ICT Sector Performance Review for Bhutan

Abstract

Despite rugged topography, low population density, settlement patterns that include extremely small and isolated villages and landlocked nature, Bhutan made significant strides in a short time to provide voice connectivity to its people. The market opening in 2007 yielded good results: mobile connectivity more than doubled from 22% in 2007 to 57% in 2011, and Internet penetration increased from less than 1% in 2007 to 14% in 2011. Bhutan has also recorded a drop in prices by 27% since September 2008 with the entry of the second operator.While performance in terms of price is satisfactory, the duopolistic industrial structure appears not conducive to rapid innovation in terms of new 'more-than-voice' services being offered on mobile platforms. The issuance of a third license has been proposed as a solution. et considering the fact that among 20 countries with populations of less than one million, 11 still have only one operator, and only Fiji has three operators. Therefore Bhutan should be cautious when considering an additional operator due to the small size of the addressable market. The main recommendations in this report are: Improve quality and price performance of international backhaul services by licensing one or more external gateway operators. This will also create a credible threat of entry into the access-network market and thereby contribute to improving the performance of retail operators. Improve the management of the access-network operators by permitting joint ventures by permitting foreign investment. Improve the conditions for greater innovation by initiating entrepreneurship development programs, training of skilled employees, leveraging the IT Park.