Mobile operators need competition

Thailand’s mobile communications market has two service providers with an equal share of customers. In economic terms, it is a symmetric duopoly. This is the worst market structure because the two can easily discipline each other to limit competition. If all much any lower price says, if limit 5G and improvement, they do so to temper competition and innovation, which helps the carriers’ shareholders but harms consumers, especially in the long run, through slower innovation in a critical infrastructure industry.

- PETER CRAMTON & ERIK BOHLIN

This year, Thailand prepares for a multi-band spectrum auction to allocate essential spectrum to carriers, an effective remedy is needed to promote competition and innovation. Spectrum caps are set aside, which prevent any company from amassing too much, are ineffective and indeed counter-productive. Entry is impossible, given the challenging economics of mobile communications today.

Restrictive spectrum caps could lead to unsold spectrum, and a fifty percent cap enforces due competitive split that carriers like. What is needed is a way to stimulate competition in the wholesale market for mobile communications. Then, mobile virtual network operators (MVNOs) can enter the market at a lower cost, but is ineffective because the virtual operators must negotiate with the duopolists, who do not want competition. The market share of virtual operators remains near zero in Thailand despite a remedy requiring it. The remedy is too difficult to enforce.