Efforts needed to improve infrastructure and human resources

Myanmar’s IT sector is beginning to feel the effects of the telecoms revolution as a result of the sector’s major reform process, but fixed-line connections and related infrastructure have a long way to go to catch up with the aggressive developments from mobile operators Ooredoo, Telenor and Myanmar Post and Telecommunication (MPT). The general spread of internet connectivity will transform Myanmar, but social issues could arise. With a freer information flow and less government control, some existing ethnic tensions may come to the surface.

Internet Providers

In 2012 there were only 600,000 fixed-line users in Myanmar through three internet service providers – MPT, Yatanarpon Teleport (YTP) and RedLink. MPT is the fully state-run provider now also offering mobile services through its partnership with Japanese telecoms infrastructure giant KDDI. YTP is 51% government held and 49% privately owned, and has yet to significantly upgrade its services as part of the sector’s transformation, although it is in negotiations with potential international partners. RedLink, run by the son of the parliament speaker and rumoured 2015 presidential candidate, U Thura U Shwe Mann, operates a wireless LTE-based service under YTP’s licence.

However, these services remain unaffordable for the majority of Myanmar consumers. The basic home connection from these providers has an installation cost of at least $350 before minimum monthly costs of $40 for a paltry 128 Kbps. For the higher end of office connections, there are fibre-to-the-home (FTTH) services run by two local groups, Fortune and Elite, which currently offer the fastest speeds for businesses and homes but with very limited deployment. Only 3% of the 10,000 FTTH users were in Yangon in 2013, although Fortune has been planning an expansion through 2014. Installing FTTH, if available in the area, will cost a user an initial $1000 plus at least $50 per month thereafter.

Internet Infrastructure

In 2012 Myanmar had the lowest international bandwidth per capita in the ASEAN region at 0.286 Kbps compared to Malaysia’s 15.6 Kbps and Singapore’s 258.3 Kbps. Fast-forward to 2014, and Myanmar’s overall internet speeds remained poor. The average monitored download speeds recorded online were 7.1 Mbps for the country and only 3.98 Mbps for Yangon, the largest city. This is three times less than the global average of 21.5 Mbps and measures 118th out of 192 countries measured by Ookla’s Net Index.

However, this is only the beginning. As more users connect in the coming months and the mobile network operators expand rapidly, backbone infrastructure will need to improve drastically if it is to sustain the rising demand. From a total 128-MB backbone capacity in 2000, Myanmar is expected to reach 40 GB by the end of 2014, an increase of 313 times in the space of 14 years. But internet infrastructure still relies predominantly on two main cables to connect its internet users to the web, compared to New York City’s 10 cables, for example.

The first of these is a “dry” cable to Thailand, but the larger and more important link is the “wet” South-East Asia-Middle East-Western Europe (SEA-ME-WE) 3 cable running under the Bay of Bengal to connect Myanmar to 38 other landing points across the globe.

The third SEA-ME-WE 3 link was commissioned in 2000. The 39,000-km cable is administered by Singapore, and stretches from Goonhilly in England to Perth in Australia and Okinawa in Japan, providing 48 wavelengths of 10 Gbps each. Myanmar used one of these to account for approximately half of its total bandwidth for 2013 and an estimated quarter of its total by the end of 2014.

But even if Myanmar hits its 40 GB international bandwidth goal for 2014 it will still lag behind its regional peers. With 40 GB it would have 0.78 Kbps per capita, whereas Thailand boasted 1085 GB total international capacity as of October 2014, or 16.2 Kbps per capita, 21 times that of its neighbour.

And yet, despite this shortfall, Myanmar was not able to join the upgraded 2004 SEA-ME-WE 4 cable that built on its predecessor because it missed the deadline due to a lack of funds. In March 2014, however, it was one of 17 countries to sign up to the latest SEA-ME-WE 5 project that is due to deliver 10 times the capacity of the existing cable by 2016.

Meanwhile, Myanmar must look to private cables to boost internet speeds. China Unicom has agreed to build a terrestrial cable between Myanmar and China as part of its $20bn ASEAN preferential loan scheme, and Thailand’s land connection also represents a small portion of Myanmar’s total capacity.

Furthermore, in March 2014 MPT allowed Telenor, one of the two new telecoms entrants, to establish its own internet link to the outside world. The line was a breakthrough in terms of improving the country’s overall internet infrastructure. Telenor began by passing the minimum required amount of bandwidth allowed for global routing as a test, but is expected to expand rapidly as its internet infrastructure grows in the coming months and years.

Domestic

One way to swiftly alleviate problems linked to international bandwidth is to keep users surfing the web within the country’s borders. The Myanmar Computer Federation and other government-linked associations are pushing for local developers to create more Myanmar-focused content to both build the industry and reroute some traffic internally. Naturally, it is expected that as the internet user-base grows in the country, so will the number of Myanmar domain websites.

In September 2013 there were only 300 locally registered domains in Myanmar, but by September 2014 that number had tripled to 900 and surpassed 1000 by November. As more users will connect via handsets rather than traditional devices, mobile-ready websites are due to attract the majority of traffic.

“We should be developing more mobile apps,” said U Min Zeyar Hlaing, managing director of Myanmar Millennium Group, a systems integration specialist company based in Yangon. “This is not a conventional system; we have the ability to leapfrog over past technologies and focus on the most modern services and content delivery.”

Hardware

Even before SIM cards were inexpensive enough for the majority of consumers to purchase, citizens began to purchase mobile handsets to use disconnected. For years a mobile phone in the country offered a cheap and convenient gaming, camera and media device that became as much a status symbol as a connectivity device. Then, as the price of SIM cards dropped, more and more people began to buy a handset, and today mobile phones can be found for sale on almost every street corner.

Of all the sales, the most popular content delivery devices are now resoundingly mobile, and of those, Huawei phones with Android operating software have taken the lead. A total of 71% of consumers purchase Huawei handsets, well ahead of Samsung, which has 14% of the market.

Huawei was founded in 1987 and overtook Ericsson in 2012 as the largest telecoms equipment maker in the world. The firm operates in 170 countries and recorded revenues of $39bn in 2013, and although the majority of its business is supplying equipment to carriers, it has stormed the consumer sales business in the past few years, especially in a number of emerging markets.

Partly due to this dominance, by June 2014, 95% of Myanmar consumers used Android phones, 3.5% feature phones and only 1% iPhones. Unlike most emerging markets, feature phones are unpopular in Myanmar, but this could be because up until now only the wealthy have been able to afford a mobile device at all. Telenor’s 2G compatible network is banking on the rise of feature phones in more rural areas once they are able to get connected.

Yet, for software developers looking to the Myanmar market, there is currently a very clear dominant operating system. Notably, despite Android’s success, 32% of consumers consider Apple their favourite brand, according to surveys, suggesting that the higher end of the market would still purchase an iPhone if they could afford it. For now, the cheaper Android devices serve the needs of Myanmar consumers, but as incomes rise this trend may change.

Mobile Only

Conversely, only 38% of consumers use a laptop or PC on a weekly basis, and for almost half of users surveyed mobile is the only way to access the internet. For those who can access mobile internet, almost three-quarters use it every day.

It is expected that with the growth to come, the majority of Myanmar citizens will first access the web through a mobile device, completely skipping the PC or laptop access point. The sole fixed-line internet provider in Myanmar reported only 20,000 ADSL customers in 2014, making way for the dominance of the MNOs as internet service providers.

With internet access, Myanmar citizens have begun to use social media in earnest. A total of 84% of internet users are connected to social media, with half of them using Facebook and 31% using YouTube. In terms of messaging, Viber is the leader by a long shot, used by 79% of the market compared to Facebook Messenger, which holds only 27% of the messaging market. Skype, WeChat and others also serve around 10% of the market each.

As increasing numbers of users connect to the internet and as SIM cards spread across the country, the dominant hardware and software brands will have a firm footing to increase sales for Myanmar’s 51m citizens. However, not everything will be smooth sailing as users get connected. The sudden access to all forms of information and means of communication could upturn some unexpected surprises, as the power of information is an untested force for the once tightly controlled nation.

Censorship

Until 2011 Myanmar’s internet was heavily censored. The country ranked second worst in terms of internet freedom, ahead of only Iran, as many sites relating to certain ethnic groups, pro-democracy advocates and independent media agencies were blocked by the government’s filters. Many users still found ways to work around the restrictions, but throttled speeds and a limited number of access points hindered access severely.

In August 2012, however, the Ministry of Information announced that pre-publication and authorisation for all media would halt, allowing a host of new media outlets to grow, including via the internet, and previously blocked websites and journals to circulate inside the country.

The OpenNet Initiative in 2012 reported drastic reductions in surveillance and filtering from within Myanmar, especially with regards to political issues. It also cited Myanmar as one of the few countries that had lifted censorship rather than increased surveillance in recent years.

But with added connectivity came added threats. Cyber attacks on journalists’ web accounts were reported by Google in 2013, originating from “state-sponsored attackers”. The government has continued to issue its own announcements denouncing some media agencies for fabricating news, and is suspected of initiating the attacks.

But a more widespread problem comes from newly connected citizens using social media and information freedom to incite hatred in the country’s fragile ethnically diverse regions. Since the lid was lifted on media suppression, certain groups have been posting inflammatory articles on Facebook and other social media platforms, seen as one of the key reasons given for rising civil unrest between the Buddhist majority and Muslim minority in Myanmar.

On July 2, 2014 a Myanmar blogger alleged online that a Muslim had raped a Buddhist employee in a café, and the comment went viral. Infamous nationalist monk Ashin Wirathu shared the comment on his Facebook page, leading extremist anti-Muslim groups to rally a violent response, gathering Buddhist mobs to attack Muslim businesses in the country’s second-largest city. Police did little to prevent the violence and on July 3, 2014 the government blocked Facebook in an attempt to quell the tension.

The incident was not unique. In August 2013 international aid agency Doctors Without Borders was attacked via social media and its staff threatened, and Myanmar actress Daw Khun Sint Nay Chi was targeted when her Facebook account was hijacked and used to incite attacks on Muslims.

In the short term, additional information access and sharing for Myanmar citizens has the potential to unleash a wave of hereto suppressed anger, and the government will face severe challenges in taming this hostility in the coming years. As elections approach in 2015, more of these incidents could be sparked as tensions rise.

Rankings

The World Economic Forum’s “Global Information Technology Report 2014” included Myanmar in its ranking for the first time. The country ranked 146th out of 148 in the overall Networked Readiness Index, ahead of Burundi and Chad.

Of the ASEAN members covered in the 2014 report, Myanmar ranked at the lower end, along with Cambodia, which ranked 108th and Lao PDR, which came in at 109th. Other regional rankings included Bhutan – the first year the country was included in the report – at 94th, Bangladesh at 114th and Nepal at 126th.

With the sector having seen major developments towards the end of 2014, the 2015 report should present major improvements in Myanmar’s ranking. To better the country’s standing, however, the sector’s skills shortage must be addressed.

Human Resources

The entrance of two new players to the sector, Qatari Ooredoo and Norway’s Telenor, is expected to create demand for a number of ICT services companies, drawing upon the skills of web designers, network professionals and programmers. However, as with all sectors in Myanmar, education and human resources are a major challenge and local talent is hard to find.

U Lwin Naing Oo, chairman of Shwe Pyi Tagon Telecommunication, told OBG, “Human capacity is a huge issue. The arrival of international operators will assist with the development of Myanmar’s human capital. However, whilst the arrival of both Ooredoo and Telenor has created thousands of jobs for local Myanmar people it has also made staff retention a challenge for local companies.”

While infrastructure such as towers and cables can be constructed over the next two to three years, it will take much longer to educate future employees for the ICT industry. “The sector desperately needs more human resources,” U Kyaw Soe, the principal of the Telecommunications and Postal Training Centre, told OBG. The centre provides employee training for the MPT. “This will be our biggest challenge over the coming years.”

Outlook

Overall, Myanmar’s increased connectivity will improve the lives of millions of people. Access to information will enable the country’s citizens to thrive in areas that have been blocked for decades. The dangers lurking beneath the surface are problems that the country must face separately, but with cheaper access to information technology the playing field may equalise.

More than any other developments currently under way, technology has the potential to expand Myanmar’s horizons swiftly, boosting economic growth and bringing the country into the modern era. “It is clear that the IT and telecoms sector is going to boom in the years to come and local companies will have many opportunities to participate in the growth of the sector,” U Lwin Naing Oo, told OBG.