A closer look at South Asia
by Michael Minges and Pratikshya Simkhada*
South Asia, which comprises Bangladesh, Bhutan, India, the Maldives, Nepal,
Pakistan, and Sri Lanka, has a combined population of over 1.3 billion people
(see Table 1). India is by far the largest South Asian country, in
terms of population, economy, and telecommunications network. For a region that
makes up over one fifth of the total world population, South Asia accounts for
only 2 per cent of world Gross Domestic Product (GDP) and 2.4 per cent of the
total telephone subscribers (fixed and mobile). The region has one of the lowest
per capita incomes in the world, about one tenth the world average and is home
to four least developed countries (LDC). With 29 per cent of its population
living in urban areas, South Asia remains predominantly rural.
Table 1 – Basic indicators for South
||GDP in 2000
|Total telephone subscribers
||Per 100 inhabitants
| Sri Lanka
| Less India
Source: ITU World Telecommunication
With a total of 43.7 million fixed lines in operation and 8.5 million mobile
subscribers, South Asia accounted for 4 per cent of the world’s fixed lines
and less than 1 per cent of cellular subscribers in the year 2001. South Asia’s
average fixed-line teledensity was 3.2 and the mobile teledensity was 0.63. The
compound annual growth rate of fixed lines and mobile subscribers in the period
1996–2001 has been 20 and 78 per cent respectively, while during the same
period the world growth rate was only 7 and 48 per cent. When compared with the
rest of the world, South Asia is one of the fastest growing markets despite its
low telephone penetration.
In 1981, South Asia had a fixed-line teledensity of 0.31, which increased to
0.65 in 1991. Another decade later, this teledensity had increased by over
fivefold, reaching 3.2. The telephone network growth rate in South Asia has
accelerated for every five-year period for the last two and half decades. For
example, between 1976 and 1981, the annual average growth rate was 7 per cent;
between 1986–1991 it was 11 per cent and from 1996 to 2001 it was 20 per cent.
This continually increasing growth rate is beginning to impact the
long-established correlation between GDP per capita and fixed-line teledensity.
The correlation would have predicted that South Asia’s fixed teledensity
would be 1.2 in 2001. Yet it was almost three times higher, at 3.2 (see Figure
1). The figure is all the more astounding considering it does not factor in
mobile penetration. This is evidence that old assumptions about
telecommunication development no longer apply.
Despite South Asia’s high telecommunication growth rate over recent years,
the official waiting list for a fixed telephone line did not decrease
significantly. During the period 1996–2001, while main telephone lines in
operation in South Asia grew at 20 per cent a year, waiting lists decreased by
only 7 per cent a year. Overall, South Asia’s waiting list stood at 2.6
million at the end of 2001, down from 3.8 million at the end of 1996. In some
countries, the waiting lists have actu ally increased. This suggests a high
level of suppressed demand in South Asian countries where teledensity is very
low. Ironically, the waiting list probably grew because of the rapid
telecommunication growth. People who had never signed on before because they did
not believe they would ever get a telephone began to change their thinking.
Economics also played a role. Per capita incomes grew, raising demand. At the
same time, prices dropped in relative terms, also increas ing demand.
Figure 1 — Fast growth, broken relations
Source : ITU World Telecommunication Indicators Database
The phenomenon of mobile phones surpassing fixed telephone lines has not yet
generally occurred in South Asia, except in Bangladesh and the Maldives.
Ironically, the former has the region’s lowest fixed-line teledensity while
the latter has the highest. In the Maldives, mobiles could be said to have been
supplementing fixed lines. Mobile tariffs are relatively high and fixed lines
are available on demand on densely populated islands. The introduction of
pre-paid service in September 2001 has begun to shift mobile demand from
supplement to substitute. In Bangladesh, where there are few fixed telephone
lines relative to the population, mobiles are a substitute for telephone
Public call office in Nepal
A Nepali entrepreneur providing public telephone and e-mail service from
his photo shop. The incumbent telephone operator has around 200 or so “recognized”
public call offices around the country, which get a modest reduction on
long-distance call charges and in some cases a monthly subsidy. There are around
1000 or so unlicensed public call centres (PCC) around the country, mainly in
Kathmandu and its surroundings, which seem to offer the main hope for extending
access. PCCs offer a range of services including long distance and international
telephone, fax, call-back, photocopy, Internet and e-mail.
