- Stale Inventory: 3G phones available in Bhutan's mobile shops are imported from India. While roaming a little around town yesterday, I found that many 3G phones do not support the 850/2100 bands, and are thus as good as 2G phones. Many dealers are not aware of the frequency issue (why?), so the wrong phones were/are imported. Some savvy consumers are deciding not to buy these phones. Others find out that their new phone doesn't support 3G and exchange it with a more expensive phone. Dealers in Bhutan are now stuck with lakhs-and-lakh-of-rupees worth of obsolete inventory which was (or perhaps still is) imported from India. Given the rate with which new phone models are launched, the value of these phones is constantly dropping.
- Trade Balance: 3G phones supporting 900/2100 can now be bought for less than Rs 5,000 (for example, the Nokia 208 Dual SIM). In contrast, Indian-imported phones that support 850/2100 are much more expensive, usually starting at around Rs 20,000. The result: more rupees leaving the country.
- Inflation: Mobile phones are now part of Bhutan's Consumer Price Index (CPI) basket. More and more people are switching from 2G phones to 3G phones. For many in Bhutan, a mobile phone is their most valuable asset. Instead of buying a 3G phone for Nu 5000 to Nu 10,000, many consumers now spend Nu 20,000 and above for a phone that supports 3G in Bhutan. People are spending more on 3G phones than they should have. While I do not have the details of the weight of mobile phones in the new CPI basket, the net result is that there's a good chance BICMA's decision has contributed to Bhutan's inflation.
Wednesday, November 6, 2013
Is a BICMA decision impacting Bhutan's inflation?
As a country's radio spectrum is a limited and highly-valuable resource, governments pay a lot of attention to its management and allocation. I already wrote a few posts about BICMA's decision to allocate the north American 850 band for 3G networks in Bhutan (in addition to 2100) instead of the SE Asian bands of 900/2100. But I have not touched on its effect on the country's economy. Here are a few points to consider: