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Nakachin Wiboonprasong and Tanawat Ruangteprat

Special Issue of the International J ournal of the Computer, the Internet and Management, Vol. 17 No. SP3, December, 2009

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subscribers reached 61 million by the yearend 2008, representing a 15% increase from53 million in 2007, pushing mobile marketpenetration to 94%. The increase insubscribers in recent years has mainly been

driven by the surge of multiple SIM users,who carry more than one SIM and/or mobilephone to reduce their calling costs by takingadvantage of different tariff plans. This isadded to by free or low-priced SIM carddistribution as well as low-tariff plans toencourage new consumer trials.

Although mobile penetration in Thailandis heading towards 100%, the saturation

point and the penetration in each region isvaried. While Bangkok and other majorcities have reached 100-120% penetrationrate, the upcountry areas, mainly in Northand Northeastern provinces have only

achieved 50-60% penetration (AIS Annualreport 2008).

The Thai mobile phone service industryconsists of 3 main mobile operators, whichoccupy more than 97% of mobile servicerevenues in total. The market is dominatedby Advance Info Service Plc. (AIS) with45% share, followed by DTAC 31%, TrueMove 23% and other 1%.

Source: Adopted from AIS Annual report 2008

Figure 1: Mobile subscriber market share in years 2008

As a high competition in mobile market

every operator try differentiate themselvesform other and avoid price war by launchingnew value added service (VAS). The table asfollow will show number of revenue movesin short range. On the other hand the numberof revenue non-voice service increases

continuously. The number of VAS and

revenue especially in Data service areincrease continuously. This information mayimply that voice service is saturated and non-voice service is in growth stage. The non-voice service will become the new cash cowfor mobile operator in making revenue.

Source: Adopted from: NTC (http://www.ntc.or.th/uploadfiles/1211510294_3Q2007.pdf)

Figure 2: Thailand Mobile non-voice user in the 4th quarter in 2005 till the 3rd quarter in 2008(Million people)


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The Comparative Study of Internet Infrastructure Investment Between WiMAX and 3Gto Support Incoming Growth of eLearning in Thailand

The Sixth International Conference on eLearning for Knowledge-Based Society, 17-18 December 2009, Thailand

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Internet IndustryThe current International bandwidth for

the whole country is 11Gbps. The domesticexchange total bandwidth is close to100Gbps. The number Internet users,

according to the National Statistical Office,seem to be too conservatively estimated,with less than 2% growth for the year2005/2004.

The average growth of the Internetbandwidth in the past two years(2005/2006/2007) is about 45%, a slow

down when compared with the 2002-2005period, and it is even more conservative as astatement: growth of the Internet users isone-third of the growth of the Internationalbandwidth, then may apply 15% growth in

the past two years. The result in the greencurve is shown in the graph below, with thenumber of Internet users in Thailand in 2007to be around 13.15 million people (ImportantInternet Statistics of Thailand ThaweesakKoanantakool, August 24, 2007 page 3).

Sourced: Adopted from www.nectec.or.th/internet cited in Important Internet Statistics of Thailand, 2007

Figure 3: Internet user and bandwidth of Thailand

The growth of Internet in Thailand, likesmany other countries, are due to popularizedapplications which attracts young and casualusers. Entertainment and games shares50.33% of all web clicks each day. Usage ofthe Internet (web visits) relating to gettinginformation about the social aspects, readingnews and business is among the secondcategory, having 24.9 of shares. Using theweb to access websites of the government isvery low, 1.75%, and even worse foreducational contents 1.71%.

The main service providers in Thailandare United Broadband Technology (UBT),Q-Net by Samart, CS Loxinfo, TOT, TT&T,

Advance Datanetwork Communication(ADC) and True Corporation. In Thailand

there is a population around of 63 millionusers but the number of internet users isaround 13.5 million, so it may imply that themarket still has a potential in growing.Consumer behavior is another reason thataccelerates the internet usage. Consumersuse more email, search information,entertainment, or event, and do business viaonline. Government also supports people touse more internets by reducing license feeand international gateway fee. These reasonsshow opportunity that the internet market in

Thailand has a potential to be highlyexpanded in nearest future.


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Technology Background

3G TechnologyThe 3rd generation (3G) technologies are

designed to provide high-speed wireless data

and enhanced voice capacity. CDMA2000and WCDMA 3G technologies basedcommercial networks are now providingservice to tens of millions of payingsubscribers. As of October 2004, there are108 3G CDMA deployments worldwideserving more than 140 Million subscribers.KDDI in Japan had recorded over 15.8million CDMA2000 subscribers after two

years of service. Korea has accumulated atotal of over 3 1 million CDMA2000subscribers, over 9 million of which are1xEV-DO.

The new enhancements in WCDMA

standards include significantly improveddata capabilities for the downlinkcommunications using the HSDPA mode.HSDPA offers downlink peak data rates ofup to 10 Mbps is mainly aimed at providingdata applications with enhanced end-userexperience with shorter connection andresponse times (Yaliapragada and Naidu,2005).

Sourced: Adopted from:

http://www.itu.int/ITU-D/imt 2000/documents/Slovenia/Presentations/Day%203/3.1.1_Drilo.pdf

Figure 4: 3G evolution

Worldwide Interoperability forMicrowave Access (WiMAX) technology

WiMAX is one such technology and it issaid to be a broadband wireless accesstechnology, offering an alternative toinfrastructure dependent telecommunicationstechnologies such as DSL (Digital

Subscriber Line) or fiber.

WiMAX was initially introduced as acable/fiber replacement technology and ableto provide large bandwidth wireless access toa distance of approximately thirtykilometers. This is known as fixed wirelessaccess that is ideal for situations wherebroadband access is desired but without the

complication and cost of DSL or fiber. Withfixed WiMAX, 3G operators have seen this


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4. Accounting Module which isprofit and loss , and cash flowmodel

Risk analysis

1. Scenario analysis

Feasibility Study

Assumption1 The fluctuation of exchange rate will not be

included in this model2 Universal Service Obligation charge is at

10% of total revenue (same between 3G andWiMAX)

3 Initial cost for licensing is 3,000 Million

baht (up front)4 Source of investment will be derived

financial intuition5 The duration of license is 25 years for both

3G and WiMAX6 The revenue from voice service will not be

included in this model7 The useful life of equipment is 10 years

8 Market structure will be based on historicaldata (5 years later from years 2009) ofinternet data service

9 Thai population prediction is performeduntil Year 2020 according toNationalEconomic and Social Development Board.After Y ear 2020, trend projection methodwill be used.

10 Moving average and trend analysistechnique will be applied for demandforecasting

11 The maximum penetration rate of internetuser is 75% of total population based onKorea and Japan penetration rate (Maturitystage)(http://www.internetworldstats.com/asia/)

12 The maximum penetration rate of eachtechnology is 80% of total Internet user

13 Network will cover all areas in 11 years(since beginning the project) for 3 G butWiMAX need 7 years

14 Average revenue per user will be based on590 Baht (as a minimum charge) uponcurrent rate of internet speed at 1 Mbps

15 A number of WiMAX users in the first yearwill be assumed from a number of trueinternet users because customer profile quitesimilar

16 A number of WiMAX users use the MovingAverage technique for forecast, based on

true internet growth rate structure17 A number of 3Gs user in the first year willbe assumed upon number of AIS data

(EDGE and GPRS) user because customerprofile is quite similar

18 For number of 3G users use MovingAverage technique in forecast by based onSingapore 3G market growth rate structure

19 CAPEX forecast will be based on base

station section only not included corenetwork

20 Interest will be based at 6.50% BBL rate(Jan, 2009)

21 CAPEX investment will invest in bi-yearlybasis

Marketing feasibilityPossible ways to the marketing study in

the research are use the data from the serviceprovider, and both of government sectorinstitute and the private sector that related ,

bring study the possibility with marketingtool , such as Remote environment oftelecommunication industry, SWOTAnalysis and Five Force Model. Fromtendency growth of using hi-speed Internet(Data Service), and number of existingmobile phones and high-speed internetsubscribers. Internet (Data Service) has a lotpotential in the expanding market because topenetration number of Internet users is quitelow when compared to number of Thaipopulation. As the current market situationevery player tries to expand networkcoverage and does marketing activities forgaining more market share and expandmarket.

As mentioned earlier about potential ofInternet (Data Service) market in Thailand, itwill be a good opportunity for 3G andWiMAX technology to serve a huge demandof data users in nearest future. The 3G

technology has an advantage in terms ofcustomer adoption rate because customer arequite familiar with the mobile phonetechnology. The number of existing devices3G (HSPDA device), and clear technologyroad map 3.5G and 4G which makeconfidence to service providers and users inrelying on this technology. On the otherhand, WiMAX has an advantage in terms ofdata transfer rate (speed) which is the mostimportant criteria for customers to choose

data service. The capacity of networkequipment (Base station) is greater than 3G


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The Comparative Study of Internet Infrastructure Investment Between WiMAX and 3Gto Support Incoming Growth of eLearning in Thailand

The Sixth International Conference on eLearning for Knowledge-Based Society, 17-18 December 2009, Thailand

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in terms of coverage area which will saveservice providers investment cost in a longterm. The weakness of WiMAX technologyis number of devices which supported thistechnology is still quite low and unclear

about technology road map when compared

to 3G technology. These factors may causeof uncertain of end user and service providerin choosing this technology.

