budget telecom network business model


With long experience in neighboring Bangladesh, where they may have well discovered the Budget Telecom Network model, Telenor appears to be pulling out all the stops in its Myanmar campaign. Telenor plans to sell SIM cards for free—or with a minimal charge of about 20 kyat (US$0.02)—and offer its phone service by a pay-per-minute plan. The company also plans to make communications accessible by establishing a high volume of points of sales throughout the country. “We never want a customer to be living more than a few hundred meters from a retailer,” Brekke said.
I just completed a paper that summarizes the key arguments I have been making against the ETNO proposals to impose sending party network pays principle on the Internet. Here is an excerpt from the paper: ETNO wants the ITU to designate Internet content providers as “call originators” and subject them to a “sending party network pays” rule that would allow telecommunications operators to charge them rates they believe are commensurate with the bandwidth their content consumes. Such a change would have enormous implications for the expansion of the digital economy in the developing world. • Access to content would become more expensive if content providers must pass along costs. • Content providers may respond by terminating connections with operators, especially in countries with populations that have limited buying power and access to payment mechanisms.
Senior Research Manager, Ayesha Zainudeen participated at the 10th International conference on mobile business (ICMB 2011) from 20-21 June 2011. She made a presentation on Connecting Asia’s poor through the “budget telecom network model”: Innovations, challenges and opportunities, drawing from LIRNEasia’s research on the budget telecom network model, as well as Teleuse@BOP3 findings. The presentation slides can be found here. The theme of the conference was “Mobile Internet: a new paradigm in a new value network,” and explored the current mobile business models and players involved in the value network and their strategies, as well as the technological framework enabling the distribution and creation of services.
LIRNEasia CEO, Rohan Samarajiva, recently spoke at a workshop organized for the telecom reporters in Bangladesh to strengthen their understanding and know-how on telecom, especially regarding legal, regulatory and business issues. The event has received extensive media exposure. While noting that Bangladesh boasts of the some of the lowest tariffs in the world, largely a result of budget telecom network business model, Rohan argued that the government’s vision for a “digital” Bangladesh can only be met “by extending the budget telecom network model to broadband, building wireless access networks capable of handling data cost-effectively, backed up by non-discriminatory, cost-oriented access to backhaul, including redundant capacity, and offering applications that are of value to consumers, giving them reason to use broadband.” Click here to read the full article in the Daily Star. More coverage will be tracked here in the coming days.
In September 2009,  LIRNEasia Chair and CEO, Rohan Samarajiva, participated in the second Harvard Forum on “Connection and human development” held at Harvard University, USA. Harvard Forum II was convened by Nobel Laureates Amartya Sen and Michael Spence, in collaboration with Randy Spence and theInternational Development Research Centre. Its aim was to bring together leading thinkers in the area of development to discuss how ICTs could contribute to poverty reduction in developing countries, both now and in the future. It was a follow-up to the Harvard Forum I held in 2003, where several needs in the ICT for development (ICT4D) area were identified (including ICT governance and regulatory reform, especially in the telecommunication sector).  One of the outcomes of Harvard Forum I was the funding of organizations such as LIRNEasia that seek to remove policy and regulatory barriers to the use of ICTs.
Rohan Samarajiva, LIRNEasia Chair and CEO, made the lead presentation on access to ICTs at an OECD/infoDev Workshop on the Internet Economy yesterday in Paris. The workshop, “Policy coherence in the application of information and communication technologies for development,” is currently underway. In his presentation, Dr Samarajiva described the new “Budget Telecom Network Model” developed in South Asia that is enabling mobile operators to serve low-income customers who yield very low ARPUs [Average Revenues per User] and discuss its extension to enable broadband use.  Bangladesh, India, Pakistan and Sri Lanka have offered the lowest total costs of mobile ownership since 2005-06 while still yielding adequate, though somewhat volatile, returns to ensure continued investment in network extension and new services.  LIRNEasia research shows that this has been made possible by business process innovations to reduce operating expenses, and the minimizing of transaction costs made possible by widespread prepaid use.
One of the more exciting things we have been talking about in the last little while is the budget telecom network business model being implemented in South Asia. We have seen it spread to Nepal, but the big question was when and how it would get to Africa. If Bharti and MTN merge, we can be sure the model will spread. An update.
Last year, several LIRNEasia researchers were pleased to work with Nokia on explaining the reasons behind South Asia (Bangladesh, India, Pakistan and Sri Lanka) being the only countries with a TCO [total cost of ownership] below USD 5/month, when the average for almost 80 countries studied was USD 13.15. According to the latest issue of Nokia’s Expanding Horizons magazine (p. 10), the TCO has come down further, to USD 10.88.