and 1800MHz network, which is under concession with CAT Telecom - and DTAC’s own licensed 2100MHz network. The sub-brand MVNO was launched without a MVNO license. DTAC claims it is not a MVNO - but that LINE MOBILE (which is a MVNO in Japan), is a service of DTAC's subsidiary DTN, who has entered into a brand licensing deal for the rights to use LINE MOBILE in Thailand, against a nondisclosed royalty fee. NBTC invited DTAC and LINE to provide information regarding the setup. NBTC pointed out amendments needed regarding online SIM registration, marketing and customer support but allowed LINE MOBILE to continue without a MVNO license. DTAC and LINE MOBILE insist, that despite LINE MOBILE not having a MVNO license, there is no unfair advantage and the country is still receiving full licensing fees from this setup.
DTAC SUBSCRIBERS
LINE MOBILE
850MHz 1800MHz 2100MHz
IN-HOUSE SUB-BRAND = NO NEED FOR MVNO LICENSE
In 2014, AIS launched a prepaid sub-brand called YOU! The setup was build from scratch by AIS but with its own YOU! SIM, branding, design, promotion packages, marketing, etc. This is a sub-brand build, owned and maintained by AIS under existing license and as such, it does not need a MVNO license.
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BRAND LICENSING AGREEMENT = MVNO LICENSE
Plenty of mobile operators have entered into joint ventures or brand licensing agreements, where the operator buys access to use the brand value of an existing brand i.e. brand recognition, distribution, users/followers etc.
Examples are: • Australia: MNO Optus and Virgin Mobile • America: MNO Sprint and Virgin Mobile Virgin Mobile, is/has been a sub-brand MVNO in Australia, Canada, Qatar, India, UAE and the US. Energy drink Red Bull is/has been a sub-brand MVNO in Austria, Belgium, Hungary, Poland, South Africa and Switzerland. This is a sub-brand MVNO and as such, it needs a MVNO license.
MNO
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MNO/MVNA/MVNO – WHOLESALE AGREEMENTS
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Own Subscribers
MNO
Retail
MVNO Agreements
LINE MOBILE
Brand Licensing
Capacity based pricing
Retail Minus
Cost Plus
Revenue Share
Commision based
MVNO
MVNO
MVNO
MVNO
MVNO
MVNO
Subscribers
Subscribers
Subscribers
Subscribers
Subscribers
Subscribers
TO BE - OR NOT TO BE A MVNO – IT NOT A QUESTION
DTAC DEFLECTS LINE MOBILE LICENSE CRITICISM https://www.bangkokpost.com/tech/local-news/1331395/dtac-deflects-line-mobile-licence-criticism
In this article published in the Bangkok Post on 26 September 2017, CEO of DTAC, Lars Norling states why he thinks LINE Mobile does not need a MVNO license
“Mr Norling intimated that the contract was not exclusive, which suggests that Line can partner with AIS and TrueMove to provide similar services”. This remark clearly shows that LINE is a partner and not part of DTAC or DTN and therefore need a MVNO license to operator on DTAC’s network
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LINE MOBILE UNFAIR ADVANTAGE
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Line Mobile is given the unfair advantage of being able to provide lower prices than rest of the players in the market, as it doesn't have to shoulder the extra cost of a MVNO licensing fee, and the country is also not benefitting, as it won't receive MVNO licensing fees.
❶
❷
DTAC pays NBTC 1.50% of revenue in license fee + 3.50% of annual revenue in USO fee - Total 5%
The MVNO also pays NBTC 1.5% of annual revenue in license fee. It does not pay USO fee, as it dosen’t have spectrum. Example: The MVNO sells the now THB 105 worth of voice calling to customers THB 105 + 1.5% fee = THB 106,57
Example: The operator sells THB 100 worth of voice calling to the MVNO which is THB 100 + 5% total fee = THB 105
LINE MOBILE
MVNO Voice call incl. Fees THB 105
Voice call THB 100
1.50% License Fee 3.50% USO Fee
Unlevel playing field as LINE Mobilecan sell directly to its customers for just THB 105 vs. the MVNOs THB 106,57
1 x 1.5% License Fees (MNO) = 1.5% 1 x 1.5% License Fees (MVNO) = 1.5% 1 x 3.5% USO Fee (MNO) = 3.5%
REGULATOR
❸ Voice Call Incl Fee THB 106,57
TOTAL
MVNO License Fee 1.5%
NOW
6.5% 5%
As the mobile operator and MVNO each have to pay the license fees of annual revenue, the same mobile signal (voice/sms/data) ends up having double the tax, when it ends up at the MVNO and its customers.
