Internet on the Mekong: Lao PDR Case Study - March 2002The Lao People’s Democratic Republic (Lao PDR, or Laos), with an area of 236’800 square kilometres, is South East Asia’s

INTERNET ON THE MEKONG:

LAO PDR CASE STUDY

March 2002

ii

This report was written by Michael Minges and Vanessa Gray of the InternationalTelecommunication Union (ITU). Tim Kelly provided valuable comments. Nathalie Delmasformatted the report. It is based on research carried out from 5 – 8 November 2001 aswell as articles and reports noted in the document. The assistance of Lao Telecom,particularly Somchit Leuangvansay and Bounthone Phounsavath, was indispensableand highly appreciated. We would also like to thank Peter Loone (PlaNet Online) andGi-Soon Song (Center for Development Research, ZEF) for their extensive and valuablecomments on the draft version of this report.

Equally, the report would not have been possible without the cooperation of the manyLao organizations who offered their time to the report’s authors. The report is one ofa series of case studies examining the Internet in South East Asia carried out in 2001.Additional information is available on the ITU’s Internet Case Study web page at

http://www.itu.int/ITU-D/ict/cs/.

The report may not necessarily reflect the opinions of the ITU, its members or the

government of the Lao People’s Democratic Republic.

The title refers to the Mekong River, which runs almost the entire length of Lao.

© ITU 2002

http://www.itu.int/ITU-D/ict/cs

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Contents

1. Country background ............................................................ 1

1.1 The only landlocked South East Asian nation ...........................1

1.2 Growing too fast? ................................................................. 1

1.3 Agriculture is king ................................................................2

1.4 Raising literacy .................................................................... 2

1.5 Recent history ..................................................................... 3

2. Telecommunications in Laos ................................................ 5

2.1 The Ministry in charge .......................................................... 5

2.2 ETL Revival.......................................................................... 5

2.3 Building the PSTN ................................................................6

2.4 Who wants a telephone? ....................................................... 6

2.5 International makes the money ............................................. 7

2.6 Mobile potential ................................................................... 8

3. Laos Internet ..................................................................... 11

3.1 Multiple initiatives .............................................................. 11

3.2 The market today ............................................................... 12

3.3 Who is in charge? ............................................................... 13

3.4 How many gateways? ......................................................... 13

3.5 How much does it cost? ...................................................... 14

3.6 Laos or Los Angeles? .......................................................... 14

4. Sector absorption .............................................................. 15

4.1 E-government .................................................................... 15

4.2 Education .......................................................................... 16

4.3 Health .............................................................................. 17

4.4 E-commerce ...................................................................... 18

5. Conclusions ....................................................................... 20

5.1 State of the Internet ........................................................... 20

5.2 Recommendations .............................................................. 21

Annex 1: List of meetings........................................................ 23

Annex 2: Acronyms and abbreviations .................................... 24

Annex 3: Useful links .............................................................. 26

Annex 4: Framework dimensions ............................................ 27

Annex 5: Bibliography ............................................................. 30

Figures

Tables

1.1 Population indicators ............................................................ 2

1.2 Human Development Indicators ............................................. 3

2.1 Telephone tariffs 2001 .......................................................... 8

3.1 Laos international Internet connectivity ................................ 13

3.2 Internet dial-up prices in Lao PDR ........................................ 14

4.1 Laos at school .................................................................... 17

4.2 Laos Health Facts ............................................................... 18

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1.1 Map of Laos .........................................................................1

2.1 Mobile cellular growth ...........................................................9

3.1 Internet users in Laos ......................................................... 12

5.1 State of the Internet in Laos ................................................ 20

Boxes

2.1 Mass Media .........................................................................9

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1. Country background


Figure 1.1: Map of Laos

Source: The World Factbook.

1.1 The only landlocked South

East Asian nation

The Lao People’s Democratic Republic(Lao PDR, or Laos), with an area of236’800 square kilometres, is SouthEast Asia’s only landlocked country.Lao PDR is situated in the centre ofthe Indochina Peninsula. It is borderedby China to the north, Vietnam to theeast, Cambodia to the south, Thailandto the west and Myanmar to thenorthwest. Some 70 per cent of thecountry is composed of mountains andhigh plateaux. The plains region issituated along the Mekong River,which runs through 1’898 kilometresof Lao territory. Situated between theTropic of Cancer and the Equator, Laoshas a tropical climate. Administra-tively, the country is divided into18 provinces, 142 districts, and10’912 villages.

