1. Regulating the Internet: Lessons from Thailand Somkiat Tangkitvanich Thailand Development Research Institute (TDRI)

2. Outline zStatus of Internet in Thailand zImpacts of the state monopoly on price and Internet adoption zImpacts of the states share-ownership on price and corporate governance of ISPs Future prospects

3. The Status of Internet in Thailand z18 commercial ISPs + 4 non-commercial providers + two public interchanges z2.5 billion Bt of ISPs revenue in year 2000 zOver 600 Mbps international bandwidth About 3.54 million Internet users (as of Q1 2001)

4. CAT 18 ISP House hold Corpor ate Internet Structure of the Internet Markets

5. Listed Prices of 64 Kbps Leased Line $ US/month Source: TDRI

6. 0.57 1.13 1.71 2.70 4.05 2 Mbps 4 Mbps 8 Mbps 16 Mbps 45 Mbps Prices of International Half Circuits 0.71 1.29 2.22 3.94 7.16 CATMCI Million Bt/Month

7. Monopoly and its Impact on Net Use z# Host = 772.6 GDP - 557.2 M x GDP - 41,201 (1) z# SSL Server = 4.25 GDP - 4.0 M x GDP - 49.9 (2)

8. Identify the IP Address Locate the IP Address Tracert Whois Identify and Locate the IP Address Neotrace Two Ways to Locate a Server

10. Location of Thai Web Portals Source: TDRI

11. Consumer Benefit Quantity Price Qc Pc Qm = 555 Mbps Pm=1.43 Pc Producers Profit Welfare Losses = 230 million Bt per year Welfare Losses

12. Impacts of CATs share ownership zISPs 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

13. The Cost of CATs Share Ownership Let X be an ISPs expected rate of return yP/P = (2+3X)/(2+2X) 20% price mark-ups for X = 30%

14. CAT Holding Company Major Shareholder 1 Major Shareholder 2 ISP Subsidiary 1 Subsidiary 2 Subsidiary 3 32+3%65% 100% Shareholding Structures of ISPs

15. Revenues and Profits of ISPs Million Bt