In other countries in the region, mobile subscriber growth rates are much
higher than the fixed lines growth rate hence it is only a matter of time before
the former surpasses the latter. The region will be relatively late to achieve
this crossover with several factors holding mobile penetration back. One is a
late start with only Pakistan and Sri Lanka having mobile networks in the early
1990s. Another is market structure. India experimented with regional duopolies
that proved to be a constraint. Only recently has consolidation occurred,
providing the needed economies of scale. In Nepal, mobile service is a monopoly
and thus not benefiting from the lower prices and wider coverage achieved
through competition. Bhutan has yet to launch a mobile service. Another
constraint has been unfriendly billing practices such as Receiving Party Pays,
pre-paid cards with less than their face value and short validity dates and
national roaming charges. The introduction of Calling Party Pays in Pakistan in
2001 gave a boost to its cellular market, growing it over 100 per cent.
During the past decade there has been a phenomenal increase in the number of
public telephone facilities in South Asia. In 2001 the number of public
telephone facilities exceeded the one million mark, while only a decade ago
there were just over 100 000. In 2001, public telephone facilities
accounted for 2.7 per cent of the main lines in operation in the region. Public
calling facilities represent a significant contributor to expanding access to
The Grameen project in Bangladesh is a well-known example. With financing
from Grameen Bank, women buy cellphones and provide telephone service in their
shops or the local market (see Mobiles in rural Bangladesh). In addition
to licensed public telephone facilities, there are numerous technically illegal
telecentres in the region reselling telephone service for community access (see Public
call office in Nepal).
In Sri Lanka alone, there are an estimated 20 000 unregulated communication
centres (compared to 5100 payphones) providing a variety of telecommunication
services and some even operating 24 hours a day.
Figure 2 – Mobile trends in South Asia
Source : ITU World Telecommunication Indicators Database
Sector reform has transformed the telecommunication landscape
of South Asia. Governments of most countries in the region have, in recent
years, made significant changes in their approaches to infrastructure
development. In particular, private sector participation has been or is being
introduced. At present, five out of the seven South Asian countries have granted
operating licences for fixed and cellular operations to private operators. Table
2 summarizes the basic structure of the telecommunication services market of
South Asia.In total, there are 51 telecommunication operators in the region,
including 18 basic service operators and 37 cellular service operators. Out of
the seven South Asian countries the Maldives and Sri Lanka, the countries with
the highest teledensity in the region, have incorporated strategic investors in
their respective incumbent telecommunication operators. Sri Lanka, India and
Bangladesh have liberalized their local service sectors by allowing private
operators to compete with the incumbents. However, complete competition has yet
to occur. The international long-distance sector has not been opened up to
competition except India. In the cellular services sector, competition has been
widespread. All governments, except Nepal and Bhutan, have taken steps to
liberalize this sector.
Mobiles in rural Bangladesh
Grameen Telecom (GT) is dedicated to extending the benefits of
telecommunications to the rural people of Bangladesh. It is a not-for-profit
company and holds 32 per cent of Grameen Phone that was awarded a nationwide
licence for GSM 900 cellular services in 1996. Grameen Phone has expanded
rapidly since launching service in March 1997. By December 2001, it had 464 000
subscribers around 70 per cent of the country total. GT hopes to extend
telecommunication services to rural areas by leveraging its part ownership of
Village Phone (VP) is the mechanism GT is using. Under a micro credit
programme provided by a GT sister institution (Grameen Bank), a villager can
purchase a mobile phone and become the VP operator in their village. The
operator’s income is derived from the difference between the air time charges
paid by the customers and the amount due to GT. In addition, there is a flat
service charge rate for each incoming call.
The programme was started with eight VPs in March 1997. The number of Village
Phones was 12 568 on 24 April 2002. GT estimates that the current VPs
are providing telephones access to over 30 per cent of the rural population. GT’s
goal is to provide a telephone in each of Bangladesh’s villages. The average
usage of VPs is about 2061 minutes per month, of which 935 minutes are outgoing
calls. In June 2001, the average monthly bill was USD 121.
Figure 3 — Mobile access in Bangladesh
Source :left : ITU World Telecommunication Indicators Database.
Right :ITU adapeted from Grameen Telecom
GT’s shared access model has several implications. A person may not own a
telephone but may have access to one nearby. Almost 50 per cent of Bangladesh’s
rural households are landless, thus many seek non-farming in come opportunities
inside or outside their villages. VP serves as an attrac tive source of
revenue. Increased labour mobility resulting in increased rural-urban migration
as well as immigration has led to an enhanced demand for telephone services. A
study on the ben efits of VPs claims that the predomi nant economic benefit of
using VPs is the facilitation of the flow of income and wealth between overseas
workers or workers in urban cities like Dhaka and their families in rural
villages.1 VPs can also be used to improve overall living standards as
telephones provide access to services such as police, health assistance,
agricultural information and family planning offices. VPs can also be used to
obtain market information that allows villagers to negotiate bet ter prices for
their products. Access to the Internet, electronic fund transfer and other
value-added services are in the pipeline.
