BCG Study: Thailand

Surfing wireless

With appropriate initiatives and policies to stimulate investment and rollout of wireless infrastructure, a bottom-up, cost-benefit analysis suggests that Thailand could have 17.9M subscribers in 2020, which translates into approximately 26 subscribers per 100 population


By WAVE Team
from Belgrade, SERBIA


Thailand has seen rapid growth in Internet usage, increasing seven-fold over the last 8 years. However, penetration continues to lag behind regional peers. In terms of both Internet users and broadband subscribers per 100 population, Thailand lags behind fellow ASEAN members like Singapore, Malaysia, and even Vietnam, although it is ahead of Indonesia and the Philippines.

This is a source of concern for Thailand, which is focused on improving its economic competitiveness vis-ŕ-vis its neighbours. The low penetration rates for Internet use and broadband subscription have been identified by the Global Competitiveness Report in 2008-2009 as a drag on Thailand's competitiveness. Thailand's ranking for technology readiness fell 21 places to 66 in 2009, which is significantly lower than its overall ranking of 34. Given that an earlier OECD study had found a correlation between Internet usage and Foreign Direct Investment, this raises the spectre of Thailand suffering a competitive disadvantage relative to its peers.

Given the current limited penetration and coverage (outside of major cities) of fixed lines in Thailand, it seems likely that wireless Internet technologies will be critical for Thailand to achieve mass nationwide Internet penetration within a short timeframe. Only 1 in 4 households nationally have a fixed line, while alternative technologies such as satellite access are prohibitively expensive. Experience from voice also suggests a much stronger growth outlook for mobile access, relative to fixed lines.

With appropriate initiatives and policies to stimulate investment and rollout of wireless infrastructure, a bottom-up, cost-benefit analysis suggests that Thailand could have 17.9M subscribers in 2020, which translates into approximately 26 subscribers per 100 population.

Growth is initially driven by strong uptake in the high income segments, particularly in Bangkok and other urban areas, while adoption amongst low income groups takes off in the latter years, from 2018 onwards. Growth in 2018 is slightly lower than the 2017 or 2019 as some high income segments reach saturation in that year, while adoption in the low income segments has not yet accelerated sufficiently to make up the gap.

At the household level, 70% of households have at least one Internet subscription, with some high income households also taking on additional wireless subscriptions. Business adoption is higher, at around 91%. The Thai business landscape has a high proportion of small service and manufacturing firms, and it is the relatively low penetration levels in these segments which drives the overall penetration rate, as large businesses already exhibit very high penetration rates. Experts believe that approximately two out of three Internet subscriptions will be wireless.

Social benefits

Thailand has made considerable progress on a range of social issues, such as literacy, poverty reduction, etc. Nevertheless, the Internet has the potential to help push it to a higher level on key areas of concern, enabling it to compete with its South-east Asian peers. Four issues are highlighted in this report: education, healthcare, and rural development, as well as the possible environmental benefits the Internet can bring.

To attain these benefits, an appropriate value chain must be put in place to promote mass Internet adoption in Thailand. Steps must be taken to ensure that there are appropriate local content and applications, access to Internet-enabled computers, and sufficient trained instructors to disseminate knowhow about the Internet. This will require coordination across multiple actors, including the government, private sector, media and local communities. Some steps have already been taken in this direction. For example, the Meaningful Broadband Working Group is a coalition of regulators and operators that aims to develop broadband so that it fulfils specific public policy goals, while being commercially viable. Its members include the National Telecommunications Commission, all the major operators, and Chulalongkorn university. Apart from the working group, operators have individually already undertaken steps to increase Internet awareness and usage, e.g., TOT donated equipment and Internet access to schools in the Northeastern regions of Thailand.


(Published: 11.10.2009.)