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Myanmar is last in telecoms: What can be done

A short piece I wrote on my own time (IDRC is subject to Canadian government restrictions against any expenditures of Canadian funds in/for Myanmar) was just published in English in the Myanmar Times. I am hopeful the Bamar translation will also be published.

The text is below:

In 2010, I worked on a section of an ITU report about information and communication technologies in the least developed countries (ITU, 2011). Analyzing the countries that were at the bottom of the league tables in telecom, I found to my unhappiness that Burma was one before the last in mobile telephony. Hearing that N Korea was reaching 1 million active connections by end 2011, I checked the data again. Now Myanmar is last, other than for St Helena, a UK colony with a population of 5,000, which does not seem to have any mobiles.

Figure 1: Countries with lowest mobile SIMs/100 people,

Source: ITU/ICT Indicators Database, 2011.

It is not that N Korea has more mobiles than Myanmar, but that as a proportion of the population it is performing better, as a result of the rapid increase in connections driven by a foreign-owned private operator issued a license in 2008. Myanmar has had mobiles for longer, but according to data reported to the International Telecom Union by the government, the government-owned operator’s progress has been slow, compared to other low-performing countries that have not reformed their sectors.

Table 1: Total mobile connections and growth rates among the countries with lowest penetration

  2006 2007 2008 2009 2010

2006-10 CAGR

2009-10 growth

St. Helena                -                   -                  -                  -                 -

N/A

N/A

Myanmar

   214,214

      247,641

      367,388

     502,005

    594,000

23%

18%

D.P.R. Korea

               -

                  -

                 -

       69,261

    431,919

N/A

524%

Eritrea

      61,996

        84,348

      108,631

     141,130

    185,275

24%

31%

Solomon Islands

        7,000

        10,900

        30,000

       30,000

      30,000

34%

0%

Somalia

   550,000

      600,000

      627,000

     641,000

    648,200

3%

1%

Marshall Islands

        1,000

           1,500

          2,000

          3,000

         3,800

31%

27%

Ethiopia

   866,700

   1,208,498

  1,954,527

  4,051,703

 6,854,000

51%

69%

Cuba

   152,715

      198,252

      331,736

     621,156

 1,003,015

46%

61%

Kiribati

           700

              750

          1,000

          1,000

      10,000

70%

900%

Source: ITU/ICT Indicators Database, 2011.
Notes: CAGR stands for Compound Annual Growth Rate, the best indicator of growth over time. The right-most column shows the percentage increase from 2009 to 2010.

There is no doubt that some of the data may not be accurate (whenever one sees numbers nicely rounded to thousands, one questions their veracity). It is the duty of the relevant country authorities to report the most current and accurate data to the ITU. In the case of Myanmar the 2009 number has been supplied by the Ministry of Posts and Telecom, while the 2010 number is an ITU estimate, which explains the round figure for 2010 and not for previous years. It would not be fair to use data from the Ministry only for Myanmar, but even if one tries, there are problems. The Ministry reports data by project not by aggregate connections; and the problems of rounded numbers persists.

But let us assume that there may be more mobiles in Myanmar than the ITU reports. Even then, it can, at most, overtake N. Korea and regain its old place at second (or third, counting St Helena) from the bottom. Is this something worth debating? The real challenge is to vault out of the Bottom Ten altogether, and give the people of Myanmar electronic connectivity on par with neighboring countries.

To achieve this goal, Myanmar has an advantage.

Late-starter advantage

Starting late means that most of the mistakes have been made, by others. In the world of policy design, we spend the most effort working around previous mistakes. For example, Thailand’s recent effort to develop its ICT sector has been bedeviled by the existence of concession contracts from a previous time. A green field is much easier to work with.

So, if the government wants to take Myanmar out of the Bottom Ten, what should it do? This is not the place for detail, but here are five key actions that must be taken at the outset:
• Build a national open-access fiber backbone as a Public Private Partnership
• Conduct an assessment of spectrum use and availability, especially for 3G and 4G technologies
• Initiate action to refarm or reassign frequencies if valuable frequencies have been assigned to low-value uses (it is most likely that the military are using frequencies across the spectrum)
• Design a technology-neutral access network license system
• Design and implement a clear market entry/exit policy modeled on Pakistan’s 2003 policies
In all these cases, the government should insist on solutions that are appropriate for developing country contexts and avoid the wholesale importation of policies developed and implemented in advanced market economies (Samarajiva & Zainudeen, 2008). International consultants will be required, but they should be carefully managed and coordinated so that the overall scheme is coherent and suits the local circumstances.

Managing the policy actions will require the establishment of a policy cell within a strong Ministry, preferably Finance and Planning. Most, if not all, of the present employees of Ministry of Posts and Telecom (14,770) should be moved into the national backhaul network PPP.

A sector specific regulatory authority will be needed. The first policy actions can be taken in parallel with the design and planning of the regulatory body.

Getting the architecture right

The green-field advantage will be lost if the overall architecture is not right, if the different policy actions do not cohere. For example, Timor Leste had green-field advantage, but wasted it by giving a long-term monopoly concession to Portugal Telecom. Today, Timor Leste is a telecom backwater, even if it is not in the Bottom Ten.