As Grameen Phone expands its network throughout the nation, GT will spread
its operation to more villages. When GP completes its network expansion by the
year 2004, 50 000 VPs will be in operation, covering most of the country. GT’s
novel idea of connecting villages through mobile phones is a concept that could
be replicated in many developing countries, where cellular telephony may be the
solution for uni versal access to telecommunications.
In the last decade, as the region witnessed liberalization
and privatization, it became necessary to share the responsibility of meeting
the universal access targets between the incumbent government-owned monopolies
and new entrants. A country’s commitment to the availability of communication
services is usually manifested in the incorporation of universal access goals in
its National Telecom Acts, or equivalents, and the establishment of regulatory
mechanisms that ensure the fulfillment of these goals. A growing number of
regulatory agencies in South Asia oversee the telecommunication sector. Most
national telecommunication regulatory agencies have some kind of stated
universal access policy goal. In most cases, a rural roll-out obligation or
contribution conditions applicable to all licensed telecommunication operators
accompanies the universal access policy guidelines. Furthermore, provisions
are made so that policy tools such as revocation of licences or imposition of
penalties can be used to enforce the universal access conditions.
Additionally, most have scheduled specific targets for achieving universal
access. In the case of the Maldives, the target was set for 2000, but it was
able to provide 100 per cent universal access ahead of schedule by May 1999 (see
Leveraging on post offices). Overall, the regulatory framework
for universal access provision in the region is already in place. What are
lacking are concrete efforts to implement, enforce and monitor developments.
ITU 020171/A. de Ferron
Microwave antenna in Malé (Maldives)
Table 2 – Status of competition in South Asia
Situation as of April 2002, number of operators in parenthesis
||M (1) (Urban)
D (2) (Rural)
|National long distance
|International long distance
| M Monopoly
NA Not Applicable
* Providers registered with the Telecommunication Regulatory
Authority of India (TRAI). Some 33 licences have been issued.
** Legally, rural telecommunication operators are allowed but none exist.
*** Licences issued.
**** PC-phone Internet telephony also permitted.
***** Local fixed operators are allowed to route long-distance calls
within their own network.
****** Providers registered with TRAI.
The Maldives: Dhiraagu delivers
Although the Maldives has the smallest population of
the South Asian countries, its citizens are spread out on 200 of the
more than 1000 islands that form the archipelago. Dhiraagu,
the incumbent telecommunication operator — 55 per cent owned by the
government of the Maldives and 45 per cent by Cable and Wireless of the
United Kingdom — has faced the huge challenge of providing service to
the 90 000 km² country.² Since commencing operation in October 1988,
Dhiraagu has increased the number of telephone lines by a factor of nine
(from 3000 to 27 000) at a cost of USD 84 million. This works out to
around USD 3800 per line or more than twice the world average, attesting
to the higher costs of installing telecommunications in rural and remote
In some dozen years, Dhiraagu has made the Maldives the
envy of other South Asian nations. Fixed teledensity crossed the landmark
of ten in 2001, the highest of South Asian nations and more than three
times the regional average. The Maldives is the only country in the region
to have attained universal access, meaning complete telephone coverage of
its 200 inhabited islands. That is a remarkable achievement for a least
developed country. Over 670 payphones have been installed, giving the
Maldives the highest payphone penetration in South Asia.
Figure 4 — Reaching universal access in the Maldives
Source :left : ITU adapted from Dhiraagu, Ministry of Planning
and National Development.
Right :ITU World Telecommunication Indicators Database.
Now that universal access has been reached, the
Maldives must push to higher goals. One is expanding mobile coverage,
launched relatively late in January 1997. Since the network was converted
to digital GSM network in November 1999, growth has been high and mobile
subscribers overtook fixed telephone lines in April 2002. Mobile is
available on 36 islands covering 40 per cent of the population. There is
currently a project to expand service to an additional 35 islands pushing
population coverage to over 50 per cent. Over one fifth of households had
a fixed line in 2000, twice the South Asia average. There is still plenty
of room for growth considering that some 60 per cent of Maldives homes
have a television.