1.2 Growing too fast?

Laos had a population of 5.2 millionat mid-year 2000 with an annualpopulation growth of 2.8 per cent. Atthis rate, the Lao population woulddouble by 2025, posing, according toone commentator, “serious threats to

Government efforts to raise the living

conditions of the Lao people.”1

Families are large, with the averagehousehold composed of six persons.Several hundred thousand Laotiansl ive abroad, part of an exodusfollowing the change of governmentin 1975.2 The majority of thepopulation, around 85 per cent, livesin rural areas. At 22 people per squareki lometre, Laos has the lowestpopulation density in Asia. Its capital,Vientiane, is home to some598’000 inhabitants. The country isyoung, with 94 per cent of thepopulation under 29 years.

The 1995 population census recorded48 different ethnic groups in Laos. Themajor one is the Lao Loum who live inthe lowlands and the Mekong rivervalley and who make up about 68 percent of the population. The Lao

Theung, who are believed to be Laos’first inhabitants, make up about

22 per cent of the population and livein the mountainous region. Most of the

Lao Soung, who make up about tenper cent of the population, arenomadic and often live in very remoteareas, especially the highlands, above1’000 meters. Lao culture has been

influenced by Thailand, Cambodia andVietnam and the Lao Loum sharemany similarities with the Thai. The

official language is Lao as spoken inthe capital but there are manydifferent dialects. Most are related toThai, which is also widely understood.As a former French colony, some

people–general ly the oldergeneration–speak French. English isincreasingly emerging as the second

language, particularly among theyoung. Theravada Buddhism is the

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Lao PDR Internet Case Study

religion of the majority of Laotians.Some tribes practice animism.

1.3 Agriculture is king

With an annual per capita income ofUS$ 290 (2000), Laos is one of theregion’s poorest nations and isclassified by the United Nations as aLeast Developed Country (LDC). Mostpeople survive on subsistenceagriculture. Around 39 per cent of thepopulation lives in poverty. The Laoeconomy is mainly based onagriculture, which employs over half

of the work force and contributes over50 per cent of Gross Domestic Product

(GDP).

The Laotian economy has traditionallybeen based on state planning andcontrol. In 1986, the governmentlaunched its New EconomicMechanism (NEM), aiming to create a

more market-oriented economy byemphasizing privatization, promotinginternational trade and creating a

stable environment for foreigninvestment. Between 1992 and 1997the economy grew by an average ofseven per cent a year. Laos wasaffected by the Asian financial crisis,

which started next door, in Thailandin July 1997. The devaluation of theThai baht, led to a depreciation of the

Lao currency, the kip, to one-tenth itspre-crisis value and inflation rosedrastically. Inflation hit over 100 per

cent in 1999 but dropped to24 per cent in 2000 andcontinues to stabilize. Whilethe economy started torecover in 1999, the overallsituation remains fragile andthe country’s ability to recoverfrom the crisis will also dependon Thai land’s economy.Eighty-four per cent of Laos’imports (1998) go to Thailand.Thailand also represents alarge hydroelectric market anda drop in energy demand fromthe Thai side has caused amajor loss of export revenue.Thailand is also the biggestforeign investor in Laos,including in the telecommu-nications sector.

Laos has great hydroelectricpotential and could expand this sector.Other major exports include textiles,wood and forest products, agriculturalproducts, coffee, tea, minerals, andhandicrafts. In 2000, exportsaccounted for US$ 393 million, 22 percent of GDP. Nonetheless, Laosimports more than it exports and in1999 ran a trade deficit ofUS$ 214 million.

The country depends upon foreignassistance to carry out itsdevelopment objectives and reducepoverty. A major development goal isexiting the ranks of the LDCs by theconservative date of 2020. In 1997foreign aid accounted for 38 per centof the government’s budget and in1999 foreign aid per capita stood atUS$ 58.

1.4 Raising literacy

Laos ranks 131st out of 162 on the

United Nations DevelopmentProgramme’s (UNDP) Human De-velopment Index (HDI). This places the

country towards the top of the “lowhuman development” category. TheHDI is composed of a basket ofindicators including life expectancy atbirth, adult literacy, school enrolment

and GDP per capita (measured inPurchasing Power Parity). Lao PDRranks lowest among South East Asian

Nations (see Table 1.2). Its majorweakness is the low adult literacy rate

Table 1.1: Population indicators

Source: National Statistical Centre.

Item 2000

Population (million) Population growth rate (%)

Rural population (%)

Households (thousands) Average household size

Average life expectancy at birth (years)

5.2 2.8

85

849 6.1

54.7

Age Distribution:

Below 15 years (%) 15-29 years (%) 30 years and older (%)

44 50 6

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that is reported by UNDP as 47.3 percent for 1999. This diverges fromnational statistics from the 1995population census where the adultliteracy rate in Laos was reported at60 per cent. A recent governmentreport claims that literacy had risento 70 per cent by 2000.3 Furthermorenational statistics base the literacyrate on the respondent’s ability to readand write Lao. This may result indistorted results since only 53 per centof the population is ethnically Lao.

1.5 Recent history

The first Laotian state, the Kingdomof Lane Xang (“million elephants”) wasfounded in 1353. It existed until thebeginning of the 18th century, when itwas divided between three separatedynasties and ruled by the Siamese(Thai). In 1893, Laos became a Frenchprotectorate. Although there was a

Table 1.2: Human Development Indicators

Source: ITU adapted from UNDP.

Lao PDR compared to selected South East Asian countries, 1999

HDI Rank Country

Life expectancy

at birth (years)

Adult literacy

rate (%)

Combined school gross

enrolment ratio (%)

GDP Per Capita

(PPP US$)

26 Singapore 77.4 92.1 75 20’767

56 Malaysia 72.2 87.0 66 8’209

66 Thailand 69.9 95.3 60 6’132

70 Philippines 69.0 95.1 82 3’805

101 Viet Nam 67.8 93.1 67 1’860

102 Indonesia 65.8 86.3 65 2’857

118 Myanmar 56.0 84.4 55 1’027

121 Cambodia 56.4 68.2 62 1’361

131 Lao PDR 53.1 47.3 58 1’471

strong nationalistmovement beforeand during WorldWar II (when thecountry wasoccupied by theJapanese), Franceregained controlover Laos. In July1949 Laos obtaineds e m i -a u t o n o mywithin the FrenchIndochina Union.An independencemovement fromVietnam, the VietMinh, backed by thenational resistancemovement, thePathet Lao (“Landof Laos”), movedinto parts of centralLaos and civil warbroke out. TheFrench eventuallyacknowledged theindependence ofLaos and theKingdom of Laos

gained full sovereignty in 1954.National conflicts between differentforces led to further internal struggles.In 1961 these forces agreed to acease-fire and the establishment of acoalition government. However soonafter, Laos became embroiled in theCold War and drawn into the US-Vietnam war. Laos sustained some ofthe heaviest bombing of the 20th

century as US forces sought to destroyparts of the Ho Chi Minh Trail thatpassed through the eastern part of thecountry. Another terrible legacy of thewar is that more than 25 years later,some 50 per cent of Laotian territorycontains unexploded ordnance. InDecember 1975 the monarchy wasabolished and the Lao People’sDemocratic Republic established underthe rule of the Pathet Lao party. Laoadopted its first constitution in 1991.In 1997, Lao PDR joined the Associationof Southeast Asian Nations (ASEAN).

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1 “Lao population set to double in one generation.” Vientiane Times. 9 – 12 November 2001.

2 According to the US government, some ten per cent of the Laotian population sought refugee status since1975, including 250’000 who have settled in the United States. See U.S. Department of State. “BackgroundNote: Laos”. www.state.gov/r/pa/bgn/index.cfm?docid=2770. According to a Thai newspaper article, 56’384Lao workers have registered with labour authorities in Thailand and this is believed to be only a fraction ofthe total number of Laotians living in that country. See Penchan Charoensutthipan. “Aliens flustered asemployers refuse to pay for registration.” Bangkok Post. 23 October 2001.

www.bangkokpost.net/231001_News/23Oct2001_news09.html

3 Lao PDR Government. Interim Poverty Reduction Strategy Paper. 20 March 2001.

www.imf.org/external/np/prsp/2001/lao/01/index.htm.

