BTN model


Reforming MPT is essential to ensure its survival in the face of skilled and well-endowed competitors. Is a partner from a high-cost, high-price telecom market the best way to do this? Japan’s KDDI Corp and Sumitomo Corp are likely to partner of Myanmar’s state-backed telecommunications operator to expand services in one of the world’s least-connected countries, a Sumitomo official said. Sumitomo’s deputy general manager in Myanmar, Soe Kyu, told Reuters the companies were jointly invited into “exclusive” talks about becoming the international partner of Myanmar Post and Telecommunication (MPT), sharing its existing licence. No further details on the likely partnership were revealed.
It appears that ability to invest was a critical factor in the selection of Ooredoo and Telenor as the first foreign private licensees in the Myanmar telecom sector. Both have committed to low-price mobile services. Telenor has considerable experience in running profitable operations using the Budget Telecom Network business model. Ooredoo can, I suppose, buy that expertise. If they do not succeed in running a BTN model in Myanmar, it will be their money that will go down the drain.
We have consistently argued that human beings must be associated with, and be accountable for, SIMs. The imperatives of the Budget Telecom Network Model cause companies (or more, the thousands of resellers who actually interact with customers) to give away SIMs without too many controls. Therefore, one must be judicious in enforcing the rules. We have been pointing to Pakistan as a model. Kenya, it appears, is exemplary of what not to do.
I have heard many absurd proposals related to the mobile industry, but this about takes the cake. Pakistan’s government is considering a radical plan which could dramatically alter the mobile phone industry in the country – as it mulls proposals to ban Prepaid SIM cards from sale. The Interior Minister Rehman Malik said that the government is considering a phased ban on all prepaid SIM cards in an effort to clamp down on terrorism in the country. However, with something in the region of 97% of the entire mobile subscriber base on PrePay tariffs, the impact on the industry would be huge. In addition to the costs of upgrading billing systems to cope with the surge in contract customers, and having facilities in retail stores to cope with the migration – the networks would also face a hole in their finances as payments switch from in advance, to monthly in arrears.

A caution on Jugaad

Posted by on June 21, 2012  /  1 Comments

Workaround was a key theme across the chapters in our 2008 book. People were doing all sorts of things, like using WiFi to haul data over long distances in Indonesia, that made sense in the specific circumstances, but had no other value. As soon as the Indonesian telecom incumbent provided leased lines, the WiFi use stopped. This was a classic jugaad. A contrast is the budget telecom network model, that came about because companies were trying to deal with the low purchasing power of their customers and the low transaction cost afforded by pre-paid mobile.
> Bhairti Airtel may revise low-cost strategy in Africa > > In Telecom.paper 29-02-2012 > > [Mobile World Congress 2012] > Bharti Airtel may devise a new strategy for the African market, following what it termed an unexpected response to its low-cost model developed in India. According to the Daily Nation, the mobile company told participants at the Mobile World Congress in Spain that it was surprised to find that the African market did not increase its talk-time, which was critical to supporting its low-cost model. MD Sunil Mittal said unlike India, they were surprised that in Africa, lower tariffs could not increase volumes. In Africa, subscribers use the money saved on lower calling rates to buy food and not to talk more.
First, you must read Steve Song’s self-described rant. He is a thought leader. Will do anyone good to read his thoughts. What follows is my response: This could be the beginning of a good brawl, so let me first thank Steve for starting the debate right, with some facts wrong and slightly in rant territory. Without these elements one would not get a lively debate.
The long dragged-out drama of license renewal in Bangladesh has taken one step toward closure, according to the Daily Star. The government yesterday finalised the process of how it will charge four mobile operators — Grameen-phone, Banglalink, Robi and Citycell — for renewing their licences for the next 15 years. A high-profile meeting presided over by Prime Minister Sheikh Hasina decided that the operators will pay at the rate of Tk 150 crore for per megahertz of airwave, which will be multiplied by the total allocated spectrum and a ‘market competition factor’. The meeting held at the Prime Minister’s Office also decided to give 3G (third generation) technology licences through auction. The per-MHz amount has been set arbitrarily.
According to the Nokia Total Cost of Ownership (TCO) study 2011, Ethiopia’s mobile prices bring it to the very threshold of membership in the “Under USD 5 club” of 11 countries. The TCO in Ethiopia in 2010 was USD 5.02. This is a puzzle and appeared to pose a challenge to the entire explanation of the conditions for the emergence of the BTN business model. Because Ethiopia is a member of another exalted “club,” the “bottom-ten” in terms of mobile connectivity.