Mobile growth strong in Bhutan

Details: James Barton; Category: Trends & Forecasts; 01 February 2011; 9328 views

Bhutan could be deemed one of the world’s more insular countries, and the development of its telecommunications sector has been far from typical...

Bhutan could be deemed one of the world’s more insular countries, and the development of its telecommunications sector has been far from typical. A new report from Research and Markets provides an overview of the market in the Kingdom of Gross National Happiness.

In less than 6 years Bhutan has gone 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 late 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 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 late 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 late 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 early 2008.