Myanmar linking up to digital world

After decades in the dark, Myanmar took one step closer to joining the digital age on Thursday after global Qatari telecommunications provider Ooredoo and Norway-based Telenor obtained licenses from the government, enabling them to develop the country’s first nationwide mobile network.

The two firms have an ambitious agenda to make mobile phones accessible to 90 percent of the country’s population of 60 million people within just five years.

Myanmar announced in June that the two firms had won an international tender to develop and operate mobile infrastructure, helping to solidify the quasi-civilian government’s plan to open the long-isolated country to foreign investors.

Since then, however, the issuance of the coveted operator’s licences – which would allow the two firms to build their multi-billion dollar networks – has been delayed, as lawmakers struggled to put a modern regulatory framework for the telecom sector in place.

Affordable phones

Telenor and Ooredoo have pledged to waste no time in bringing their networks to the country that currently has less than 10 percent mobile phone penetration. The two have said they will launch initial services in major hubs such as Yangon in the next six to eight months.

“The main goals of [the government’s new] policies are: To increase the overall tele-density; to make telecommunications services available to the public at affordable prices in both urban and rural areas; to give citizens and enterprises the ability to choose their telecommunications services and providers; to create jobs and boost the overall economic growth of Myanmar,” the Ministry of Communications and Information Technology stated in a press release on Thursday, adding that the new licences would become active on February 5.

Sigve Brekke, vice-president of Telenor Group and head of Telenor’s operations in Asia, said that the license comes following an “extensive consultation process” with the government and international organisations.

“It [the telecommunications law] now represents an acceptable framework that we believe will go a long way to provide the necessary long-term predictability that Telenor requires when it formally starts operations in Myanmar,” he said in a separate statement on Thursday.

Of Myanmar’s estimated 60 million population, just 7.08 percent had access to mobile phones as of July, according to government data, while only five percent had access to the Internet.

Neighbouring Thailand, meanwhile, has a mobile penetration rate nearing 100 percent, while Cambodia and Laos have penetration rates of 57 and 64 percent respectively, according to global research firm Deloitte.

“International experience shows that improved access to telecommunications opens up a wide range of opportunities, including to the poorer sections of the population,” Matt Davies, deputy division chief at the Asia and Pacific department of the International Monetary Fund, told Al Jazeera.

“Easy access to information on market prices and weather conditions can make a huge difference to farmers in remote communities. Similarly, mobile phones can be a portal for basic health and education services,” he said, adding that the investment and related financial flows, including license fees, will add to growth and improve budget revenues.

U Than Lwin, economist, deputy chairman of locally owned KBZ Bank and former deputy governor at the Central Bank of Myanmar, told Al Jazeera that developing a mobile infrastructure would not only give millions of people access to mobile services, but would pave the way for mobile finance – an alternative banking model that has been wildly successful in countries such as Kenya, China and Cambodia.

“This will improve the telecom sector and will have real benefits in mobile banking,” he said.

“We [local banks] will have more access to rural areas where no [banking] infrastructure exists.”

Not just for radicals

During military rule, telecommunications were tightly controlled by the government, which held a monopoly over the sector, while mass communication was looked at as a tool for radicals to spread rhetoric that could lead to change. SIM cards for mobile devices, meanwhile, were unaffordable to most, costing thousands of dollars at the time they came onto the market some 15 years ago.

At the same time, only a few phone lines existed in urban communities and calls could only be placed with outdoor phone vendors – generally run from a makeshift table consisting of one or two beat-up, old phones with poor line quality – a method still used to this day.

In rural areas, the obstacles to telecommunication were even more extreme, as callers could wait hours to get a line connection, running up costs that surpass a day’s wage.

While the price for SIM cards have since dropped substantially, they can still only be acquired by nationals through a lottery system – while others are forced to buy them on the black market for anywhere between $110 and $450.

Nevertheless, mobile phone vendors claim there is little to be made from selling second-hand SIM cards and said they look forward to the day when their costs are low enough so that buyers can begin investing in modern handsets.

Challenges remain

“A new operator will hopefully provide better services than the MPT currently does and we will have access to more kinds of handsets in the future,” said Myint Zu Win, an employee at a mobile phone vendor in Yangon, adding that newer smart phone models can cost has much as $700 – well beyond the budget of the average customers.

Ooredoo has promised to invest $15 billion across the duration of its 15-year licence, while Telenor has said in the past that a SIM card with their service would cost no more than $1.50.

Despite Thursday’s milestone, analysts said that several challenges stand in the way of Telenor and Ooredoo reaching their launch targets, including the acquisition of land to build the necessary towers, as well as the formation of an independent regulator.

“There are a lot of challenges remaining as they have to set up the towers, which is problematic as land ownership is not clear in some areas, while other areas are still embroiled in conflict,” said KBZ’s Lwin.

“How rapidly operators will build its infrastructure will depend on the government and how helpful they are,” he said. “Currently, there are some 40 legal acts to be discussed by parliament, so everybody’s plates are full.”

Follow Philip Heijmans on Twitter: @HeijmansPhilip