DTAC AND SUBSIDARY TELEASSET AND DTN MVNO SETUP ON TOT 2300MHz
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If LINE MOBILE connects to DTN, which is a MVNO on TOT’s 2300MHz spectrum then it must obtain a MVNO license, as the 2300MHz isn't’ DTN’s network but TOT’s
LINE MOBILE
LINE MOBILE WHAT WILL HAPPEN ON 2300MHz
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If DTAC allows the LINE Mobile customers to use its new setup on TOT’s 2300MHz, questions is how does the NTBC plan to bill the license fee. The 2300MHz is the spectrum of TOT and DTN is a MVNO – Will the NBTC allow the MVNO DTN to provide access to LINE Mobile
❶
TOT pays NBTC 1.50% of revenue in license fee + 3.50% of annual revenue in USO fee - Total 5% Example: TOT resell THB 100 worth of voice calling to the MVNO DTN which is THB 100 + 5% total fee = THB 105
❷
As a MVNO DTN also pays the NBTC 1.5% of annual revenue in license fee. LINE Mobile pays nothing
❸
Example: DTN and LINE Mobile sells the now THB 105 worth of voice calling to customers I.e. THB 1,05 + 1.5% fee = THB 106,57
The MVNO also pays NBTC 1.5% of annual revenue in license fee. Example: The MVNO sells the now THB 105 worth of voice calling to customers THB 105 + 1.5% fee = THB 106,57
MVNO DTN LINE MOBILE
TOT
MVNO
Voice call incl. Fees THB 105
Voice call THB 100
Voice call incl. Fees THB 106,57
MVNO License Fee 1.5%
1.50% License Fee 3.50% USO Fee
1 x 1.5% License Fees (MNO) = 1.5% 1 x 1.5% License Fees (DTN) = 1.5% 1 x 1.5% License Fees (MVNO) = 1.5% 1 x 3.5% USO Fee (MNO) = 3.5%
REGULATOR
Unlevel playing field as the MVNO can sell directly to its customers for just THB 106.57 vs. the MVNOs THB 108,17
TOTAL
NOW
8% 6.5%
❸ Voice Call Incl Fee THB 108,17
MVNO License Fee 1.5%
As the MNO, MVNA and MVNO each have to pay the license fee, the same mobile signal ends up having triple tax, when it arrives at the MVNOs and the consumers
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THE SOLUTION LINE Mobile is a MVNO and must obtain a MVNO license, pay fees and compete on the same terms as the rest of the market
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PROBLEM #5 IN THAILAND
NBTC ISSUES A LICENSE THAT IS BOTH AN MVNA AND AN MVNO
NBTC ISSUES A LICENSE THAT IS BOTH AN MVNA AND AN MVNO
NBTC ISSUES A LICENSE THAT IS BOTH AN MVNA AND AN MVNO NBTC wants the MVNO part on the MVNA license to take over customers, in case the MVNO client goes out of business!!!
Hello handsome MVNO, Welcome! I will make special price just for you! MVNO
MVNA
OK! MVNO
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COMBINED MVNA/MVNO LICENSE = CONFLICT ON INTEREST
NBTC ISSUES A LICENSE THAT IS BOTH AN MVNA AND AN MVNO How can you, as a MVNO client, who want to use the service of the MVNA be sure that it will take care your interest when it is also a competing MVNO?
MVNO
Three down, five more to go, and the world is my oyster
MVNA
This will further manifest itself in negotiations of packages, fees, terms and conditions, as the MVNA will always have more power in any outcome and be able to control the competition (MVNO clients) = non level playing field.
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COMBINED MVNA/MVNO LICENSE
YOU MUST FILL OUT ALL THE BOXES This also means that when a MVNA is applying for a license, the NBTC wants the MVNA to provide written information on call center, customer support, distribution and marketing plans towards end-users, which the MVNA will never use…
MVNA
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THE SOLUTION If the NBTC absolutely have to issue licenses, then there should be one license for MVNA and another for MVNO. It is two different setups.
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PROBLEM #6 IN THAILAND
NO PLANS FOR MVNO’S GOING OUT OF BUSINESS
THE NUMBER YOU HAVE DIALED IS NO LONGER IN SERVICE
OUT OF BUSINESS AND THEN WHAT?
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NO PLANS FOR MVNO’S GOING OUT OF BUSINESS
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THE INTENTION
IN REAL LIFE X 3
Section 20 of the Telecommunications Act of 2001 stipulates that: The licensee shall not suspend or terminate the service, in whole or in part, unless permitted by the Commission under the criteria and procedures prescribed by the Commission.
At a meeting on January 17, 2017, at the NBTC commission, TOT requested guidelines from the NBTC, to suspend the service with MVNO Mojo3G on grounds that the MVNO had defaulted on payments to TOT since 2015 but TOT had continued the service.
And Section 22: The licensee shall, without delay, inform the Secretary General of the following events: (5) any case that affects, or may affect, the business operation or the supply of service of the licensee as prescribed in notification of the Commission.