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2. Telecommunications in Laos


Lao PDR has made a number of changesto the structure of its telecommu-nication sector over the last decade.This includes introducing privateinvestment through a joint venture(1994) as well as separating posts fromtelecommunications (1995). A newtelecommunication law was passed in2001 and will soon be implemented. Atleast in theory, the sector has been opento competition since the beginning ofNovember 2001. However thesechanges have not typically been theresult of a transparent timetable. Todaythe telecommunications sector seemstrapped in a web of tension betweendevelopment assistance bodies, privateinvestors, inter-ministerial rivalry andstate planners. Reconciling these forceswill be a major challenge. The nationalso faces immense technical andcommercial challenges in expandingtelecommunications. Most of thepopulation resides in rural areas,transport and electrical infrastructureare scarce and incomes are low. Thetraditional money earner for theindustry, international telephone calls,is under mounting pressure globally andlocal tariffs have not kept up with therecent pace of inflation and currencydevaluation.

2.1 The Ministry in charge

The Ministry of Communication,

Transport, Post and Construction

(MCTPC), with a staff of around 300,is responsible for telecommunicationpolicy and regulation. The Department

of Posts and Telecommunications

(with a staff of 22) is the functionalunit within MCTPC whose tasks includefrequency management, telecom andpost policy, long term developmentstrategy, licensing and regulation.MCTPC has an annual budget allocatedby the government. The Germandevelopment bank, KfW, is one of anumber of bodies involved in advisingthe government on the establishmentof a regulatory authority.4

Telecommunication development hasbeen guided by Master Plans. Detecon,the consulting arm of DeutscheTelekom, developed the Master Plancovering the period 1990-2000. TheJapanese International CooperationAgency (JICA) is developing a newMaster Plan, covering the period 2003-2015.

2.2 ETL revival

Until 1993, the Enterprise of Post andTelecommunications Lao (EPTL) wasthe 100 per cent government ownedorganization responsible for operatingtelecommunications in the country. In1994, a joint venture was establishedbetween the government and a Thaicompany, Shinawatra InternationalPublic Company Limited, called LaoShinawatra Telecom Company Ltd (LST)to operate telecom services (telecomproject Phase III). It should be notedthat this was not the first example ofprivate investment in the telecomsector. In 1990, Telstra of Australiainstalled and operated an internationalgateway with satellite connectivity toIntelsat. This so-called BusinessCooperation Contract, following a modelcommon in Vietnam, was for a term often years and has expired.

In 1995, EPTL was divided intoEnterprise of Post Lao (EPL),responsible for postal services andEnterprise of Telecommunication

Lao (ETL), responsible fortelecommunications.

In 1996, ETL and LST were mergedto form Lao Telecommunications

Company Limited (LTC, or LaoTel)with the government owning 51 percent and Shinawatra owning 49 percent. LaoTel was granted a concessionof 25 years with five-year exclusivity(through October 2001).

Meanwhile the Japanese governmenthad provided infrastructure grants and

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loans in the 1990s. These included localand transit exchanges as well as theinternational gateway. Under its officialdevelopment assistance policy,Japanese aid is not available for privatecompanies such as LTC. Therefore a wayhad to be found to regularize thissituation. So ETL was resurrected inAugust 2000 and the Japanese suppliedassets transferred to it. As a result,LaoTel ended up leasing certain networkelements needed for its serviceprovision such as the internationalgateway. With the expiration of LaoTel’sexclusivity in October 2001, the way isnow open for ETL to enter the sector asa telecom service provider. ETL plansto provide fixed telephone lines, mobileGSM and VoIP services in 2002.

