Big leap in Communication

Myanmar’s telecommunications sector is poised for sharp growth with the entry into the market of two foreign operators and the government’s Myanma Post and Telecommunications planning a US$2 billion upgrade with a Japanese partner.

Qatari-owned Ooredoo launched its commercial network on August 15, focusing on delivering 3G technology to provide faster internet and higher quality call connections to mobile users. 3G technology has a shorter range than 2G but can serve a high density of users, such as in Yangon and Mandalay.

Norway’s Telenor is due to launch this month and will concentrate on delivering both 2G and 3G services to reach more users. 2G phones are cheaper and more readily available and the technology has a greater reach, albeit with slower internet speeds and poorer call quality. The Norwegian company has also signed an agreement for joint promotional activities with the Chinese giant, Huawei, whose handsets are a popular choice in Myanmar.

Both Ooredoo and Telenor have committed to selling SIM cards at a competitive K1,500 and have promised to keep call rates low.

Meanwhile, Myanma Post and Telecommunications, the state-backed company which until recently had a monopoly in the sector, will partner with Japanese telecoms firm KDDI to upgrade its services. KDDI and the big Japanese diversified conglomerate, Sumitomo Corporation, formed an entity called KDDI Summit Global Myanmar on July 17 to partner with MPT. KDDI Summit Global Myanmar says it will invest US$2 billion (about K2 trillion) during the next three years to implement the agreement with MPT, starting with an urgent upgrade of mobile infrastructure.

In addition, MPT has signed a wholesale agreement with the French carrier, Orange, to roll out a network of international roaming services. Travellers using Orange mobile services will be able to use the roaming service in Myanmar and MPT customers will be able to use their mobile phones in countries where Orange operates.

Ooredoo and Telenor were awarded their licences in June last year in an international tender that attracted huge interest. Myanmar’s Ministry of Communications and Information Technology said the licences would increase overall capacity and were expected to deliver affordable mobile phone services to urban and rural areas.

A study conducted by the Asian Development Bank in 2012 estimated that mobile internet penetration in Myanmar was 1 percent. But the sector has been developing so fast that it can be difficult for analysts to provide a definite figure.

“Internet penetration is massively driven by smartphones in Myanmar,” Myanmar Survey Research’s head of market research, Ms Marita Schimpl, told Mizzima Business Weekly. “Those who have smartphones go online almost daily and we can expect that number to increase dramatically after Ooredoo and Telenor [are] in full swing.”

Ms Schimpl said the most recent study she had conducted a few months ago put internet penetration in Mandalay and Yangon at about 20 percent.

“If we talk about internet usage in the total country it will be much less,” she said. “Once you leave Yangon and Mandalay, people are less likely to own a smartphone and the connection there is so slow that many don’t bother with internet.”

The new telecommunications services are expected to provide connectivity to more than a quarter of Myanmar’s population of about 60 million. The government has indicated a goal of 75 percent penetration by 2016 and up to 97 percent of the population in the next five years.

The roll-out for a faster and more accessible communications network also involves plans for the Southeast Asia-Middle East-Western Europe 5 (SEA-ME-WE 5) fibre optic cable. The plan is to connect Myanmar to the worldwide internet, also known as “the cloud”, via a second undersea cable.

The main reason for Myanmar’s slow internet connections is a lack of bandwidth to support the number of people going online.

An independent telecommunications expert, who requested anonymity, said increasing service capacity would require more mobile towers and the installation of more fibre optic cables.

Telecoms operators can apply for extra bandwidth if it hasn’t already been used or sold to another provider. The government can also put out a tender for fibre cable laying and lease the capacity back to the operators, the source said.

But that depends on how much bandwidth is available to start with and Myanmar has just three cables connecting it to the rest of the world that take up considerably lower bandwidth than other countries in the region.

Myanmar needs more cables or “tubes” that connect it to the rest of the worldwide internet to boost capacity and achieve faster internet speeds.

As well as a first-generation undersea SEA-ME-WE-3 cable, Myanmar also has two cross-border cable connections with Thailand and China. The capacity of the link to China is small and in the past it has been subject to outages, although cables laid underground are susceptible to damage. On July 21, a bulldozer damaged a fibre optic cable in Bago Region, disrupting internet services in Yangon for several days.