Despite Section 20 on notifying the NBTC in advanced, the MVNO, had not submitted such a plan to the NBTC at the time of the meeting taking place. Instead it was suggested that customers, could voluntarily transfer to TOT, and that the MVNO must inform the customers on the suspension of service in order for the customers to cancel the service, and get remaining funds back.
In case of (5), the licensee shall inform the Secretary General immediately when the events occur. The Secretary-General shall, without delay, submit the matter to the Commission after having been informed. In this regard, the Commission shall have the power to prescribe certain conditions for the licensee to perform for the prevention of damages to public interest.
This is not the first time, and it will not be the last that a MVNO goes out of business. Prior to Mojo3G, it was MVNO 365 communication, and in June 2017 the MVNO i-mobile followed suit, but did however inform the NBTC first. Before approving the exit request, NBTC, TOT and i-mobile had to figure out how to handle the remaining users.
MVNO’S IN THAILAND ARE ALLOWED TO CONNECT TO SEVERAL MNO’S
MVNO’S IN THAILAND CAN CONNECT TO SEVERAL MNO’S This provides a dilemma in case the MVNO ends its service. Which MNO has to take over the MVNO subscribers, CAT or TOT?
MVNO
?
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MVNO’S IN THAILAND CAN CONNECT TO SEVERAL MNO’S THROUGH SEVERAL MVNA’S
MVNO’S IN THAILAND CAN CONNECT TO SEVERAL MNO’S THROUGH MVNA’S This provides a dilemma in case the MVNO ends its service. Which MNO has to take over the MVNO subscribers, CAT or TOT?
MVNA
MVNA
MVNO
?
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ALL-IN-ONE
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ONE MVNO, WHO HAS AGREEMENT WITH TWO MNO’S, IS SELLING WHOLESALE TO NON-MVNO’S, WITHOUT A MVNA LICENSE The MVNO is selling SIMs and airtime to unlicensed outlets, as well as acting as a MVNA to MVNOs by selling airtime and SIM packages. •
Who owns the numbers – the MVNO or the companies?
•
Which MNO has to take over the MVNO subscribers if it closes?
•
If a MVNO can wholesale then why do we need a MVNA license?
•
Who are the subscribers – The two companies or the companies subscribers?
MVNO
COMPANY
COMPANY
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THE SOLUTION 1. A protection plan should be part of the MVNO Agreement between the host operator and the MVNO. I.e. The Agreement shall include provisions covering the expiration, termination or suspension of the Agreement and shall contain an adequate protection plan for MVNO customers and their payments, including processes and information to subscribers on refund process, number porting options, and the continuation of uninterrupted services (taken over by the host operator), if the customer chose not to de-activate, or port out three months after the announcement of service termination.
2. The NBTC should issue a mandatory Code of Practice notification to all new and existing MVNOs and host operators, to include the amendment to its MVNO agreements mentioned above, as well that both the host operators and the MVNOs from the date of the notification, are required to, provide mobile number portability services for at least three months after the date of service stop to allow affected customers to port out their mobile numbers to other service providers. Ensure subscribers are automatically absorbed by the Host Operator (no end-user action or consent required) if they choose not to port out, three months after the announcement of service termination.
3. To minimize the impact on various stakeholders, the NBTC should publish a Service Cessation Alert Notice standard sample format to be used for host operators to notify the NBTC, and one Service Cessation Alert standard sample to be used by MVNOs to inform the NBTC, affected customers and the public.
SOLUTION: IF A MVNO GOES OUT OF BUSINESS MVNO
MVNO
MVNO
MVNA
MVNO
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MVNO
CUSTOMERS
THE HOST MNO HAS TO TAKE OVER THE REMAINING CUSTOMERS MVNO
MVNO
MVNO
MVNA
MVNO
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IF A MVNA GOES OUT OF BUSINESS MVNO
MVNO
MVNO
MVNA
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MVNO
MVNO
THE HOST MNO TAKES OVER AND MAKE SURE THE MVNO’S ON THEIR NETWORK CAN CONTINUE MVNO
MVNO
MVNO
MVNO
MVNO
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EXAMPLE: SCOPES OF 3 MONTHS TERMINATION PLAN
PRE-LAUNCH MVNO provides the NBTC before service launch with a notice which include: •
Details and terms regarding termination of service plan from the contract with host operator (or MVNA).
STAGE 1
STAGE 2
STAGE 3
SERVICE TERMINATION
REFUND
CONTINUITY OF SERVICE
MVNO issue a notice 3 months before termination to:
• • •
NBTC Host operator (or MVNA) Subscribers
MVNO to provide:
Main concern for subscribers:
•
The subscribers with the choice to port or terminate. Refund of unused prepaid deposit. Unused credit transfer to new service provider. Information on MNP. Weekly report to NBTC during the 3 month termination process.
