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A Major Brake on Myanmar Digital Economy Plan

Internet Myanmar Censorship

Last week, the Myanmar government once again instructed mobile operators to block an additional slice of Internet resources.

According to Myanmar-now, the list includes three websites, six domains, and two IP addresses.

Myanmar government nor the mobile operators shared the list of targets along with the detailed motive for this block except.

To our opinion, this fast-growing blacklist along with a complete lack of transparency will have a serious impact on the country’s digital economy development. An impact that seems sadly underestimated by the government.

Here is why.

Porn is a huge part of Internet traffic

The first block ever enforced by the Myanmar government was related to adult / explicit content websites.

We strongly believe this first action was a false pretext, set a precedent that paves the way to Internet censorship in Myanmar. That being said, this first block plausibly had a significant impact on the revenue generated by mobile operators and ultimately on the taxes collected by the government.

To put things in perspective, Telenor Myanmar was the largest taxpayer among all foreign companies operating in Myanmar in 2018.

Based on various sources (Statista, BBC), porn websites generate up to 30% of Internet traffic worldwide. There is no reason to think it would be different for Myanmar. There is a handful number of porn websites being ranked in Alexa top websites in Myanmar. Even if we assume a more conservative share of 25%, that is still a quarter of the data ARPU (Average revenue per user) that could disappear with the ban. This is assuming that all porn websites have been blocked in Myanmar which is obviously not the case, still.

Based on the last digital report for Myanmar, Myanmar counts more than 68 million mobile subscribers in January 2020.

A few days ago, Telenor published its group results for the first quarter of 2020. In there, we can read that the average ARPU in Myanmar is slightly above Ks 4,000.

Assuming an even spread of ARPU across mobile operators, the overall revenue generated by mobile operators in Myanmar should be around $182M per month. Yes, per month.

In 2016, Telenor CEO claimed that 40% of its revenue was coming from data traffic. There is no reason to believe this share has decreased over time, probably the other way around.

Based on this percentage, we can estimate the data revenue generated by mobile operators all together to be $73M per month. On what, a conservative share of 25% would give $18M in revenue per month just for porn. Over 12 months, that is a potential drop of $11M on commercial tax for the government.

And that is just the beginning…

The blocklist puts a major obstacle on the country’s digital development.

The main concern is probably not the block itself but the lack of transparency that goes with it.

What are the websites that have been blacklisted?

For what rational reason?

What actions could the site owner take to be whitelisted?

All these questions remain unanswered and the mobile operators themselves appear reluctant to talk about it.

This block sends a very important message to every company eyeing to develop local content: there is a risk that the government blocks you and there won’t be a way around it.

If your content is hosted outside of Myanmar, you are under the risk that your website may not be accessible from Myanmar networks anymore. This could be a major hit for your traffic and hence your revenue especially if your audience is mostly coming from Myanmar.

But still, VPN solutions exist and your most faithful readers will find a way to bypass the country blacklist to continue reading your content.

If your content is hosted inside Myanmar, your activity is at risk that the Myanmar government summon your infrastructure or connectivity provider to bring you down. For ICT companies in Myanmar, that is a major red flag. 

The development of local infrastructure and services is a necessity for the country

In 2019, the Myanmar Ministry of Planning and Finance released its official roadmap for developing the country digital economy. The document includes a strategy, short term, and long term action plans and key milestones. Its objective is to support digital progress in nine priority sectors of the economy including education, healthcare, agriculture, tourism, hospitality, or financial services.

Digital transformation is one of the key contributors to GDP growth. According to a recent IDC study commissioned by Microsoft, Digital Transformation in APAC is expected to add 0.8% CAGR GDP growth annually by 2021.

For Myanmar, the objective is all the more important, and here is why:

This is critical for data sovereignty

Myanmar has suffered in the past from the US and EU embargo and there are still measures in place today that prevent Myanmar people from benefiting from digital services available for the rest of the world.

The country is under threat, especially with the recent political issues. Myanmar needs to protect its most valuable assets and data is definitely one of these assets. Problem: most of the country’s personal data is hosted abroad, in the hands of large multinational corporations under western jurisdiction.

