Budget Bureau suspends submarine cable project
The Budget Bureau has put the brakes on the 5-billion-baht submarine cable construction project, saying it violates the state’s procurement regulations.
Thailand’s procurement rules stipulate that any state agencies in a public-private partnership must be the sole owner of the asset in the investment project.
The Information and Communication Technology (ICT) Ministry, however, had wanted submarine investment to be a global development through an international consortium business model, which requires highly skilled foreign workers. The submarine cable industry is dominated by global players.
A source at the ICT Ministry expressed concern that the delay of the submarine construction project would probably trigger a domino effect among other hard digital infrastructure development projects, eventually leading to further delay in the development of the country’s digital economy.
ICT Minister Uttama Savanayana earlier said the country’s digital economy could not get off the ground if the hard digital infrastructure is insufficient.
In March, the government had approved the allocation of 20 billion baht from its fiscal budget to the ICT Ministry to construct hard infrastructure under the digital economy scheme. Of the total, 15 billion baht is slated to be invested in broadband internet networks for 39,000 villages nationwide. The remaining 5 billion is for the construction of submarine cables.
CAT Telecom has been assigned by the ICT Ministry to take responsibility for the submarine cable construction project through an international consortium business model. The Budget Bureau, however, said that the business model violated the state’s procurement rules.
Having additional submarine cable routes in the country could reduce IP transit costs to internet service providers in order to lower the cost of domestic internet services. This could in turn promote broadband internet access, thus narrowing the digital divide.
The submarine project is also part of efforts to promote Thailand to be an Asean digital gateway.
Currently, CAT owns six submarine cables, while TOT Plc has two.
Surapan Meknavin, a director on the CAT board, conceded that the submarine project could not be made through the international consortium model as it would be in violation of the Budget Bureau’s procurement rules.
Therefore, CAT plans t o propose two alternative partnership models to the government.
First, the government might directly allocate the 5-billion-baht budget to CAT to construct the submarine cables, adding to its existing six routes, without needing any foreign partnership.
This proposal could end the restriction on the procurement rules as CAT would be the sole owner of the submarine cable asset.
The second entails the government potentially amending the existing procurement rules in order to end the current restrictions.
A recent report by the Telecommunications Association of Thailand noted that in the past nine years, Thailand’s international internet traffic had increased by 81% to two terabits a second in August 2015. The rate is expected to reach 38 terabits per second by 2020.
CAT’s six submarine routes, meanwhile, have nearly reached full capacity of 10 terabits per second. Boosting capacity via submarine cables and links is essential to handling greater domestic internet traffic.