A thesis submitted in partial fulfillment of the requirements for the degree of Master of Business Administration in Management of Technology, School of Management

Thesis (M.B.A.) - Asian Institute of Technology, 1997

Technological advances, globalization trends and changes in market demand have eroded the natural monopoly of Public Telecommunications Operators. Today, in both the developed and developing worlds, reform is being undertaken for a variety of reasons ranging from improving efficiency and upgrading infrastructure, to supporting a country's macroeconomic reform objectives. The Kingdom of Bhutan also has to find a suitable approach to undertake telecommunications sector reform, on the basis 9fher socio-economic, political, technological and market environment. This study addresses telecommunications sector reform in Bhutan, based on the four interrelated policy variables of regulation, competition, restructuring and ownership. A detailed analysis of the telecommunications sector in Bhutan and her greater environment is carried out in order to identify the aims, goals and objectives of telecommunications sector reform in Bhutan. Likely scenarios of reform are then developed and these range from a corporatized monopoly to the privatization of the operator and the introduction of competition. In all the scenarios, a separate regulator is established. The alternate institutional arrangements for reform are assessed using expert opinion and the most appropriate reform options identified. Relevant lessons for Bhutan are also drawn from Singapore's experience with reform. It is found that no one option allows for all the objectives of reform to be met. A phasing decision is thus required and this is further elaborated in the study. From the findings of the research, Bhutan's telecommunication sector has to undergo reform in order to seize the opportunities in this industry. However, reform must also be guided by Bhutan's national considerations. The best option in the short and medium term will be corporatization and the introduction of competition. In the longer term, privatization is indeed a viable option. Recommendations are given to conclude the study with a request to include infrastructure development as a rationale for reform. Further recommendations are made on the basis of the four policy instruments; financial considerations and national policy issues.