Millicom International Cellular SA, aL u x e m b o u r g - h e a d q u a r t e r e dinternational mobile investor, withoperations in a number of countriesincluding Cambodia and Vietnam,announced in June 2000 that it hadapproval (in the form of an MOU) toobtain a mobile cellular license upon theending of the exclusivity of LaoTel’slicense.5 In January 2002 Millicom wasawarded a GSM 900 and 1800 license.It will provide mobile services in a jointventure with the government and isexpected to launch in the second halfof 2002.6

2.3 Building the PSTN

Laos has made impressive stridesduring the 1990s in boosting its fixedtelephone network. Annual growthaveraged 20 per cent a year between1991-2000, the 3rd highest in the SouthEast Asia region. As a result the numberof fixed telephone lines in service grewfrom 7’270 in 1991 to 47’810 inSeptember 2001. Fixed teledensity rosefrom 0.17 to 0.89 per 100 inhabitantsand is poised to break one sometime in2002. The local exchange network iscompletely digital.

A microwave backbone running thelength of the country from north tosouth was completed in 1994. It isstarting to show its age and is havingdifficulty handling the increased growthof the telecommunication network. Dueto a lack of electricity, solar energy orgasoline generators power parts of the

backbone but in some places, the solarstorage units are losing capacity.There is one fibre-optic junction. Itruns from east to west from theVietnamese border (via Khamkeut inBolikhamxay province) to Vientiane,and is part of the regional CSC (China-Singapore Cable) network, planned bythe Asian Development Bank. The ideaof installing a fibre optic network alongthe highway that would run most ofthe length of the country has beenplanned by ETL. Lao Telecom has alsopetitioned the government to allow itto use satel l ite technology fornationwide communications.

2.4 Who wants a telephone?

Universal telephone service—wherealmost every family has a telephone—is still a long way off for Laos. It isestimated that fewer than four percent of Laotian households currentlyhave a telephone. Less than half ofLaos’ districts (58 out of 142) havefixed telephone services and onlyurban areas in half of the provincesare covered by a mobile cellular signal.

There is no specific plan for developinguniversal access to telecommuni-cations. The telecommunicationMaster Plan established targets butthere was no clear link between thesetargets and explicit mechanisms forachieving them. Of course the factthat the government owns half ofLaoTel suggests that it can exert itsgoals into network rollout. The MCTPChas set a target of teledensity of threeby 2005, but again there is no clearmechanism of how this wi l l bereached. It is interesting to note thataccording to official reports less than6’000 people were on the waiting listfor a fixed telephone line at the endof 2000. This suggests that 87 percent of all expressed demand fortelephone service in the country is met.Taken at face value, one could arguethat demand for telephone service inLaos is almost satisfied. However thisdoes not factor in people that could notafford telephone service or just assumeservice cannot be obtained becausethey live in areas without electricity ortelecommunication infrastructure. Oneestimate puts ‘hidden’ demandat 35’000.

7

It seems that affordability is onlypartly a barrier to access. Theconnection charge for the fixedtelephone network is just Kip 300’000(US$ 38). This amount is equivalentto roughly 13 per cent of householdyearly consumption expenditure.7

Though this seems large, it is a one-time investment to get connected tothe network and is far below the actualcost of providing service. After that,monthly expenditures for phoneservice seem manageable forwealthier households. For example themonthly telephone fee plus100 minutes of local telephone calls(Kip 15’000 + 4’500 = 19’500) is equalto 10.3 per cent of average monthlyhousehold consumption. It should benoted that the average householdalready spends 10.6 per cent of itsincome on transport andcommunications. Furthermore, there isa difference in consumption betweenurban and rural households. For theaverage urban household, monthlytelephone service would amount toabout six per cent of consumption. Thusthere are at least 135’000 urbanhouseholds that could afford telephoneservice yet only around 33’500 hadservice at September 2001. Thoughmore work is needed in analysingtelecommunication demand in thecountry, there appears to be a mismatchbetween supply and demand.

One means of promoting wider accessis through public payphones. LaoTelinstalls card phones since there areno coins in circulation. These are beingupgraded to magnetic smart cards. AtSeptember 2001, there were 312 cardphones in the country, more thandouble the amount three years earlier.The close community structure in Laosalso lends itself to telephone sharingand those with phones will often letneighbours use them (typically for afee of between Kip 1’000 – 2’000 perminute). This may explain whycompared to other developingcountries we find few public phonecenters. Also, public phone centerscan only operate under ETL’s orLaoTel’s license.