• •
Refund process to be completed 3 month after service termination notice.
•
• •
Notice shall include: • • • • •
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Date of termination. Refund period for prepaid customers. Service continuity options. Contact information. MNP process.
• •
Continue to have access. Able to obtain refund.
Subscribers Service Continuity Plan •
•
•
•
Subscribers who have not yet ported will automatically continue to have access. MVNO handover HLR and customer database to host operator. Host operator takes over the remaining customers. Utilization of remaining / transferred prepaid value. Submit final report to NBTC.
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PROBLEM #7 IN THAILAND
BUREAU-CRACY AT NBTC KILLING INNOVATION
MVNO LICENSE APPLICATION IS IN-CORRECT AND NOT UP-TO-DATE
TERMS AND APPLICATION FOR MVNO IN THAILAND IS ABOUT 15-YEARS TO OLD
The application seems to be a copy and paste from old applications and various countries in early 2000’s In mid-2017 the NBTC added a MVNA license to the market without request for consulting or public hearing, ending up using the MVNO application for MVNA license as well.
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LICENSE APPLICATION BUREAU-CRAZY
FILL-OUT & HAND-IN THE APPLICATION
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NBTC OFFICER HAS TO UNDERSTAND & APPROVE
NBTC has added their own little notice to the act regarding license approval. The NBTC officer can decline the application if he/she doesn't understand, either due to language, the service, network etc.
LICENSE APPLICATION BUREAU-CRAZY
HOWEVER… The NBTC officer will not uderstand new innovative service from the MVNO and decline it because he/she is responsible, and it does not fit the boxes. Therfore all MVNOs are the same in Thailand - even MVNAs have to use the MVNO application form which makes no sense
?
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LICENSE APPLICATION BUREAU-CRAZY
ONCE APPROVED, THE OFFICER HANDS THE APPLICATION TO A BOARD WHO HANDS IT TO NBTC’S BOARD FOR APPROVAL AND SIGNATURE
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LICENSE APPLICATION BUREAU-CRAZY
THE MVNO LICENSE IS GIVEN BASED ON THE APPROVED AND PROVIDED INFORMATION I.e. The information given and approved is part of the license – License valid for 5-years
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BUREAU-CRACY KILLS INNOVATION AND OPENS FOR CORRUPTION
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THE OFFICER BECOMES A SINGLE GATEKEEPER, WHICH OPENS FOR CORRUPTION There are people who are either direct employees or have very close ties with employees at the NBTC, who provide a service in which they guarantee you a license for the price of THB 50,000-100,000.
SAY NO!
Because…
The MVNO license is valid for 5years and consist of the information provided in the application. That information is however outdated because it has to fit the old standard and knowhow from the officer.
We are aware of some who have used the service and has been awarded the mentioned license. Question is how many have used this ”service” and how is it even possible that this can take place considering the license approval process involves several stages and departments/boards? The license approval process is long, slow and non-transparent, and NBTC will drive you in circles. This further helps trigger the interest in ”guaranteed license”
The setup opens a ”backdoor for further corruption.
TO CORRUPTION
Once the MVNO launch in the real world with technology and interfaces according to updated standards the regulator can come back at anytime and say the MVNO is not operating according to the license (information provided in the license) and demand they stop operation – or solve it with a brown envelope.
GETTING A LICENSE WITHOUT AN AGREEMENT
Thailand is among few, if not the only country in the world, where you can get a MVNO license without some sort of agreement (MoU) with a mobile operator (or MVNA/MVNE)
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GETTING A LICENSE WITHOUT AN AGREEMENT – HOW?
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Question: How does a MVNO without a host operator agreement fill out 9,10, 11, 12? Answer: They fill in ALL operators as example and use a network diagram from the 90’s
…and who would buy equipment BEFORE having an MNO agreement AND a license?
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THE SOLUTION • • • •
Update the license application to the present and amend it from time to time. Drop the added clause that the officer has to understand, approve and be responsible. There is no reason to provide a license prior to an agreement with a MNO/MVNA/MVNE. Introduce a real MVNA license application = do not use the MVNO application it’s not the same.
BUT BETTER YET… • Drop the need for MVNA/MVNO application/license altogether in-line with other countries who no longer issues MVNO licenses. Doing so would make sense, as most of the issues releated to MVNO in Thailand, as discussed in this presentation would need an update or be removed. We are aware that NBTC is very keen on licenses in order to collect fees, and we therefor suggest a solution, where NBTC could maintain a very simple MVNO and MVNA license scheme, purely for the sake of collecting its license fees.
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Presentation by Yozzo Co.,Ltd. www.yozzo.com March 2016