Market too small for third operator say telcos

TashiCell calls for independent study, while Bhutan Telecom says move could cause company to lay-off employees

Telecom: Introducing a third telecom operator in the country will not improve the quality of services according to Bhutan Telecom and TashiCell.

Given the small market size with a population of just over 700,000, the feasibility of a third operator is not a realistic idea for Bhutan, say the telcos.

The Prime Minister earlier this month announced at the Meet-the-Press that the two operators need to improve their poor telecom and internet connectivity by September this year and that in case the services do not improve, the government will be compelled to consider opening up the market to a third operator.

TashiCell managing director, Tashi Tshering said that the government has not given the company any notice, neither in writing nor verbally. “In fact it came to us as a surprise when we heard about the notice from the Prime Minister to improve our services by September over the news,” he said.

Tashi Tshering said that in three months, improving a mobile network is virtually impossible. “At least in the Bhutanese context it is not possible within three months.

Not only for us but also for operators anywhere else, three months is too short to improve a mobile network,” he said. “Now we’re confused. What does this notice mean? Is it that the government really wants us to improve the network or are they directly saying that they want to put in a third operator?”

“Personally, for Bhutan two operators are more than sufficient. When the global trend today is consolidating the market by reducing the number of operators, here we are trying to diversify and fractionalise the market by adding more operators, I don’t understand,” he added.

Tashi Tshering said that TashiCell has been operating for the last eight years, but today the company is not making any profit. “But still we are investing billions to improve the quality of services,” he said. “Telecommunications is a long-term business. There is a huge capital investment. If a third operator comes in, the financial burden on the two existing operators will be heavy.”

Sharing a similar opinion, Bhutan Telecom managing director, Tshewang Gyeltshen said that the Bhutanese market is perhaps the smallest in the world but on the other hand expectations of the customers could be highest in the world.

Tshewang Gyeltshen said that mobile technology is evolving constantly and so is the expectations of the customers. “To keep pace with the changing technology and to meet the expectations of the customers, government will continue to pressurize the operators for setting high standards,” he said.

If a third operator comes into the market, the three operators will have to share the small customer base whereby the revenue earning of the existing operators will go down and the new operator will not earn good revenue, said Tshewang Gyeltshen.

Further he said that the price war among the competitors will rise. “The quality of service will suffer over the period and eventually companies could declare bankruptcy,” said Tshewang Gyeltshen.

Tshewang Gyeltshen said that Bhutan Telecom as of date has been declaring substantial dividends to Druk Holding and Investments (DHI), which is paid to government. He pointed out that these dividends will go down or there may not be any dividends if a third operator is allowed to enter the market.

“We could resort to laying off our employees. Since all stations will have to be operated even if there is no return, the only way to minimise operational costs is to reduce the overhead costs by laying off or retrenching employees, which normally affects the lower rung of employees,” said Tshewang Gyeltshen.

Tashi Tshering said that the ultimate goal of any operator is to provide reliable and efficient means of communications.

“Will this ultimate goal be realised by adding a third operator?” said Tashi Tshering. “My request, not as MD of a company, but as a citizen of the country to the government is to carry out a study, a comprehensive and independent one to see if there is a requirement for a third operator a small market like ours.”

The mountainous and rugged topography of the country also poses one the biggest challenges for the two telecommunication operators in providing quality services to the public today.

Both Bhutan Telecom and TashiCell attributed the rugged terrain for hindering effective delivery of network coverage.

Tashi Tshering said that propagation of mobile connectivity in the country is very challenging. “We cannot cover every nook and corner given our geographical terrain.”

“We have a reasonably good network. However, over the last two months we have had some congestion in data network (3G) in Thimphu and Phuentsholing,” said Tashi Tshering.  “We foresaw this issue from before, that’s why we have been trying to put in more number of base stations in Thimphu and Phuentsholing since last year.”

Tashi Tshering said that to increase the network coverage, more base stations are required to be put in place. “The biggest challenge we are currently facing is getting land to place our base stations,” he said.

The company is working with the thromde to procure land. “They are willing to give us land but we have to share with Bhutan Telecom. Also we have to share Bhutan Telecom infrastructure like towers,” said Tashi Tshering. “We have come to that understanding and we have already started sharing four Bhutan Telecom towers.”

Tashi Tshering said that by end of this month the congestion in core areas in Thimphu should be solved.

“It is a continuous process. Our engineers are monitoring our system regularly and depending on the problems we are working on it,” said Tashi Tshering. “We are doing everything possible with the existing resources in the area we have currently.”

Meanwhile, Bhutan Telecom invested over Nu 700 million last year to improve their services. The company has installed over 225 WiFi access point to offload 3G congestion. Of the total 225 access points, 203 are in Thimphu. Bhutan Telecom plans to install over a thousand such access points.

Bhutan Telecom is also installing five new 3G sites in Thimphu and 17 in the rest of the dzongkhags. The company is conducting network optimisation on regular basis.

Tshewang Gyeltshen said that Bhutan Telecom will also upgrade the core network from 1.5Gbps to 3Gbps along with replacing of radios and installation of auto start generators.

TashiCell began operations in 2006 and today the company has around 205,000 subscribers of which around 177,000 are active users. Some 130,000 users avail the data service of the company.

Bhutan Telecom has 424,000 registered mobile subscribers

Younten Tshedup

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply