Bhutan’s entry-level mobile data (2GB) is the second most affordable in the SAARC region after Sri Lanka, according to ITU’s “The Affordability of ICT Services 2023” report

The high cost of ICT services in Bhutan has been a concern since mobile services were introduced nearly two decades ago. The main grievance, both now and in recent years, is the high cost of mobile data, the dominant method for accessing the Internet in Bhutan. This issue gained renewed attention after the 1st session of the 4th National Assembly, with media outlets highlighting high mobile data charges through comparisons and third-party reports, particularly the “Kingdom of Bhutan Digital Economy Development and Transformation Strategy” by GovTech Bhutan and UNDP.

In response to claims that Bhutan has the highest mobile data costs in the region, based on this report, TIPL, one of Bhutan’s two telecom companies, seeks to provide evidence-based clarifications. TIPL aims to inform the public, policymakers, and regulators about the actual state of mobile data affordability in Bhutan. The clarification references following “Table A: Comparative Prices of Mobile Broadband in Other Countries” from the report.

As per our analysis, the comparison of data charges illustrated in the table above is incomplete and unfair for three reasons explained below:

The first limitation of the cost comparison in the table is the use of different data packages to compare the cost per GB, which is incorrect and unfair. For example, Bhutan’s 8.46 GB data package is compared to India’s 30 GB and Vietnam’s 90 GB packages. Due to higher economies of scale, the cost per GB decreases as the size of the data package increases, meaning Vietnam’s 90 GB package will have a lower cost per GB than India’s 30 GB package, and both will be lower compared to Bhutan’s 8.46 GB package. To ensure a fair comparison, the same or similar data packages should be used. Using TashiCell’s 25.37 GB package (Nu. 777) or Bhutan Telecom’s 27.03 GB package (Nu. 799) instead of the 8.46 GB package, the cost per GB drops to about USD 0.35, which is roughly half the cost mentioned in the report.

The second shortcoming of the report is using the absolute cost per GB to compare mobile data affordability among countries. A fair comparison should consider the income levels of users in each country. The International Telecommunication Union (ITU) measures ICT service affordability as the cost expressed as a percentage of monthly GNI per capita (GNIpc). According to their latest report, “The Affordability of ICT Services 2023” the cost of a 2GB entry-level mobile broadband basket in Bhutan is only 0.83% of monthly GNIpc, the second lowest in the SAARC region as illustrated in the  Table B.

It can be inferred from the above table that Bhutan’s entry-level mobile data is the second most affordable in the SAARC region, following Sri Lanka, and also more affordable than nearby countries like Vietnam and Thailand. The ITU report specifies 2% of monthly GNIpc as the affordability threshold, which all mobile data packages offered by the telcos in Bhutan easily meet. Thus, while the absolute unit cost comparison makes Bhutan’s mobile data appear expensive, expressing the cost as a percentage of monthly GNIpc reveals Bhutan’s mobile data offerings are highly affordable, even more so than India, a frequent comparison point for Bhutan’s mobile service prices.

The third limitation of the comparison is the lack of information on the validity of the data packages. In Bhutan, monthly data packages are valid for 30 days, whereas in countries like India, they are valid for 28 days, as shown in the table below. This means that operators in India receive 13 monthly payments in a year compared to the usual 12 payments for operators in Bhutan. In other words, a customer in India on a Rs. 249 monthly plan must recharge at least 13 times a year.

The clarifications shown on Table C address only the price component of mobile data. Another critical factor is the cost borne by the telcos. Due to Bhutan’s extremely small market size, telcos pay much higher prices to the vendors for network equipment, materials, and international Internet bandwidth compared to other countries. Additionally, network deployment, operation, and maintenance are costly due to high transportation and engineering charges caused by country’s rugged terrain. These costs are further increased by a 20% import tax and a tripling of the annual license fee due to recent policy changes. Despite these challenges and delays in construction approvals, two telcos strive to make mobile services more affordable while improving service quality, a difficult trade-off to achieve and sustain.

In conclusion, the size of market is critical parameter in determining the prices of telecommunication services. Therefore, it is absolutely unfair to compare the prices of telecommunications services between the telcos catering to a market size of 1 million and that of 100 million, or 1 billion. Despite several cost disadvantages, telcos leverage on new technologies and find ways to reduce data rates. This effort is evident as the cost of telecom services has been decreasing over the years, even while other goods and services become more expensive.

TashiCell

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