Subsidising essential data for all

Thailand is a leader in digital connectivity in southeast Asia. GSMA reports that in 2018, Thailand had a 92% smartphone penetration rate and 66% 4G penetration – both of which were higher than the southeast Asian (79% and 43%, respectively) and global (61% and 44%, respectively) averages. GSMA also reports that Thailand has the second highest mobile broadband penetration rate in the region at 127%, exceeding the regional average of 96%. Three companies control 97% of the mobile internet services market: Advanced Info Services (AIS) (44.9%), True Corporation (30.2%), and Total Access Communications (DTAC) (22.1%).

In March 2020, Thai Prime Minister Prayut Chan-o-cha declared an initial one-month state of emergency in response to the COVID-19 pandemic, effective March 26. The state of emergency directive included restrictions on non-essential travel between provinces, and a voluntary stay at home order.  Prior to the declaration of the state of emergency, partial lockdowns had already been established in various regions of the country, including in Bangkok and the northeastern Buri Ram province. The state of emergency directive stayed in place throughout Thailand’s first COVID-19 spike in March and April 2020. Restrictions began easing at a provincial level in May 2020.

Opensignal collected data on the average amount of time Thai users spent connected to WiFi networks from January to May of 2020. There was an approximate 5% increase between February and the week that the state of emergency was declared in March. This increase remained consistent through May. Pratthana Leelapanang, the Chief Consumer Business Officer at Thailand’s top mobile operator AIS, announced that mobile data and broadband growth exceeded 10% over the month of March.

Data from Opensignal also demonstrates that during the first week of the state of emergency, 4G download speeds decreased by 18.8%. In late March, communications conglomerate and one of Thailand’s largest mobile operators, True Corporation, announced a 52% increase in broadband usage and an 18.4% increase in mobile data usage, resulting in the company tripling its broadband capacity.

To encourage people to stay at home during the state of emergency directive, the National Broadcasting and Telecommunications Commission (NBTC) launched a public assistance scheme to provide 10 GB of data to mobile users free of charge for 30 days and a 100 MBps upgrade for fixed broadband users. To be eligible for the free data, mobile users had to be Thai nationals with phone plans activated prior to March 31, 2020. The offer was limited to one phone number per person and excluded users with long-term prepaid or unlimited plans. To receive the free data, users had to register for the assistance scheme by texting their 13-digit Thai ID number to *170*. Registration was open for a 20-day period from April 10 to April 30, 2020. The free data was available for 30 days from the date of approval. For fixed broadband users, no registration was required and the data package upgrade was automatically applied to their plans.

The initiative was funded by 3 billion baht ($97 million) from the Broadcasting and Telecommunications Research Fund (BTRF), a Universal Service Fund established in 2001. The fund is financed by contributions from telecom operators equal to 2.5% of their annual revenues. Funds also came from 5G spectrum license auctions held in February 2020, which raised 100.52 billion baht ($3.3 billion). The assistance scheme was projected to benefit 3050 million mobile users and 1.22 million fixed broadband users.

While the assistance scheme was designed to benefit mobile users, it was widely believed that the scheme would not be beneficial to the operators. Under the assistance scheme mobile operators received 100 baht per u10GB data handout launches Fridayser from the NBTC. However, a 30-day, 8 GB data package is sold for 599 baht. According to A4AI data, this represents a loss to the operators of about 400 baht per user. Furthermore, NBTC Secretary-General Takorn Tantasith predicted that the scheme would remove incentives for users to recharge their plans for at least a 30-day period, which could result in additional losses for telecoms providers.

To provide assistance to the operators, the NBTC implemented a new tiered fee structure to reduce the annual 2.5% universal service obligation fees collected from operators to fund the BTRF. The new fee structure features eight tiers: Under the new structure the two lowest tiers are set at 0.05% of total annual revenue for companies with revenues up to 5 million baht, and 0.125% for companies with annual revenues of 5-100 million baht. The highest tier is set at 1.5% for companies with annual revenues exceeding 50 billion baht.

As of March 2021, the NBTC estimates that roughly 14.9 million users (out of a total of 116.29 million mobile subscribers) took advantage of the assistance scheme. This falls short of the projection that the assistance scheme would benefit 30-50 million mobile users but provides an example of USAF-backed assistance that kept millions of people connected to the internet through the pandemic.

Despite the data offer, the network was able to handle the excess bandwidth demand. By May 2020, 4G download speeds had improved by nearly 19%, coinciding with the rollout of the NBTC assistance scheme. Increased 4G speeds may be the result of a combination of factors, including the assistance scheme and increased broadband capacity from telecom operators.

In its 2020 annual report, Thailand’s third-largest mobile operator DTAC reported that data and broadband usage in non-urban areas increased at a rate 5 times that of urban areas during the months of March and April. According to DTAC, the widespread increase in data usage was in part due to urban workers relocating back to their home provinces to work remotely during the lockdown. It is unclear to what extent the assistance scheme contributed to the increase in non-urban data usage. While this trend suggests an improvement to the urban/rural digital divide, the increase in data usage in non-urban areas poses a challenge to mobile operators. According to Sirawit Klabdee, Head of Investor Relations at DTAC, when mobile operators have experienced increases in data usage in the past, the surges have been primarily in densely-populated, urban areas. With the increase in non-urban data usage, mobile operators like DTAC must speculate on the duration of the heightened data usage and whether or not to speed up deployment of capital expenditures on infrastructure in these areas.

Financial data shows decreases between first and third quarter earnings in 2020 for some of Thailand’s top mobile operators. AIS reported a 1.1 million baht decrease in total revenue from the first to the third quarter of 2020, coinciding with the period of the assistance scheme. Similarly, DTAC reported a 1.4 million baht decrease in total revenue from the first to the third quarter.  Due to the pervasive economic downturn related to the pandemic, it is difficult to determine the extent to which the assistance scheme may have contributed to these losses. Furthermore, both companies saw increases in earnings in the fourth quarter, and in the case of AIS, the company’s fourth quarter earnings surpassed those of the first quarter. This data suggests that the assistance scheme had minimal effect on long-term market conditions.

A4AI data suggests an upward trend in internet use in Thailand prior to the pandemic. In 2018, there was a 4% increase in the number of internet users followed by an approximate 10% increase in 2019. Despite the pre-pandemic increase in internet use, NBTC data reports an 8% decrease in mobile subscriptions in 2020. DTAC asserts that the decline in mobile subscriptions could be partially attributed to the decline in tourism and migration.