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Transcript of Regulating the Internet: Lessons from Thailand Somkiat Tangkitvanich Thailand Development Research...
Regulating the Internet:
Lessons from Thailand
Somkiat TangkitvanichThailand Development Research Institute (
TDRI)
Outline
Status of Internet in Thailand
Impacts of the state monopoly on price and Internet adoption
Impacts of the state’s share-ownership on price and corporate governance of ISPs
Future prospects
The Status of Internet in Thailand
18 commercial ISPs + 4 non-commercial providers + two public interchanges
2.5 billion Bt of ISPs’ revenue in year 2000
Over 600 Mbps international bandwidth
About 3.54 million Internet users (as of Q1 2001)
CAT18 ISPHous
eholdCorporate
Internet
Structure of the Internet Markets
Listed Prices of 64 Kbps Leased Line
0
200
400
600
800
Thailand Hong Kong India Philippines Malaysia Indonesia
$ US/month
Source: TDRI
0.571.131.712.704.05
2 Mbps4 Mbps8 Mbps16 Mbps45 Mbps
Prices of International Half Circuits
0.711.292.223.947.16
CAT MCIMillion Bt/Month
Monopoly and its Impact on Net Use
# Host = 772.6 GDP - 557.2 M x GDP - 41,201 (1)
# SSL Server = 4.25 GDP - 4.0 M x GDP - 49.9 (2)
Identify the IP Address
Locate the IP Address
Tracert Whois
Identify and Locate the IP Address
Neotrace
Two Ways to Locate a Server
Location of Thai Web Portals
USA68.5%
Europe5.4%
Thailand20.7%
Singapore5.4%
Source: TDRI
Consumer Benefit
Quantity
Price
Qc
Pc
Qm = 555 Mbps
Pm=1.43 Pc
Producer’s Profit
Welfare Losses =230 million Bt per year
Welfare Losses
Impacts of CAT’s share ownership
ISPs are required to give 1/3 of its share to CAT in return for a concession to operate
A CAT representative acts as the chairman of the ISP and has a veto rights against any business plan
The Cost of CAT’s Share Ownership
Let X be an ISP’s expected rate of return
P’/P = (2+3X)/(2+2X)
20% price mark-ups for X = 30%
CAT Holding Company
Major Shareholder 1
Major Shareholder 2
ISP Subsidiary 1
Subsidiary 2
Subsidiary 3
32+3% 65%100% 100%100%
Shareholding Structures of ISPs
983.3
-25.7
1588.4
-119.7
2451.6
-280.6-500
0
500
1000
1500
2000
2500
1998 1999 2000
Revenue
Profit
Revenues and Profits of ISPs
Million Bt