Expanding into Myanmar, telcos must confront ethical questions

As Myanmar solicits bids from telcos to build out its telecommunications infrastructure, the country is making it clear that they’re open for business.

But as the Burmese government seeks to hand out two 3G licenses, allowing millions of people to be connected with one another and the world, companies must perform their due diligence. With billions of dollars on the line for both the country and the companies, it’s no wonder that interest is high. Telcos that receive the new licenses, though, may be surprised by the number of obstacles they face on entering the country. Democratic reforms may be coming into shape, but progress remains incredibly fragile. Telcos, then, need to consider whether investing in Myanmar is feasible under internal company ethical standards and international law obligations.

By the end of a two-week bidding process that concluded on Feb. 8, Myanmar received 91 “expressions of interest” from telecommunications providers from all around the world, including Axiata, a Malaysian Telco, Digicel from Ireland, Telemedia and SingTel from Singapore, TeleNor from Norway, and Bharti Airtel from India.

This level of interest demonstrates the value companies see in this untapped market. Indeed, the Burmese government is looking to exponentially increase its mobile-phone penetration rate to 80% by 2015 through these licenses. At the moment, due to limited build out, Myanmar lags in mobile to its neighbors – Burma has only a 9% mobile-phone penetration rate, while Thailand is over 100%, Cambodia is between 54-70%, and Laos is at 64%.

Beyond infrastructure deficits, one of other barriers to obtaining a mobile phone in Myanmar is its exorbitant cost. SIM cards in Myanmar cost between $150 and $350 USD, the equivalent of nearly a year’s salary, while in neighboring Thailand the average cost of a SIM card is $4 USD. In order to achieve the Burmese government’s target penetration rate, these prices will need to be dramatically reduced.

Challenges for Telcos

With untapped markets becoming increasingly scarce, it’s to be expected that telcos would be interested in expanding their presence in Myanmar. But as they enter this new market, telcos will face difficulties stemming from the transition in the Burmese government from the military junta, which controlled the country for nearly 50 years.

There are signs that the government is taking steps to reform the telecommunications sector, as a way to attract lucrative contracts from outside investors. Earlier this year, the Burmese telecommunications minister, Thein Tun, resigned after refusing the president’s request to lower the price of SIM cards. His resignation comes amid a corruption probe that is investigating “officials from the ministry of telecommunications.”

However, the parliament has recently confirmed General Myat Hein as the new Minister for Communications and Information Technology. His appointment has been met with mixed responses, since Hein’s last job was chief of the Air Force, and the country has a sordid history of military involvement in civilian issues.

There are questions that the general may not have the expertise or experience on telecoms policy, given he comes from the military and is a new player in the Burmese Ministry of Communications and Information Technology. Moreover, the perception of corruption will follow him, as his military background constitutes yet another red flag that the country is not progressing toward civilian rule.

Old habits die hard

A new law has just been proposed limiting the freedom of speech, in the name of reforming Myanmar’s older, draconian printing and publication laws. The draft law retains overly restrictive language forbidding printing of speech that is against the constitution, or that might incite unrest. It also requires licenses for those looking to print materials, and those who do not have a license face steep fines and prison terms, a violation of free expression norms.

Access has written about the human rights issues global telcos will face in Myanmar, so companies should keep a careful eye on how the democratic reforms come into place and adhere to the Telco Action Plan. The principles in the Plan contain guidance for telcos by advising companies to assess the potential for restrictions on users’ access, freedom of expression, or privacy in each operating environment in which they do or plan to do business.

Promoting opportunities there, the U.S. Agency for International Development (USAID) just convened a group of U.S. high-tech executives inMyanmar. Representatives from Cisco, Google, HP, Intel, and Microsoft in Rangoon and Nay Pyi Taw had a weeklong visit, according to USAID, on expanding access to new technologies, supporting government efficiency and transparency, and building skills.

Any companies seeking mobile phone licenses should consider the context noted above, and those based in the United States should consult the U.S. State Department’s proposed Reporting Requirements on Responsible Investment in Myanmar, currently in the second round of public comments, before investing.

In Myanmar, with even a cursory glance at its historical leanings toward dictatorship, current draft bills on publishing, and internal appointment mechanisms, it would be difficult for any foreign telco to respect user rights, through no fault of their own. Changes will be needed, in regards to the mobile and digital rights environment, before it is safe for investment.

Access Policy Counsel Peter Micek contributed to this report.