If universal access can be achieved relatively quickly
within the Maldives challenging geographic context of dozens of spread out
islands, there is no reason why this should not be the case among other
South Asian nations. Perhaps the main reason for the Maldives success is
that it privatized its incumbent operator earlier than other South Asian
nations and also brought in a strategic investor. Although Dhiraagu is a
profit-seeking company, it also has a social conscience and has worked
closely with the government to pursue national telecommunication goals.
Ironically, while other South Asian nations are now wrestling with
liberalization as a method of achieving elusive universal telephone
access, the Maldives did so under a monopoly environment. In the end, it
is not the means, but the result that matters.
With 71 per cent of its population in rural areas, South Asia
is an overwhelmingly rural region. Therefore ensuring access to communications
in rural areas should be a prime goal. There are several possible ways of
measuring rural access to telecommunications. These include rural teledensity;
the number of rural localities with telephone services and mobile population
coverage. Rural and urban teledensity are not always available for all
countries; however, available data suggests that rural and urban teledensity in
South Asia stands at one and nine respectively. Rural teledensity compared to
the average urban teledensity of South Asia suggests that rural areas are not
However, rural teledensity may not be the best way of looking
at the problem. Because incomes are lower in rural areas and the cost of
installing a line is much higher than in cities, it is more realistic to expect
that telephones in rural areas should be shared. Another way of measuring rural
access is to ascertain how many villages have a telephone. Rural South Asia is
made up of some 850 000 villages with populations ranging from 50 to 10 000
persons per village. Table 3 summarizes the rural telephone coverage in South
The numbers are not precise but the message is clear. Some 60
per cent of rural localities in South Asia have access to some kind of
telecommunication service. In India, rural telephone access is provided through Village
Panchayat Telephones, in Sri Lanka it is available through post offices (see
Leveraging on post offices), while in Bangladesh it is provided
through the Village Payphone programme. Transposing the number of villages with
telephone service to the number of rural dwellers with access is subject to
interpretation. One limitation is that none of the countries compiles data on
how many rural inhabitants have access to telephone service. One method is to
assume that all the inhabitants of a village have access if there is telephone
service available and that the most populated villages in a country have been
served with telephones. In the latter case, not all the countries have a
breakdown of the population distribution across villages. Here we assume that
the rural population is distributed equally across villages. Based on this
assumption, some 800 million rural dwellers or 83 per cent of the rural
population — in South Asia have access to telephone service. These are rough
estimates, however they suggest that telecommunication access in rural South
Asia is not as lacking as would be reflected by the regional rural teledensity
Access to telephone service is also being expanded through
the rapid deployment of mobile service, particularly as competition intensifies.
For example, the percentage of the Bangladeshi population covered by a mobile
telephone signal has increased tremendously over the last five years since the
market was opened. It is estimated that over half the population is within the
range of a mobile cellular base station. On a regional basis, roughly 750
million inhabitants of South Asia are within mobile cellular coverage.
Ironically, despite the role mobile communications can play in alleviating
telephone shortages, few of the governments in the region track mobile
Figure 5 – Tracking village phones in India
Source: BSNL http://www.bsnl.co.in/vptstatus.htm
India is one of the few countries in the region that
regularly compiles and monitors rural telecommunication statistics. It
provides a break down of telephone lines by urban and rural areas and
compiles the number of villages with telephone service on a weekly basis.
Tracking the number of village phones has been somewhat of an obsession,
going on for over a decade. While progress in the early years seemed slow,
India is close to achieving its goal of providing all its some 600’000
inhabited villages within the next year. Already all villages in a dozen
of its 26 circles have a payphone.
Relay antennas in Kathmandu (Nepal)
Telecommunication infrastructure of South Asia is not as
lacking as many make it out to be. During the past five years, there has been
unprecedented telecommunications network growth in the region. Practically all
inhabitants of urban areas have access to telephone service. For example, India
reports that all of its some 5000 cities and towns have access to the telephone
network. Sri Lanka notes that telephones are available on demand in all its
cities. This suggests that the some 28 per cent of South Asia that is classified
as urban has access to telephone service. There has also been improvement in
rural access to telecommunications. Roughly 80 per cent of the rural population
has access to basic telephone services and over 50 per cent of the population is
covered by mobile signal. All together, over one billion inhabitants of South
Asia, or 88 per cent of the population, have access to telephone service.