The role that prepaid mobile hasplayed in other countries forenhancing telecom access has not yet

been fully exploited in Lao PDR.Prepaid service was only launched in2000, and is more than three timesmore expensive per minute thansubscription mobile service (800 kipper minute, or about US$ 0.8 perminute). It seems certain that newcompanies planning to enter themobile market will launch with prepaidservices. If mobile coverage can alsobe extended, this could mean a bigboost to telecom access.

With 83 per cent of its populationresiding outside urban areas, ruraltelecommunication development is animportant challenge for Laos. LaoTelhas a Rural Telecom Networks projectwith four phases. The technology isbased on radio links from towns withtelephone exchanges to villages. Thefirst three phases, covering the period1994-2001, saw the installation of1’224 l ines. The fourth phase,covering 2001-2004, will install anadditional 856 lines.

The Asia Cellular Satellite Company(ACeS) has been lobbying thegovernment to operate in Laos.8 Thispan-regional geo-mobile satellitesystem covers all of South East Asiaand works with a small antennaattached to a dual mode (satellite /GSM) mobile handset. It seemsespecially appropriate in Laos wherelarge parts of the country areinaccessible by roads and lackelectricity or telecommunicationinfrastructure.

2.5 International makes the

money

Laos is typical of many developingcountries where international callshave been used to keep local serviceaffordable. The country has some ofthe highest international tariffs in theworld as well as some of the cheapestlocal ones. A one-minute call to theUnited States costs US$ 1.90 whereasa local call costs less than one US cent.International services accounted for50 per cent of LaoTel’s revenues in2000. This situation is probablyuntenable. Although LaoTel currentlyhas a monopoly on overseas calls, thismay soon end as ETL and perhapsothers are expected to enter the


8


market. Furthermore indirectcompetition is having an impact oninternational revenues. This includesgrowing incoming traffic as well asrefile.9 Another development is Voiceover Internet Protocol (VoIP). Thoughtechnically il legal for anyone toprovide besides LaoTel and ETL, VoIPis openly offered in many Internetcafés. In addition, ETL plans to launchan international VoIP service.

Being landlocked, Lao PDR reliesheavily on satellite technology forinternational traffic. It uses an IntelsatStandard A earth station donated bythe Japanese. An earth stationinstalled by Telstra in 1990 under aten-year so-cal led BusinessCooperation Contract is no longer inuse. There are also radio and fibreoptic links across the border toThailand and Vietnam.

2.6 Mobile potential

An AMPS analogue cellular networkwas launched in 1993 servingVientiane and a year later a GSM 900network was introduced (December1994). The AMPS network has sincebeen shut down. The GSM network isnow available in nine of the country’seighteen provinces. As coverage isusually available only in the largesttown of the province and does not fullyextend down the nation’s mainhighway, it is estimated that less thanten per cent of the population iscovered by a mobile signal.

Despite eight years of mobile cellular,Lao PDR has not yet experienced awireless boom to the same extent as

other developingnations. Forexample, neigh-bour Cambodia,with roughly thesame per capitaincome, launchedmobile about thesame time as Laos.Yet Cambodia nowhas twice themobile penetrationof Laos. AtSeptember 2001,mobile subscribersaccounted for one

third of the total telephone subscribersin Laos and mobile density was a mere0.25 per cent.

There are several possible expla-nations. Laos was the last country inthe region to introduce competition inthe mobile sector. It also only recentlylaunched prepaid (2000). Some arguethat the country’s economic andgeographic situation work againstwide mobile penetration. Incomes arelow, the vast majority of inhabitantsare rural and much of the terrain ismountainous. The relevance of thesefactors will become more known overthe next year with two new mobilenetworks set to launch (ETL;Millicom).

Perhaps in anticipation of mobilecompetition, LaoTel has been activelybuilding out the mobile network overthe last year. The number ofsubscribers grew by 75 per centbetween January and September2001, significantly above the annualaverage growth of 44 per cent a yearbetween 1997-2000. One factor hasbeen the start of the M-Phone prepaidservice. Launched in 2000, there were5’402 prepaid subscribers atSeptember 2001, accounting for21 per cent of all mobile cellularsubscribers.