The technology value grid can concludedadvantages of 3G and WiMAX technology

in term of marketing clearly.

Source: Developed for this research

Figure 5: Technology value grid

Financial feasibility

TABLE 1: COMPARISON INVESTMENT CRITERIA OF ALL SCENARIOS TABLE

CriteriaNPV

(Million Baht)ROI Pay Back Period

Amount of loan(Million Baht)

3G Base Case 70,977.92 3283% 5 years 1.6 months 5,000

3G Moderate Case 53,690.43 2606% 6 years 1.65 months 5,000

3G Worse Case 27,678.85 1591% 9 years 7.4 months 5,000

WiMAX Base Case 45,560.44 2798% 11 years 7.7 months 6,000

WiMAX Moderate Case 31,838.55 2219% 13 years 0.02 months 11,500

WiMAX Worse Case 10,767.44 1349% 17 years 7.95 months 20,100

WiMAX with 3G demand(Moderate case)

54,472.65 2715% 5 years 10.79 months 5,000

Source: Develop for this research

Cash flow is positive every year andNPV is also positive. ROI is also high inevery scenario in both 3G and WiMAXtechnology. In reverse 3G makes it better inPay Back Period. Another key factor whichindicates the suitable alternative forinvestment is the amount of loan. WiMAXhas a disadvantage in amount of loanbecause it is quite new when compared to

3G, so it need some time in gaining newusers and the cost of equipment is still high.

Therefore, 3G technology has moreadvantage in terms of investment because ofa plenty of supportive device whencompared to WiMAX. It will reflect anumber of users who are ready to use 3G

Technology in the beginning of theinvestment term.

On the other hand in case of the samedemand between 3G and WiMAX the

financial statement look pretty good asshown in the table above. The main factor

Technology value grid

-1

1

3

5Number of customer base

Number of existing device

SpeedTechnology road map

Price

3G WiMAX

Remark: 5 stand for most advantage

1 stand for less advantage


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which affects all financial calculations isnumber of demand forecast in both 3G andWiMAX.

III. RECOMMENDATIONS

As the financial feasibility result shownin marketing and financial feasibility forboth 3G and WiMAX are feasible andprofitable in every case. The most suitableinvestment is on 3G technology because itrequires amount of loan lower than WiMAXand pay back period does not take so longeven in worst case scenario.

In reverse, if demand is the samebetween 3G and WiMAX as shown inscenario 2 WiMAX is attractive to invest

also. Because WiMAX requires lessinvestment cost which makes financial ratiomore feasible when compared to 3Gtechnology. The main criteria which shouldbe considered before choosing between 3Gand WiMAX is number of the forecasting ofpotential users. It will affect financialcalculation.

IV. L IMITATIONS OF THE STUDYThis study considers economic

dimensions only, so the result may not beapplied to the technical dimension. Theforecasting model is based on the assumptionthat license is based on frequency with InitialLicense Fee of 3,000 Million Baht underUniversal Service Obligation charge (10% ofrevenue) ,and voice service is excluded inthis model. Political factor is one factor thatcant be controlled which will affectregulations for both technologies.

Some data in this research are partlyderived from the interview of many well-known mobile operators executives andother data are derived from internaldepartment of mobile operator and interservice provider. Attitude and/or perspectiveof each interviewee (executive managementlevel) may change in the future when thedigital cellular industry situation or relatedindustry situation changes.

REFERENCE[1] Thai Telecommunication Market Report

Available: http://www.ntc.or.th (December 2008)[2] AIS Annual Report Available:

http://www.ais.co.th (February 2009)[3] Important Internet Statistics of Thailand,

Thaweesak Koanantakool, August 24, 2007 page3

[4] 3G evolution, Available: http://www.itu.int(December 2008)

[5] Rao Yaliapragada ,Mullaguru Nrtidu (2005),New Enhancements in 3G Technologies, IEEEXplore, No. 0-7803-8964-6/05

[6] Su-En Tan (2006), WiMax- Prospects and NewBusiness Models, IEEE Xplore, pp 279-283

[7] Asia Internet Stat, Available:http://www.internetworldstats.com/asia(December 2008)

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