Myanmar unlocks one of Asia's last untapped cellular markets

Myanmar, also known as Burma, announced the two winners of a bidding contents for its nationwide cellphone contracts. The move will give Norwegian Telenor and Qatari Ooredoo access to one of Asia’s last untapped cellular markets.

The Myanmar government’s Thursday announcement is part of its effort to raise the country’s cellphone penetration rate to 50 percent by 2016. Currently, an estimated 9 percent of Myanmar's nearly 60 million people have access to mobile devices.

The 15-year wireless license begins in September.

According to a report by consulting firm McKinsey & Company, making technology readily available in Myanmar is the first step toward building an environment that can attract strong international investment. 

The rapid introduction of consumer cellphones that the government has planned will signal a great change for Myanmar. Filmmaker Robert Lieberman remembers the difficulties of getting a cellphone in Burma five years ago, when he began working on his documentary, “They Call It Myanmar.”

“I would call somebody and hang up, and then they would call me back,” he says. As a foreigner in 2008, Mr. Lieberman could spend $20 to buy a SIM card (the chip that allows most cellphones to connect to a company's cellular network), but then the number stopped working after the $20 ran out. Texting wasn’t even an option, he says. Back then, it was about $1,500 to get a cellphone if you were Burmese.

By 2012, the price had dropped to $250, and as of April, government issued SIM cards are sold for $1.60. But the cards can only be obtained through a lottery system, and the average daily wage is about $2, he says, meaning that SIM cards are still a rare luxury item. 

“The country is so poor, people can barely feed their families,” Lieberman says. The idea that more than 50 percent of the population would have a cellphone by 2016, as the government has promised, strikes Lieberman as “unrealistic unless the economy changes.”

The introduction of foreign cellphone companies to Myanmar “reflects the commercial opening of Burma to outside investors,” says Bob Dietz, the Asia Coordinator for the Committee to Protect Journalists.

“More technology could mean more openness and freedom in Burma, but it doesn’t have to,” Mr. Dietz says.

Reforms have been underway in Myanmar since November 2010, when a nominally civilian government replaced the military junta that had been in power since 1962. The government of Thein Sein has tried to smooth over relations with the West. He has granted amnesty to over 200 political prisoners, moved away from economic ties with China, and allowed parliamentary elections – widely perceived as free and fair – to take place in April 2012.

And thus far, Mr. Thein Sein’s actions have been well received. The European Union has suspended most of its sanctions against Myanmar. For the first time in 30 years, the Asian Development Bank resumed giving loans to Myanmar. And in May, Thein Sein became the first Burmese president to visit the White House since 1966.

But the country's government has received criticism from human rights groups for making moves toward democracy that lack the legal clout to make them permanent or even meaningful. Signing cellphone contracts with foreign companies is one such instance.

“Burma lacks an electronic privacy law to prevent arbitrary and over-broad surveillance practices, and the courts have no history of independence from the government,” according to a Human Rights Watch report released on Thursday in response to the announcement of the telecom finalists.

The licenses were awarded despite efforts by lawmakers in the lower parliament to delay licensing until the passage of a new telecommunications law goes into effect. But their efforts were blocked, according to a report by Radio Free Asia.

“Cellphone penetration and democratization are not necessarily correlated,” says Salil Tripathi, director of policy for the Institute for Human Rights and Business. “But cellphone penetration can help democratization, because it will enable people to realize many rights – not only civil and political, but also economic rights." 

The two telecom companies were chosen from 12 finalists based on their plans for bringing increasing technology into the country, though many analyst commented on the possible significance of choosing Middle Eastern and Norwegian companies. Latent religious tensions between Muslims and Buddhists have erupted in Myanmar, and "here are complaints from Buddhist leaders that one of the companies awarded a contract was Middle Eastern supplier," says Dietz. 

And Norwegian? Norway leads the Myanmar Peace Support Initiative, supporting cease-fires, though Telenor is unaffiliated. 

[Editor's note: The original headline of this article mischaracterized the current state of Asia's cellular rollout. Myanmar is one of the last untapped cellular markets.]