Myanmar needs to accelerate to Internet time

Editorial, by Kieron Osmotherly, CEO, TowerXchange.

My taxi driver is atypical for a Myanmar citizen – he’s in a hurry. Which is nice because I was cutting it a bit fine to catch my flight home. I’ve thoroughly enjoyed my visit to Myanmar, thanks to the hospitality of co-hosts the GSMA Green Power for Mobile Working Group and Ooredoo. One of the reasons this country is so appealing is its calm, laid back attitude. Don’t get me wrong – Myanmar offers great service, a can-do attitude, but everything takes so long! Whether it’s making a sandwich or granting an import permit, there’s one thing Myanmar needs to achieve its self-imposed aggressive telecom rollout deadlines – acceleration!

Maybe we should put my taxi driver in charge of permitting cell sites!

Jon Whitty, our designer who makes the TowerXchange Journal look elegant, asked me to get a photo of a citizen using a smart phone in front of a pagoda or some other cultural icon. I didn’t think I had much chance with penetration at 10%, but it seems like every other citizen in Yangon was touting a smart phone – and they weren’t cheap handsets!

You also can’t help but notice that every billboard is adorned with adverts for Samsung, Huawei, LG and, most prominent, Ooredoo. However, I didn’t see a single billboard with an antenna mounted on it. Apart from the modern hotels, there weren’t a lot of structures on rooftops either – apparently many sites lack the structural capacity, and lease costs are high in Yangon. You don’t see a lot of towers in Yangon, and most you do see are guy-masts that lack the capacity for additional tenants.

There’s not a lot of Wi-Fi here, but locals and visiting businesspeople seek out hotspots – everyone knows which cafés offer the best Wi-Fi, and there’s a culture of using Skype which is going to be difficult to shift even though Telenor and Ooredoo promise keenly priced tariffs.

I didn’t have time to get out into rural areas on this trip, but the towercos verified the impression I got – that there is a growing culture of mobile phone use, awareness is high, pent up demand is being generated both for subscriptions and for network densification and extension.

The requirement to provide 85% geographical coverage in Myanmar within a tight timescale may have to be moderated, given the logistical challenges of site acquisition and import permit delays, and challenging inland logistics, compounded by a crippling rainy season. While there are good roads connecting the major cities, beyond that paved roads become dirt roads, which become paths alongside rice paddies. Myanmar’s transport infrastructure also relies on a prolific system of waterways. Myanmar’s four towercos may be targeting the deployment of up to 250 towers per month, but sustaining that volume of activity during the wet season may not be possible as they would literally get stuck in the mud.

While Myanmar’s towercos are bullish about tenancy ratios and plan to deploy mostly robust, multi-tenant towers during phases one and two, in which deployment is largely concentrated along the central spine of the Irrawaddy River and delta where the population density is greatest, it remains to be seen if multiple tenant sites will still be required in subsequent phases in more rural locations. Towercos may have to charge a premium on lease prices, and will certainly pass through more energy costs at hard to access, deep rural, off grid sites than they will charge at easy to access, on grid sites.

There would seem to be a conflict between license requirements that both international operators provide 85% geographical coverage, and the commercial reality of therefore needing both operators to provide coverage in villages with populations of 3,000 or less, where the ARPU generated may make the business case for coverage marginal for a single operator, never mind two competing operators. Ooredoo and Telenor are not taking the same approach either, with Ooredoo focusing on 3G and Telenor rolling out a more traditional 2G plus 3G GSM network, which may ultimately attract a slightly different demographic. World Bank financial assistance may help, but combine a limited commercial case with logistical challenges and you can see why it’s less clear what the tenancy ratio will be and therefore it’s less clear what typical site design, power and wind load capacity requirement will be in rural Myanmar.

Heavier structures are needed for multi-tenant towers, and the last mile(s) of delivery logistics to rural sites may be by oxen, mule and hand carriage, which means heavy cranes are unlikely to be used, and tower erection may have to be completed by hand. Modularity is going to be key – selecting passive equipment that can be delivered in smaller pieces to allow manual transport and construction, and easy upgrade for additional tenants.

The logistical challenges don’t end at the end of the capex-oriented rollout phase; post rollout O&M logistics and recurring fuel deliveries (which can literally consist of guys on mopeds delivering soda bottles full of diesel) will be costly. Nobody knows what the delivered cost of a litre of diesel will be in rural Myanmar because there are no cell sites out there now! But the sting will be felt by the MNO rather than the towerco whilst contracts are structured with power pass through clauses. This may seem to reinforce the business case for renewable energy and energy storage innovations that minimise site visits to top up diesel tanks and swap lead acid batteries with finite lifecycles. However, the reality is that in the short term, pressure of time to market will outweigh pressure to optimise energy efficiency, so a lot of DG backup power solutions will be rolled out in phase one, and phase two, which pushes into more rural areas, is still going to use a lot of dual DG or CDC+DG site designs.

Neither Telenor, Ooredo, nor their multiple towerco partners want to build overlapping networks. The Myanmar government has not formally issued a regulation preventing overlap, but has made it clear they’re not going to allow towers within around 500m of each other. This will probably translate into more formal zoning regulation eventually. However, it would be wrong to create an impression of harmonious, synchronised rollout - where once upon a time the operators were jointly negotiating with towercos, each has chosen two different partners and, even at this early stage of rollout, there is a healthy sense of competition among the Myanmar’s towercos. The build versus co-location inclination of incumbent operator MPT, particularly after investment by KDDI, remains unclear.

Ultimately the number one challenge to be overcome in the rollout of Myanmar’s towers remains a lack of bureaucratic capacity. There’s no lack of will at government level – connecting the population could prove very popular come the elections, but the reality is that Myanmar has little history of multiple companies building infrastructure, so they’ve had to create necessary legal infrastructure and the people on the front lines are stretched thin and are not used to making pragmatic decisions to expedite important processes. The impact of this lack of bureaucratic capacity is being felt at the point of land lease acquisition, checking ownership of land titles, build permitting, equipment import and even the licensing of towercos themselves.