Cellular telephone (India)
ITU 980142/Lars Aström
These are estimated figures given that complete data is unavailable. Of
course having theoretical access or being within range of a mobile signal is not
the same as actually using telephone service. For many, telephone service still
remains unaffordable. For some, they may not even know telephone service is
close by. But what these figures do reflect is that restrictions to telephone
service are becoming more an issue of economics and awareness. These issues are
likely to become even more important as demand shifts from traditional telephone
service to Internet access.
The initial steps taken by most countries at opening up their
telecommunication markets to the private sector have produced encouraging
results in network expansion, and in some cases, in expanding rural access.
However, the full potential of the private sector to meet South Asia’s
telecommunications needs remains largely untapped. If South Asian governments
keep up their commitment to liberalization of the telecommunications sector and
universal access, we can expect further improvements. However, the governments
need to make greater effort at providing effective incentives for the private
operators to expand to less profitable rural markets. Furthermore, the need
for better monitoring of rural network expansion and access should be a
priority for governments that are genuinely committed to the development of
rural telecommunications (see Figure 5).
Table 3 – Status of telephones in South Asia
||Number with telephone service
||Percentage with telephone service
||Total with access to telephone service (000s)2
||Percentage with access to telephone service
Figures in italics refer to less
reliable estimates, secondary sources or earlier years.
1 Assumed to be rural population of country.
2 If population distribution by village size is known,
assumes most populated villages are served first. Otherwise, assumes all
villages are of same population. In reality, the majority of villages
account for a small portion of the population and tend to be connected
last. Therefore, the actual population covered is probably higher than
3 The figure for villages with a telephone is for Grameen
only (April 2002) and thus could be higher. Rural population covered is
based on Grameen estimate.
4 Official data on the number of villages in Bhutan could
not be obtained. The figure is an estimate from a secondary source.
Likewise, no information could be obtained on the number of villages with
5 Source: Census India and BSNL. Data refer to March
2002. Rural population covered derived from ITU estimate based on 1991
Census data and the assumption that more populated villages have already
6 For the Maldives, villages refer to islands. Source:
7 Data from Nepal Telecommunications Corporation (September
2001). All villages are to be provided with telephone service by June
8 The number of villages for Pakistan is from the national
power company and is based on 1981 census data. The figure for villages
with a telephone refers to a 1999 figure provided by a payphone vendor.
The data for Pakistan is extremely conservative; the actual number of
villages and rural population covered is believed to be much higher than
shown. For example, over half of Pakistan’s villages are electrified.
9 The number of villages in Sri Lanka is based on secondary
sources. Villages with telephone service are derived from the number of
sub post offices with telephone service. The village population covered by
telephone service is assumed to be the same proportion of sub post offices
with telephone service.
Leveraging on post offices
Postal service tends to be more widespread in rural
areas than telecommunication services. Some South Asian countries are
leveraging on the greater coverage of post offices to provide
telecommunication services. For example, in Sri Lanka the government has
been encouraging telecommunication operators to provide telephone service
in post offices located in rural areas. It committed around USD 600 000
for connecting some of the remote post offices to the telephone network.
About three quarters of the 3300 rural post offices have telephone
service. One problem is that demand for telephone service extends beyond
post office working hours. The government is planning to allow
telecommunication companies to operate telephone services in post offices
if they extend the opening hours. It is also subsidizing the installation
of payphones in rural areas.
In Bhutan, ITU recently launched a three-year project
aimed at providing not only telephones but also e-mail in 38 postal
offices of which 20 are in rural parts of the country. This will help
alleviate a severe shortage of telecommunication facilities in remote
parts of Bhutan where "rural coverage is negligible." Bhutan is
also considering using Internet Protocol (IP)3 technology
to wire remote villages, thus completely bypassing the conventional
circuit-switch technology that has been the mainstay of telephone networks
since their invention.4
1 Richardson, D., Ramirez, R., Haq M. Grameen
Telecom’s Village Phone Program in Rural Bangladesh: A multimedia case
study. TeleCommons Development Group. March 2000.
2 This is an area larger than the land area of
two of the other South Asian nations, Bhutan and Sri Lanka and about fifty
per cent less than Bangladesh or Nepal.
3 ITU. "Bhutan to be Testbed for ITU’s
E-Post Venture with Universal Postal Union." Press Release. 26 March
4 Branscomb, H. Pushing Unlicensed Wireless to
the Limit: Aspen to Antarctica and Burning Man to Bhutan. June 2002.
|* This article was
prepared by the Telecommunication Data and Statistics Unit of ITU’s
Telecommunication Development Bureau