Undersea cables are more durable but are expensive and difficult to repair when service disruptions occur. The Ministry of Communications and Technology said the undersea cable link with Myanmar broke in July 2013, disrupting internet connections throughout the country. It took several weeks to fix and reduced internet capacity to just 20 percent of what was already limited international bandwidth. The breakage highlighted the need for more internet capacity in Myanmar.

A second undersea cable, or tube, connected to Myanmar would help to reduce the frequency and severity of these outages.

In March, Japan’s NEC was awarded a contract for the SEA-ME-WE 5 fibre optic cable link from Singapore to Sri Lanka, with France’s Alcatel-Lucent to build a link from Sri Lanka to France. The project is due to be finished in 2016.

The cable will be linked to nearly 20 countries, including Myanmar and Bangladesh – which also has one other undersea cable connection. However, unlike Myanmar, Bangladesh has six cross-border cables that prevent the frequent outages experienced in Myanmar.

The SEA-ME-WE 5 cable will stretch 12,427 miles (20,000 kilometres) and be capable of carrying100 gigabytes of information a second. In comparison, the SEA-ME-WE 3 cable has a maximum capacity of 10 gigabytes a second. A tube to “the cloud” that is 10 times bigger should help Myanmar match its neighbours in international bandwidth capacity.

Although the entry of Telenor and Myanmar will lead to greater competition in the market, some analysts believe that as an established domestic operator MPT may have the upper hand over the two foreign firms.

One of the main hurdles that has slowed roll out momentum in recent months has been the need to build more towers and provide other infrastructure such as microwave dishes.

“As a locally owned entity, MPT can roll out a network faster – at least in theory – because it can hold land without restrictions”, Edwin Vanderbruggen of law firm VDB Loi told Mizzima Business Weekly.

“One of the main setbacks is that Myanmar has several types of land laws that restrict the way in which land can be used,” Mr Vanderbruggen said.

He cited the example of farmland restricted for agricultural use for which leasing approval for a third party to erect a mobile phone tower required permission at the local and regional or state administration levels as well as from a number of ministries.

“There have been many delays in the past six months and some regional and township levels of government are not equipped to deal with these queries or requests,” Mr Vanderbruggen said.

“None of this is reason for extreme concern but can cause delays and unforeseen work for construction companies. It’s not easy to get coordinated and everyone is doing their best but it will take some time.”

The expansion of the telecommunications sector will provide consumers with greater choice and cheaper calls but there have been some negative developments. Buddhist nationalists have called for a boycott of Ooredoo because it is owned by a company based in a Muslim country and there has also been a disturbing rise in online hate speech.

Hate speech on unmoderated websites and rumours spread via mobile phones have been blamed for inciting communal unrest, such as the rioting in Mandalay earlier this year triggered by a blog reposted on Facebook.

Asked how the government would respond, the Ministry of Communications and Information Technology’s director of posts and telecommunications, U Than HtunAung, told Mizzima Business Weekly at an Ooredoo news conference in Yangon on August 2 that dealing with social or political unrest was not the ministry’s responsibility.

“Our ministry wants to support foreign direct investment and ensure that businesses flourish here in Myanmar,” U Than Htun Aung said.

He said his ministry did not need to manage the problems that had occurred as the number of online users had increased. Instead, he said the ministry needed to actively promote and encourage foreign investment and assist with more infrastructure projects.

“We need to promote a diverse market and encourage investors to come,” U Than Htun Aung said. “Only then can we see a truly competitive and transparent market that allows for growth.”

“We don’t need to manage anything except for how these companies will provide services to the public and how they will keep the services affordable so that the public can benefit.”

However, some observers are concerned that there needs to be greater public awareness about the implications of using what is relatively new technology.

“Myanmar is a technological ‘greenfield’,” said Mr Griffin Hotchkiss, a former teacher who now works for a small internet and media startup in Yangon. “It can slip straight into the newest technology like 4G, without going through the step-by-step upgrade or replace evolution that other countries have gone through in the last 10 or 15 years.”

“But Myanmar people need to be given more education about the internet,” Mr Hotchkiss said. “Without a culture of computer or internet use a lot of people are going online without a sense of who to trust and who’s listening to what they say,” he said.

“This is happening all over the world, where users are unknowingly giving away their privacy to large corporations, advertisers, and in some cases, the government”.

“Myanmar is getting rapidly connected to this world while at the same time trying to catch up with social and political development. It’s important for the average Myanmar person to understand what privacies they are signing away when they get a Facebook account.”

Source: MIZZIMA Myanmar

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