Some Laotians already benefit from asort of indirect mobile competition.Those living along the 1’835 longkilometer border with Thailand canreceive cellular signals from Thaimobile operators. For example,various parts of Vientiane are withinrange of Thai mobile networks.

Table 2.1: Telephone tariffs 2001

Source: LaoTel.

Item Kip US$

Telephone connection 300’000 38

Monthly subscription 10’000 1.27

Local call (per minute) 45 0.6 US cent

9


Figure 2.1: Mobile cellular growth

Source: ITU adapted from LaoTel.

Laotians with business interests in

Thailand have been known to take out

Thai mobile subscriptions. Laos is also

losing out on roaming revenues as it

has few agreements with mobile

operators in other countries. Some

foreigners in Laos thus connect to Thai

networks to make roaming calls.

Box 2.1: Mass Media

Lao PDR’s mass media is undeveloped. This is due

to its late start, the difficulty of delivering

newspapers over few roads, inaccessibility of

electronic media, the low literacy rate as well as

government ownership of all media. The Ministry

of Information and Culture is responsible for policy

and regulation in the sector. The first newspaper

was launched in August 1950. Today there are two

major Laotian dailies—People’s Daily (Pasason) and

New Vientiane (Vientiane Mai)—with a combined

print run of around 15’000 copies. There is also an

English language bi-weekly, the Vientiane Times(3’000 copies) and a weekly French paper,Rénovateur (1’000 copies). News kiosks are rare

and foreign newspapers and magazines are virtually

unobtainable. The foreign language papers as wellas the Lao News Agency (Khaosan Pathet Lao, KPL)have web sites.10

Radio broadcasting started in 1960. There are twonational channels and 20 provincial stations

broadcasting over AM and FM bands. Radio covers

around 65 per cent of the population. According tothe National Statistical Centre, 52 per cent ofLaotian households had a radio in 1997. Radio is a

key source of news and information due to its

comparatively wide coverage, the relatively low cost

of a radio receiver and the fact that radio can reach

illiterate sections of the population.

Television broadcasting started in May 1993. Like

radio, there are two national channels broadcast

over 27 nationwide stations. Terrestrial coverage

is around 40 per cent of the population. Some

30 per cent of households had a television in 1997.

In frontier regions, channel availabil ity is

supplemented from cross-border television signals.

For example, three Thai television stations can be

received in Vientiane. A growing number of Laotians

are turning to satellite television. Thailand’s UBCpay Direct-to-Home service is available in parts ofLaos. A Chinese cable TV operator has also been

licensed in Vientiane and was recently granted a

ten year nation-wide concession.

Videos and VCDs do good business in Lao, since

the last cinemas closed a few years ago. Thai

cinemas have been a beneficiary with some Laotianshopping across the border to watch a movie. Some20 per cent of Laotian homes had a video recorder

in 1997, a high proportion considering the relatively

low level of incomes.

0.3 0.6 1.5 3.8 4.76.4

9.4

13.9

29.5

0.52

0.18

0.120.090.080.030.010.01

0.27

93 94 95 96 97 98 99 00 01

Per 100 inhabitants

Mobile cellular subscribers (000s)

10


4 See “Advising the state on setting up regulatory authorities” on the KfW web site atwww.kfw.de/en/entwicklungszusammenarbeit/news38/archive86/onfocus67/public-pri.jsp

5 Millicom. “Millicom Received Approval in Principle for the License to Provide Nationwide Cellular Telephony inLaos.” Press Release. 23 June 2000.

6 http://micc.client.shareholder.com/news/20020124-70740.cfm.

7 Average monthly household consumption was Kip 189’319 in 1997/98 the latest year for which data isavailable. This and other data used to calculate affordability come from National Statistical Centre. The

Households of Lao PDR. December 1999.

8 For more information see the AceS web site at www.acesinternational.com

9 Refiling refers to an operator taking [refiling] its international traffic to/through a third country where lowercharges apply for forwarding of traffic to its ultimate destination country.

10 The Vientiane Times web site address is www.vientianetimes.la. Le Renovateur is hosted on the Laolink website is: www.laolink.com/renovateur/renovat.htm. The KPL web site is at: http://asean.kplnet.net.

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3. