Bhutan - Telecoms, Mobile and Internet

Mobile broadband services expanding rapidly in Bhutan

In less than seven years Bhutan has moved from having no mobile phones to claiming more than 70% mobile penetration. Over this period the annual growth in mobile subscribers has reached in excess of 100%. It was not always like this. Bhutan had been isolated from the rest of the world for a long time – both generally, and particularly in terms of its telecommunications. Its mountainous landscape made it especially difficult to build the necessary telecoms infrastructure. Back in 1974, Bhutan and India formally agreed to the introduction of trunk calls between the two countries. However, in a remarkable contrast with the rest of the world, it was not until 1999 that the country saw television stations, satellite dishes and internet services for the first time.

Between 1996 and 2001, Bhutan invested substantially in telecommunications infrastructure. The tiny country has quickly developed a modern, fully digital fixed-line network, which covered all 20 provinces and the key commercial and population centres. Despite this investment, however, it did experience significant network performance difficulties in the early stages.

For many years, the offering of mobile services had been considered uneconomical due to its small population, although Bhutan Telecom, the only telecom operator in the country at the time, had considered the Japanese Personal Handy Service (PHS) system as a possible mobile solution. In 2001, as an interim measure, Bhutan Telecom launched a GSM-based mobile satellite service in conjunction with Thuraya Satellite Co Ltd. This service was expected to fill the gap until a conventional national mobile network was established. Then, in 2003, the country’s first mobile telephone service was launched. While initially established with relatively limited coverage (five towns including the capital Thimphu), the government was keen to see this service, operated by Bhutan Telecom and branded B-Mobile, providing national coverage by 2006.

In 2006, in what was a landmark step for the local telecom market, the regulator awarded a second national mobile licence to local industrial conglomerate, the Tashi Group, requiring a commercial service to be launched within one year. Tashi eventually began operating its mobile service in 2008.

Bhutan came late to the internet. Development has continued down a slow path, as the country embraces online activity cautiously. In fact the internet penetration continues to be disconcertingly low for a country trying to lift itself up economically. Fixed subscriber penetration was still below 3% in 2012; however, this was compensated by a new booming mobile internet/broadband market.

Market highlights:

• Bhutan’s telecom sector continues to develop, driven by strong growth in its mobile market.
• The number of mobile subscribers grew strongly for four or five years but growth has eased considerably over the last few years to be running at around 10% annually.
• The launch of a second mobile operator in 2008 made the market a competitive one, the competition no doubt helping boost the overall growth rate.
• With the success of the mobile network, fixed-line subscriber numbers had eased downwards over the last few years, but by 2012 the subscriber numbers appeared to have stabilised.
• Internet penetration continues to be disconcertingly low with fixed subscriber penetration still below 3% in 2012; however, this was compensated by a new booming mobile internet/broadband market.
• The country has been moving steadily towards a democratic system of government with elections being held in 2008; the hope was that this would start to bring significant structural reform to all sectors of the economy.
• Although the telecom regulator has been operating in a progressive fashion since being set up in 2007, the telecom sector remains in need of further reform.

Bhutan – key telecom parameters – 2012 - 2013

• Category20122013 (e)
• Fixed-line services:
• Total number of subscribers27,60028,000
• Internet:
• Total number of fixed subscribers20,00025,000
• Mobile services:
• Total number of subscribers535,000590,000

This report provides an overview of the trends and developments in the telecommunications markets in Bhutan. Subjects covered include:

• Key statistics;
• Market and industry overviews;
• Major operators (mobile and fixed)
• Regulatory environment;
• Infrastructure;
• Mobile market;
• Internet market.