Executive summary
In less than 6 years Bhutan has moved from having no mobile phones to claiming in excess of 50% mobile penetration. In 2008 the annual growth in mobile subscribers was close to 100%. It was not always like this. Bhutan had been isolated from the rest of the world for a long time – both generally, and particularly in terms of its telecommunications. Its mountainous landscape made it especially difficult to build the necessary telecoms infrastructure. Back in 1974, Bhutan and India formally agreed to the introduction of trunk calls between the two countries. However, in a remarkable contrast with the rest of the world, it was not until 1999 that the country saw television stations, satellite dishes and Internet services for the first time.
Between 1996 and 2001, Bhutan invested more than US$21 million in telecommunications infrastructure. The country has quickly developed a modern, fully digital fixed-line network, which covered all 20 provinces and the key commercial and population centres.
India donated a 1000-line C-DOT Telephone Exchange to Bhutan in September 2000 as a goodwill gesture. Bhutan had been discussing the possibility of using INSAT (Indian satellite system) for national telecommunications.
Over the years Bhutan’s telecom network performance has been notoriously bad. It constantly experienced major problems with unsuccessful local calls (typical failure rate of more than 40%) in its national network. According to the International Telecommunication Union, only half of local calls made succeeded and there were 194 faults per 100 lines in 1997, falling to 54 per 100 lines by 2004. Bhutan Telecom had also been losing revenue to its malfunctioning billing equipment, according to a government audit report in 2000.
Due to its small population, the offering of mobile services had been considered uneconomical, although Bhutan Telecom, the only telecom operator in the country at the time, had considered the Japanese Personal Handy Service (PHS) system as a possible mobile solution. In mid-2001 Bhutan Telecom launched a GSM-based mobile satellite service in conjunction with Thuraya Satellite Co Ltd. This service was expected to fill the gap until a conventional national mobile network was established. Then, in November 2003, the country’s first mobile telephone service was launched. While initially established with relatively limited coverage (five towns including the capital Thimphu), the government was keen to see this service, operated by Bhutan Telecom and branded B-Mobile, providing national coverage by 2006.
In November 2006, in what was a landmark step for the local telecom market, the regulator awarded a second national mobile licence to local industrial conglomerate, the Tashi Group, requiring a commercial service to be launched within one year. Tashi eventually began operating its mobile service in April 2008.
Key highlights:
- Bhutan’s telecom sector continues to develop, driven by its booming mobile market.
- The number of mobile subscribers grew by close to 100% in 2008; although having eased slightly, growth was still continuing strongly into 2009.
- The launch of a second mobile operator in 2008 made the market a competitive one and the competition has no doubt helped boost the overall growth rate.
- With the success of the mobile network, fixed-line subscriber numbers have been easing downwards over the last few years; it is not certain when this sector will stabilise.
- Internet penetration continues to be disconcertingly low with subscriber penetration still below 1% coming into 2009.
- The country has been moving steadily towards a democratic system of government with elections being held in March 2008; the hope was that this would start to bring significant structural reform to all sectors of the economy.
Bhutan – key telecom parameters – 2008 - 2009
Category
| 2008
| 2009 (e)
|
|---|
Fixed-line services:
|
|---|
Total number of subscribers1
| 27,500
| 26,000
|
Annual growth
| -8%
| -5%
|
Fixed-line penetration (population)
| 3%
| 3%
|
Fixed-line penetration (household)
| 12%
| 12%
|
Internet:
|
|---|
Total number of subscribers1
| 6,000
| 6,200
|
Annual growth
| -2%
| 3%
|
Internet subscriber penetration (population)
| <1%
| <1%
|
Mobile services:
|
|---|
Total number of subscribers
| 305,900
| 460,000
|
Annual growth
| 98%
| 50%
|
Mobile penetration (population)
| 46%
| 68%
|
(Source: BuddeComm)
Note: 1Estimates for both 2008 and 2009.
This report provides an overview of the trends and developments in the telecommunications markets in Bhutan. Subjects covered include:
- Key Statistics;
- Market and Industry Overviews;
- Major Operators (Mobile and Fixed)
- Regulatory Environment;
- Infrastructure;
- Mobile Market;
- Internet Market.