In Burma, a race to provide mobile phone service

Dario Pignatelli/Bloomberg - A customer tries a smartphone at a retail outlet operated by KMD Co. in downtown Rangoon. International companies are vying for the right to operate in Southeast Asia’s last untapped mobile market.

RANGOON, Burma — Smartphone apps are still something of a novelty in Burma, where fewer than one in 10 people own a cellphone — a legacy of the former military junta’s tight control of information and technology.

But not for long, said Thet Lynn Han, managing director of Bagan Innovation Technology, which designs applications for Burmese banks, newspapers and other companies.

A gaucho rides a wild horse during the annual celebration of Criolla Week in Montevideo, April 15, 2014. Throughout Easter Week, 'gauchos', the Latin American equivalent of the North American cowboy, from all over Uruguay and neighboring Argentina and Brazil will visit Montevideo to participate in the Criolla Week to win the best rider award. The competition is held from April 13 to April 20 this year. REUTERS/Andres Stapff (URUGUAY - Tags: ANIMALS SOCIETY)

(Andres Stapff / Reuters)

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When his car broke down in the countryside on a drive to Mandalay last year, the 29-year-old entrepreneur wandered into a nearby village for help and was surprised at how many people he saw on cellphones. “I came to realize that things are changing,” he said in a restaurant near his Rangoon office, as the electricity fluttered on and off and the early rains of Burma’s monsoon season came down.

Until just a few years ago, getting wireless access cost thousands of dollars in this largely offline corner of hyper-connected Asia, and the government was the only provider in town. Controlling the communications apparatus was a way for the junta to monitor its citizens and a lucrative source of revenue for favored business interests.

But along with a raft of other economic and political reforms since 2011, the government of Burma — which the former military regime renamed Myanmar — is making mobile phone access cheaper and opening its telecommunications market. As people here experiment with newfound freedom of expression and increasing access to information, nearly a dozen international wireless companies are furiously vying for the two mobile licenses that the government is auctioning off  June 27.

The prize will be the right to operate in Southeast Asia’s last untapped mobile market.

“It’s the last country apart from North Korea where mobile penetration is in the single digits,” says Denis O’Brien, the Irish billionaire who owns Jamaica-based Digicel. O’Brien is pursuing a bid with financial backing from investor George Soros. “There is a huge pent-up demand in Myanmar for mobile and Internet access,” O’Brien said by phone.

The auction is shaping up to be an important test of whether Burma’s newfound economic reforms will boost the fortunes of ordinary people here, and of just how much money foreign firms are ready to sink into the country as it navigates a hugely difficult and uncertain political and economic transformation. Also up for grabs this summer are the right to build a new airport near Rangoon and scores of oil and gas production sites.

“The next three months are going to be crucial,” says Edwin Vanderbruggen, a Rangoon lawyer who works with foreign firms.

A ticket to the Internet

Reliable statistics are hard to come by in Burma — whether it’s Internet usage or the size of the population — but most experts agree that, at most, 9 percent of Burma’s nearly 60 million people have access to a mobile phone, concentrated in Rangoon and Mandalay.

The government says it wants to increase mobile-phone usage to 75 percent by 2016, and consulting firm McKinsey & Co. projects Burma will require as much as $50 billion of investment in telecom infrastructure, including the wireless towers, fiber cables and wiring that it largely lacks. Far fewer people have a land line, meaning that cellphones will be the first phone that most people own.

In a fast-opening economy that remains Asia’s poorest, a mobile phone will be most people’s ticket to the Internet. It’s a boon to development but also has a toxic side, seen in the rising use of social media to spread hate speech amid recent anti-Muslim violence in parts of this largely Buddhist country.

Cellphones are not hard to find; shops throughout Rangoon peddle scores of models, authentic and bootleg, many made in nearby China. But just a few years ago, under the government monopoly, getting mobile access cost upward of $2,500. Until early this year, the price was $250, well out of reach for most people.

Telecommunications race

President Thein Sein’s reformist government in April started releasing SIM cards costing 1,500 Burmese kyats, or about $1.60. Still, people have to enter a lottery for the limited supply of cards, many of which are being sold on the black market for as much as $90.

Meanwhile, the foreign companies are swamping local media with promised plans for charity projects they would undertake if they got a license, as well as touting their expertise in emerging markets. South African mobile giant MTN says it has raised living standards across Africa. Digicel is highlighting its role in Haiti in the aftermath of the 2010 earthquake and has been sponsoring a national soccer team.

Still, Britain-based Vodafone and China Mobile, two wireless behemoths that were pursuing a joint bid for a telecom license, withdrew from the running in late May, saying the conditions laid out by the government for winning the bid do not meet their “strict internal investment criteria.”

And Human Rights Watch, a New York-based nonprofit organization, warned foreign wireless companies last month that they “risk complicity in illegal surveillance, censorship, and other repression.” Among other concerns, the group said the government might violate citizens’ rights in order to secure land for wireless towers or laying cable.

Indeed, while the government no longer enforces most of the strict laws governing the media and telecommunications sectors, some of them remain on the books. The government’s telecom selection committee, however, pledged last month that it is running a “fully transparent” auction process that “follows international standards and best practices.”

Once millions more people have access to mobile phones, efforts to roll back Burma’s reforms could become more difficult, said Bagan’s Thet Lynn Han, whose company employs 50 local workers.

“By that point,” he said, “you already know the value of the Internet, the value of the press.”

 
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