Mongolia telecoms market
03 July 2015 |
Mongolia is one of the least densely populated countries in the world, but despite its predominantly basic telecoms setup, the country, like many across Asia, is making moves towards a more data-centric future.
Almost the same size as Western Europe, Mongolia is largely filled with an inhospitable terrain of jagged mountains and bleak deserts. Approximately half of the Mongolian population resides in the capital of Ulaanbaatar, with the remainder scattered across the country’s rural landscape.
“The phone has become indispensable in [the] rural economy,” said G. Oyunbayar, director of sales at Mongolian mobile operator G-Mobile, in a World Bank report published late 2014.
“Phone connections have dramatically changed rural business practices. People can now adapt to the laws of supply and demand. Herders can now directly connect with local markets, and go even further, by distributing their products on a national scale.”
According to a recent report from BuddeComm, the Mongolian government considers national telecoms infrastructure development a high priority. Politicians allegedly see it as central to the country’s overall economic development. The government’s reform programme in the mid-1990s effectively liberalised all market segments, and partially privatised fixed-line incumbent Mongolia Telecom. Its full privatisation remains a political debate.
As with many countries across Asia, the fixed-line market is in decline and the mobile market is experiencing growth. The country’s policy of having a competitive telecoms segment with two CDMA and two GSM telcos in operation saw mobile licences awarded to Unitel (GSM) and G-Mobile (CDMA) in 2005.
However, with a large volume of rural communities – some inhabited by just a handful of families – operators are faced with a difficult task when it comes to boosting connectivity in Mongolia.
It is uneconomical to provide communications services to tiny communities, and as well as the lack of telecoms infrastructure, the country’s road network is basic, providing a further obstacle to deployment. According to the World Bank, a mere 1% of the rural Mongolian population had access to a telephone connection in 2005.
But changes are in motion.
In February 2013, Mongolian ISP Nomsys partnered with Ruckus Wireless for its Smart Wifi technology, to roll out the country’s largest Wifi network in the capital. Named the Community Involved Nomad Wifi project, the network is designed to bring Wifi services to consumers and business via hundreds of Wifi hotspots throughout the more rural areas of the city.
“The rural areas of Ulaanbaatar are very densely populated, and people who live there have very low income,” says Nomsys founder and CEO, Bat-Erdene Gankhuyag. “To require them to purchase costly equipment in order to gain cellular connectivity is just not plausible, which is why Wifi is the ideal solution. Also, the involvement of the community itself is the key to success.”
Later in September 2013, the Mongolian government struck an agreement with South Korean telco KT Corp – which holds a 40% stake in Mongolia Telecom – to launch 4G LTE mobile technology in the country. Mongolia Telecom claimed that it would need an investment of approximately $1.9 billion for the roll-out, with $500 million of that expected to come from KT Corp.
Construction is underway and the telco hopes to offer LTE services in Ulaanbaatar by the end of summer 2015. The remaining 21 provinces are set to be connected by 2018.
Mongolia is establishing strong ties with its Asian neighbour and in March this year, South Korea’s SK Telecom entered into a MoU with Mongolia’s Skytel.
The deal will see SK Telecom provide Skytel with consulting services for LTE network technologies and solutions, to enable the real-time management of customer experience. A statement from SK Telecom indicated that spectrum allocations for LTE are likely to take place in Mongolia this year.
Moving forward, the Mongolian government has approved the country’s first satellite, and its national broadband programme is well underway. Alongside Ruckus Wireless’ efforts, this is an attempt to ensure that more than 50% of households have access to inexpensive broadband connections.
The country has been rising quickly through the ranks of global networking surveys. In the 2011-12 index for network readiness from the World Economic Forum, Mongolia came 63rd of 143 countries surveyed; a jump from the previous years’ place of 85.