This is crucial to promote the emergence of new technologies

5G is the next technology breakthrough. The new standard brings more bandwidth but more importantly, it reduces drastically the latency compared to 4G. This latency drop enables a wide range of disruptive use cases.

Even though 5G adoption may reduce the round trip time between a smartphone and the mobile core network, the only way to make the best out of these new technologies is to ensure the computing infrastructure sits very close to the mobile network. This is called edge computing.

For some of these new techs, the round trip time between a mobile phone in Myanmar and a server in Singapore is simply not acceptable. The only way to make these technologies available for Myanmar users is to bring the cloud infrastructure in-country.

So far, digital infrastructure development in Myanmar has been mainly focused on connectivity. It is a natural first step to drive internet penetration and traditional digital service adoption. Mobile operators and Internet Service Providers have made an immense job in this regard.

Digital infrastructure is not just about covering the most population and building large pipes to global data centers

There is a growing need for domestic data centers, cloud platforms, and CDN capacities in-country.

Nowadays, data is moving more and more to the edge. 5G is going to become the mobile standard in a few years and with it, comes a range of new technologies that are going to literally change the way we live. But these technologies will not be available in Myanmar as long as the infrastructure is not ready to support it.

This is no longer about having the biggest fiber network and the largest mobile coverage.

Mobile operators have done an amazing job connectivity-wise. The next step is for them to become more than telecommunications companies.

They need to transition to full-fledged communications service providers (CSP) and provide information and media services, content, entertainment, and application services on top of their telecom networks, leveraging their network infrastructure as a rich and functional platform.

In a nutshell, the belief that connectivity is sufficient for the country’s digitalization is shortsighted

It is probably enough to consume traditional digital products as we do today. But Myanmar cannot sustain its amazing growth without adopting the most advanced technologies such as Self Driving Car, Telemedicine, Smart Cities. For these techs, it is simply not realistic to consider supporting the Myanmar market from Singapore datacenters.

And this is definitely why a dogmatic internet censorship practice is so worrying. It is highly doubtful that in such context, ICT companies will invest heavily in local infrastructure knowing that their customers -content providers- can be shut down at any given time without appeal.

Let’s face it,

Myanmar is looking up at an outdated strategy from its neighbor, Thailand

Some may point out that Thailand ICT and Telecom sector are doing just fine with similar “regulatory challenges”.

It is important to note that Thailand has blacklisted websites for over 15 years. And the digital landscape has tremendously changed since. Content is moving more and more to the edge and this set of measures hinders technology advancement.

Just an example: Amazon (AWS) has deployed its cloud infrastructure all over APAC but has not stepped foot in Thailand. The same analysis could be done for Azure and Google Cloud. Coincidence?

Thailand understands slowly that its strategy is outdated and a major hurdle to technology adoption. However, it is tough for such a country to take a complete rollback on practices enforced for more than a decade.

It is high time for Myanmar to look beyond the Thai model and take examples of more mature economies such as Singapore and Hong Kong. Singapore does enforce a blacklist for reasons such as pornography or gambling. But this blacklist is public and supported by clear and transparent guidelines.

Ultimately, Internet censorship is not working

You cannot prevent people from accessing Internet content if they want to. Using a VPN solution to bypass domestic censorship is extremely easy.

Plus, content owners facing a block could simply migrate their content elsewhere. It is easy to create a new domain name and move your content to a different location. BitTorrent websites are constantly changing domain names to bypass country censorship.

Worst come to worst, the content owner will simply host the content on Facebook which is anyway the main source of information in Myanmar these days.

It is technically not possible for mobile operators to block a particular group or page on Facebook. It is not realistic for the Myanmar government to instruct the mobile operators to ban access to the largest social network in the world. This would lead not only to a gigantic collapse of the telecommunication sector but to the small formal and informal businesses that live from the social network as well.

Therefore, this decision simply put at risk the development of domestic infrastructure. This ban plays into the game of Facebook and all the giant OTT platforms that do not answer to Myanmar and only aim for profit.

For all these reasons, we urge the Myanmar government to reconsider if not, adjust its position on internet censorship.

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