Oct. 26--The long-running 3G saga in the Thai mobile phone industry appears likely to run even longer, given the troublesome bid process.

The introduction of 3G has already been delayed for five years amid frequent changes in government. The process of awarding licences has been stalled over legal questions about whether the National Telecommunications Commission (NTC) has the legal authority to do so.

The NTC recently gave new hope to operators and mobile users by announcing that it planned to award four licences for the high-speed mobile broadband service by year-end -- three for 10 MHz each and one for 15 MHz.

The regulator set the reserve price, or minimum bid, for the 10 MHz bandwidth at 4.6 billion baht, and for 15 MHz at 5.2 billion, down from 10 billion indicated earlier.

However, a planned auction in mid-December now seems very unlikely as the final public hearing on the auction rules will not take place until Nov 12, a week later than scheduled earlier.

Regulators now say their priority is not a December auction but getting the rules right and making sure everyone understands them, so the auction will go smoothly if and when it is held.

Meanwhile, the influential labour unions of TOT and CAT Telecom have stepped up protests against the 3G auction. They claim the two state telecom enterprises could face financial ruin if winning bidders shift their customers to new 3G companies that won't be bound by the concessions that provide most of TOT's and CAT's revenue.

Thai-owned True Move has also injected nationalism into the debate, contending it is at disadvantage to first-ranked AIS and No. 2 DTAC, and that companies controlled by foreign state enterprises could end up controlling national assets and risking security.

AIS is part of Shin Corp, majority owned by Temasek Holdings of Singapore, and DTAC is controlled by Telenor, a state enterprise of Norway.

AIS chief executive Wichien Mektrakarn objects to the argument. he says the market success and high credibility of a company is not a result of having foreign shareholders, but of its own corporate performance.

He cited Siam Cement and PTT Plc as examples of large companies that had earned their reputations for strong financial status and high operating performance. It had nothing to do with the shareholding structure.

He added that banks considering lending also were less interested in a company's shareholding than business potential and performance records.

AIS's foreign shareholding structure was in compliance with the draft 3G auction rules, said Mr Wichien. If the government wants to change the rules or the law, AIS is ready to comply but he said it should be applied to all industries and not only telecoms.

He said he welcomed the lower reserve price, saying the earlier proposal of 10 billion baht was "overly high" and not appropriate to the Thai market, which offers some of the lowest tariff rates in the world. The higher reserve price could lead to high financial costs for operators, he said.

However DTAC CEO Tore Johnsen says the price should be between 2 billion and 4 billion baht to encourage free and fair competition.

To ease private operators' financial burden, he also suggested that the NTC change the payment terms for 3G licences from a lump-sum to only half of the fee first and then installments over the whole life of the concession.

Supachai Chearavanont, the CEO of True Move, meanwhile, suggested a price of only 2.5 billion baht. He noted that government regulators in Singapore and Malaysia charged the equivalent of only 1.5 billion baht per 3G licence.

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