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Pricing spectrum to encourage competition

Context

Until 2011, the telecommunications sector in Myanmar was monopoly, led solely by state-owned Myanmar Posts and Telecommunications (MPT). In that year, at the start of President Thein Sein’s tenure, the government embarked on an agenda of economic liberalization. This came after nearly two decades of military leadership, a period in which Myanmar was largely unconnected, and the consumer cost of telecommunications equipment and services cost hundreds of dollars. The Thein government sought outside help to undertake market reforms and asked the International Monetary Fund to help transform the Burmese economy, eventually paving the way for re-engagement with the Asian Development Bank in 2012 for the same purpose.

 

A major first step towards the re-opening of the economy was the development of the Foreign Investment Law, which enabled businesses in the country to be foreign-owned and provided measures such as tax breaks and lengthy land lease agreements to build confidence in the renewed ease of doing business in Myanmar. This law came to serve as the linchpin for an unprecedented amount of reform that touched most sectors, including telecommunications.

 

In 2013, following the Foreign Investment Law was the development of the Telecommunications Law. In this year, Myanmar began to strengthen and transform its telecommunications policy framework to meet regional and international standards. The government recognized that part of the work to develop its economy was reliant on generating competition in the telecommunications market. As a first step, mobile licenses were issued in June 2013 to invite two additional, foreign service providers to the country alongside MPT. Ooredoo and Telenor purchased these licenses, expanding the number of mobile network operators to three.

Policy Action

Before the liberalization of the telecommunications market in Myanmar, the government paid little attention to the allocation or use of spectrum. In fact, because of the monopoly held by Myanmar Posts and Telecommunications, there had previously been no need to discuss how, if at all, spectrum was being used. There was also no recourse to deal with any instances of its misuse due to both the centralized control of the resource and the lack of policy mechanisms through which to monitor spectrum. Spectrum was allocated on a first come, first served basis, but due to the monopoly, only MPT was prioritized in this allocation along with any overarching national interests identified by the government.

 

After liberalization, the telecommunications market reforms the government began to undertake included consideration of how to enhance existing spectrum practices. The government received significant support in this area from the ITU when it published its Wireless Broadband Masterplan for the Union of Myanmar in October 2012. This document, developed in partnership with the Korean Communications Commission, later became the basis for the government's policies and regulations around spectrum.

 

In November 2013, the government issued a public consultation on the rules it proposed for the telecommunications sector, including for spectrum. The public and companies based in Myanmar were given one month to share their thoughts on the proposed rules and could submit their comments in either Burmese or English. Three weeks after the last public views on the draft rules were accepted, the MCIT published the Spectrum Rules.

 

Within the rules, the government aligned the allocation of spectrum with regionally standards as well as international ones outlined by the ITU. The government explicitly linked sufficient spectrum allocation to promoting competition in telecommunications and agreed to initiate regular reviews of spectrum to assess needs and what spectrum should be made available in the future. The rules also expressed a desire to use the number and type of new telecommunications services made available in Myanmar as a factor to improve spectrum management when spectrum allocation reviews occur.

 

Once the Telecommunications Law was officially passed at the beginning of 2014, the two new operators received the spectrum allocations linked to the mobile licenses they purchased in 2013 by way of a beauty contest where spectrum was awarded at a lower than anticipated fee to encourage network investment. MPT was also required to free up existing spectrum it possessed in the 900 MHz frequency to make way for competition from the new market entrants. Ooredoo and Telenor each received two 5MHz bands located in the 900 MHz frequency and two 10MHz bands located in the 2100 MHz frequency. The assignments came with 15-year terms and ten-year renewals at a cost of USD $500 million.

Results & Insight

The introduction of the Telecommunications Law and subsequently the Spectrum Rules paved the way for a complete transformation of the telecommunications sector in Myanmar.

 

In July 2013, it was estimated that approximately 7% of the population of 60 million people had a telephone connection while just 5% had internet access. Today, the government proudly notes that teledensity has rapidly grown to over 100% and 80% of the population now has access to the internet.

 

Instead of paying hundreds of dollars, the Burmese people can now obtain a SIM card for around USD $1. 3G networks cover over 90% of the population, and a 4G network was launched in 2018. At least 20 companies have acquired different licenses to provide telecommunications services.

 

Direct allocation of spectrum, while not a transparent method of spectrum distribution to the private sector, has nonetheless increased confidence in spectrum planning by private operators due to its speed and the use of spectrum licensing conditions with equitable concession lengths.  Promoting competition in a newly opened telecommunications market through attractive terms and pricing of spectrum has helped drive the expansion of coverage – and by extension, access – in a remarkably short period.

Full Story

Until 2011, the telecommunications sector in Myanmar was monopoly, led solely by state-owned Myanmar Posts and Telecommunications (MPT). In that year, at the start of President Thein Sein’s tenure, the government embarked on an agenda of economic liberalization. This came after nearly two decades of military leadership, a period in which Myanmar was largely unconnected, and the consumer cost of telecommunications equipment and services cost hundreds of dollars. The Thein government sought outside help to undertake market reforms and asked the International Monetary Fund to help transform the Burmese economy, eventually paving the way for re-engagement with the Asian Development Bank in 2012 for the same purpose.

 

A major first step towards the re-opening of the economy was the development of the Foreign Investment Law, which enabled businesses in the country to be foreign-owned and provided measures such as tax breaks and lengthy land lease agreements to build confidence in the renewed ease of doing business in Myanmar. This law came to serve as the linchpin for an unprecedented amount of reform that touched most sectors, including telecommunications.

 

In 2013, following the Foreign Investment Law was the development of the Telecommunications Law. In this year, Myanmar began to strengthen and transform its telecommunications policy framework to meet regional and international standards. The government recognized that part of the work to develop its economy was reliant on generating competition in the telecommunications market. As a first step, mobile licenses were issued in June 2013 to invite two additional, foreign service providers to the country alongside MPT. Ooredoo and Telenor purchased these licenses, expanding the number of mobile network operators to three.

 

Before the liberalization of the telecommunications market in Myanmar, the government paid little attention to the allocation or use of spectrum. In fact, because of the monopoly held by Myanmar Posts and Telecommunications, there had previously been no need to discuss how, if at all, spectrum was being used. There was also no recourse to deal with any instances of its misuse due to both the centralized control of the resource and the lack of policy mechanisms through which to monitor spectrum. Spectrum was allocated on a first come, first served basis, but due to the monopoly, only MPT was prioritized in this allocation along with any overarching national interests identified by the government.

 

After liberalization, the telecommunications market reforms the government began to undertake included consideration of how to enhance existing spectrum practices. The government received significant support in this area from the ITU when it published its Wireless Broadband Masterplan for the Union of Myanmar in October 2012. This document, developed in partnership with the Korean Communications Commission, later became the basis for the government's policies and regulations around spectrum.

 

In November 2013, the government issued a public consultation on the rules it proposed for the telecommunications sector, including for spectrum. The public and companies based in Myanmar were given one month to share their thoughts on the proposed rules and could submit their comments in either Burmese or English. Three weeks after the last public views on the draft rules were accepted, the MCIT published the Spectrum Rules.

 

Within the rules, the government aligned the allocation of spectrum with regionally standards as well as international ones outlined by the ITU. The government explicitly linked sufficient spectrum allocation to promoting competition in telecommunications and agreed to initiate regular reviews of spectrum to assess needs and what spectrum should be made available in the future. The rules also expressed a desire to use the number and type of new telecommunications services made available in Myanmar as a factor to improve spectrum management when spectrum allocation reviews occur.

 

Once the Telecommunications Law was officially passed at the beginning of 2014, the two new operators received the spectrum allocations linked to the mobile licenses they purchased in 2013 by way of a beauty contest where spectrum was awarded at a lower than anticipated fee to encourage network investment. MPT was also required to free up existing spectrum it possessed in the 900 MHz frequency to make way for competition from the new market entrants. Ooredoo and Telenor each received two 5MHz bands located in the 900 MHz frequency and two 10MHz bands located in the 2100 MHz frequency. The assignments came with 15-year terms and ten-year renewals at a cost of USD $500 million.

 

The introduction of the Telecommunications Law and subsequently the Spectrum Rules paved the way for a complete transformation of the telecommunications sector in Myanmar.

 

In July 2013, it was estimated that approximately 7% of the population of 60 million people had a telephone connection while just 5% had internet access. Today, the government proudly notes that teledensity has rapidly grown to over 100% and 80% of the population now has access to the internet.

 

Instead of paying hundreds of dollars, the Burmese people can now obtain a SIM card for around USD $1. 3G networks cover over 90% of the population, and a 4G network was launched in 2018. At least 20 companies have acquired different licenses to provide telecommunications services.

 

Direct allocation of spectrum, while not a transparent method of spectrum distribution to the private sector, has nonetheless increased confidence in spectrum planning by private operators due to its speed and the use of spectrum licensing conditions with equitable concession lengths.  Promoting competition in a newly opened telecommunications market through attractive terms and pricing of spectrum has helped drive the expansion of coverage – and by extension, access – in a remarkably short period.


Suggested Citation: Alliance for Affordable Internet (2019). "Myanmar: Pricing spectrum to encourage competition." Good Practices Database. Washington DC: Web Foundation.

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