One way to get the basic elements of the architecture right is to learn from the experience of China’s engagement with the World Bank as it emerged from decades of closed-economy policies (Bottelier, 2006). Engaging with an entity such as the World Bank, rather than a specific country or company, opens up access to a range of lessons on telecom reforms: many successes, but some failures as well. The lessons are more important than the money.

I will illustrate with one failure and one success.

Since the late 1990s, the World Bank and its associated experts (e.g., Wellenius, 2000) promoted universal service funds as effective tools to bring the benefits of connectivity to the poor. At the time, this was an attractive solution and one that was superior to the previous practice of imposing universal service obligations on telecom operators. While significant benefits were gained, the instrument did not perform as well as expected, with more than USD 8 billion lying unspent in universal service accounts worldwide (Somasekhar, 2010).

The World Bank Independent Evaluation Group (2011, para 4.28), upon reviewing experience in multiple countries over five years, conceded that it failed to live up to the original promise:
Equity and integration of marginalized groups have been more effectively supported by Bank support for ICT policy and sector reform than by operations specifically designed to achieve these goals. ICT operations that supported reforms to introduce competition into the sector, when successful in supporting those reforms, have had significant impact, especially in access to cellular telephony services. This increase in overall access has had a spill-over effect of providing access to the underserved. Lower tariffs (especially in cellular telephony), falling handset prices, and the expansion of prepaid cellular services are all channels that facilitate access by the poor. One indicator of the poor becoming part of the customer base of cellular telephony providers is the monthly average revenue per user (ARPU), which declined from about $20 in 2002 to about $5 in 2010 in developing countries.
The success was in reforms to introduce competition to the telecom sector, as referred to above. Not only did these reforms bring the benefits of electronic connectivity to the poor, they paid back the costs of reforms many fold.

I was personally involved in managing aspects of telecom reforms for the government of Sri Lanka, funded by credits from the World Bank (Samarajiva, 2000, 2001; Samarajiva & Zainudeen, 2008). The total expenditures could not have exceeded USD 15-20 million. In 2010 alone, the government of Sri Lanka took in USD 122 million as revenues from the partially privatized telecom industry (Rajapaksa, 2011). Today, Sri Lanka is at the forefront of ICT developments in South Asia (behind only the Maldives in mobile connectivity), with almost universal access to voice telephony at some of the lowest prices in the world, and making good progress on broadband connectivity as well.

References
Bottelier, Pieter (2006). China and the World Bank: How a partnership was built. Stanford Center for International Development, Working Paper 277. http://www.stanford.edu/group/siepr/cgi-bin/siepr/?q=system/files/shared/pubs/papers/pdf/SCID277.pdf
ITU (2011). The role of ICT in advancing growth in least developed countries: Trends, challenges and opportunities. Geneva: ITU. http://www.itu.int/ITU-D/ldc/turkey/docs/The_Role_of_ICT_in_Advancing_Growth_in_LDCs_Trends_Challenges_and_Opportunities.pdf ).
Laurence, Jeremy (2011, November 21). Secretive N. Korea opens up to cellphones, Reuters. http://www.reuters.com/article/2011/11/21/uk-korea-north-cellphone-idUSLNE7AK01C20111121
Rajapaksa, Mahinda (2011, November 21). Fiscal management report 2012. http://www.treasury.gov.lk/depts/fpd/reports/fmr/2012/fmr2012-eng.pdf
Samarajiva, Rohan & Zainudeen, Ayesha (2008). ICT infrastructure in emerging Asia: Policy and regulatory roadblocks, New Delhi & Ottawa: Sage & IDRC. http://www.idrc.ca/en/ev-117916-201-1-DO_TOPIC.html
Samarajiva, Rohan (2000). The role of competition in institutional reform of telecommunications: Lessons from Sri Lanka, Telecommunications Policy, 24(8/9): 699-717. http://www.comunica.org/samarajiva.html
Samarajiva, Rohan (2001). Sri Lanka’s telecom revolution. OECD Observer (February 1). http://www.oecdobserver.org/news/fullstory.php/aid/487.html
Somasekhar, M. (2010). Pak ahead of India in use of Universal Service Funds, Hindu Businessline, http://www.thehindubusinessline.com/todays-paper/tp-info-tech/article991070.ece?ref=archive
Wellenius, Bjorn (2000). Extending Telecommunications beyond the market: Toward universal service in competitive environments. Public Policy Journal, Issue 206. http://rru.worldbank.org/PublicPolicyJournal/Summary.aspx?id=206
World Bank Independent Evaluation Group (2011). Capturing technology for development. http://ieg.worldbankgroup.org/content/ieg/en/home/reports/ict.html

1 Comment to Myanmar is last in telecoms: What can be done

  1. Acetate's Gravatar Acetate
    May 10, 2012 at 11:17 am | Permalink

    One of the main issues in Myanmar is the ridiculously expensive cost of SIM card (previously USD3000 per SIM and now about USD500 per SIM, or higher in the black market) but there have been talks to reduce the cost to over USD300 (or lower) as government plans to sell 30 million SIM cards in 5 years. This cost should be brought down (preferably by competition) so people can own mobile phones. Aside from infrastructure, introducing real competition down at the retail level should also be a clear focus of the government.

  1. By on May 9, 2012 at 3:29 am
  2. By on May 9, 2012 at 4:04 am
  3. By on May 9, 2012 at 4:57 am
  4. By on May 9, 2012 at 11:56 am
  5. By on May 9, 2012 at 1:21 pm

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