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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 Asia (2001)

  Population GDP in 2000 
Total telephone subscribers
Total (million) Rural (%) Total (billion) Per capita Total (000s) Per 100 inhabitants
Bangladesh 131.27   74   45.5   351   1084.90   0.83  
 Bhutan 0.69   92   0.5   715   17.6   2.54  
 India 1027.02   72   464.6   459   44  967.70   4.38  
 Maldives 0.27   72   0.5   1978   46.1   16.83  
 Nepal 22.74   88   5.3   239   315.3   1.39  
 Pakistan 144.97   67   60.3   427   4193.00   2.89  
 Sri Lanka 18.73   70   16.3   882   1496.90   7.99  
1345.69   72   593   448   52 121.60   3.87  
 Less India 318.67   72   128.4   411   7153.90   2.24  

Source: ITU World Telecommunication Indicators Database.

Telecommunications scenario

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 service.

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 telecommunication services.

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

Regulatory environment

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 Grameen Phone.

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. 

Universal access

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 telecommunication markets

Situation as of April 2002, number of operators in parenthesis

  Bangladesh Bhutan India Maldives Nepal Pakistan Sri Lanka
Local fixed M (1) (Urban)
D (2) (Rural)
M (1) C (7)* M (1) M (1)** M (1)** C (3)
National long distance M (1) M (1) C (4)*** M (1) M (1) M (1) M (1)*****
International long distance M (1) M (1) C (4)***,**** M (1) M (1) M (1) M (1)
Cellular C (4) NA C (35)****** M (1) M (1) C (4) C (4)
 M Monopoly
 C Competition
 D Duopoly
 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.

Source: ITU


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 areas.

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.

Rural networks

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 adequately served.

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 Asia.

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 of one.

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 population coverage.

Figure 5 – Tracking village phones in India

Source: BSNL
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 villages (2001)



Village population

Country Number Number with telephone service Percentage with telephone service Total (000s)1 Total with access to telephone service (000s)2 Percentage with access to telephone service
Bangladesh3 86 000 12 568 15 103 441 31 420 30
Bhutan4 6000 N/A N/A 636 N/A N/A
India5 607 491 468 016 77 741 660 726 827 98
Maldives6 200 200 100 196 196 100
Nepal7 3 914 1 761 45 19 457 8 754 45
Pakistan8 125 083 12 000 10 97 855 29 357 30
Sri Lanka9 23 000 2 475 11 13 113 9 834 75
Total 851 688 497 020 58 976 358 806 388 83
Note: 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 estimated.
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.
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 a telephone.
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 been covered.
For the Maldives, villages refer to islands. Source: Dhiraagu.
Data from Nepal Telecommunications Corporation (September 2001). All villages are to be provided with telephone service by June 2003.
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.
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.

Source: ITU.

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 2002. 

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



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