‘More Competition Will Get the Work Done Faster’
By Kyaw Hsu Mon 14 May 2014
NAYPYIDAW — Foreign-owned companies are about to enter to Burma’s telecommunications sector for the first time, with Qatar’s Ooredoo and Norway’s Telenor preparing to launch mobile phone services.
And with its monopoly about to disappear, government-owned Myanmar Post and Telecommunications (MPT), under the Ministry of Communications and Information Technology, is reportedly planning to partner with Japanese company KDDI Corporation. But faces a challenge to stay competitive, as cheap and plentiful SIM cards should be on sale from the international firms in coming months, and complaints over its poor mobile phone and internet service are frequent.
The Irrawaddy’s Kyaw Hsu Mon spoke with Thaung Tin, deputy minister of communications and information technology—who formerly chaired KMD Group, a local computer training company—at the Asean Summit in Naypyidaw this weekend.
Question: Many people are complaining that internet connection in Rangoon and other cities is terribly bad recently, even here at the Asean Summit in the capital. What is happening?
Answer: It is because of an imbalance of demand and supply. Here [in Burma], demand is increasing, but supply can’t follow.
At the Naypyidaw Summit, there are two kinds of internet services: public WiFi is unlimited for users, but during the summit, many journalists were uploading big files. That’s why the WiFi speed has been slow. Then we’ve also provided cable internet lines in the media center.
For other cities, we’ve received many complaints about mobile phone lines and internet lines being slow recently. It’s because of imbalanced demand and supply, as I said. The private sector is better at providing fast connections rather than the government service provider. If there is competition, services will better. That’s why we just allowed in two international operators, Telenor and Ooredoo.
Q: When will Telenor and Ooredoo begin operations?
A: As they announced, Ooredoo will start operating in July. Telenor will start in September this year. In the terms and conditions of the licenses we issued them [in January], they have to start to operate six months after we issued the licenses.
Q: Can you say that mobile phone and internet connections will be better at the next Asean Summit in November?
A: Not only for the November summit, the internet connection will be getting better gradually soon. We will have to wait for the equilibrium when supply and demand meet.
Q: How many internet users are there in Burma now?
A: In the past, only 10 percent were internet users here [in Burma]. Now, user rates are gradually increasing because we’ve issued [SIM cards for] mobile phones. Internet user rates are more than half [of phone users]. There are about 8 million mobile phone users in Burma now, so that means internet user rates are more than 4 million, as mobile phone users can use mobile data for internet easily. In the past, internet was only available through cable lines.
Q: When will the internet speeds in Naypyidaw and Rangoon be similar? Many people say the connection is good in the capital, while in Rangoon it is getting worse.
A: User rates are always increasing in Rangoon, meaning demand is increasing but supply can’t follow it. Whenever we’ve been issuing mobile phones [SIM cards], internet users are quickly increased as well. So when Telenor and Ooredoo start working, they can take up the demand in Burma.
But it will also be difficulties for them, because they might not be able to provide coverage to all 60 million people in Burma at the same time. Mostly, going by international experience, it might take at least five years for coverage to reach 50 percent of the population from the starts the telecom companies’ operations. We’ve been targeting to meet that goal within three years because we’ve allowed international companies to work competitively at the same time. More Competition will get the work done faster.
Q: Will MPT struggle to compete with the international telecom companies? What strategy will be used for the future in this highly competitive market?
A: In liberalized telecom markets elsewhere, government departments work with the private sector. It will be the same here. The mobile phone sector and internet services sector will be different. If anyone from the local or international private sector wants to work here, they can apply to become a service provider to the government ministry. Telenor and Ooredoo are allowed for the mobile services sector, and the internet sector is still available for local and foreign investors.
Q: An official at the Myanmar Investment Commission predicted that the telecoms sector will attract 20 percent of the foreign direct investment (FDI) into Burma this fiscal year. Do you agree?
A: I agree. The FDIs in the telecoms sector are gradually increasing annually. As Telenor and Ooredoo start to invest in Burma, especially in the initial phase, they have to invest a large amount. And they also must pay license fees, so all together it will be more than US$1 billion of investment this year. They will also have to subcontract to other telecoms companies to set up towers around the nation.
MPT is also going to work with international partner companies, but we are still considering who will be working with them. We will negotiate with shortlisted international partners for MPT. But, surely, they can’t compete with Telenor and Ooredoo in this environment. MPT is working with a government budget, so we can’t compete.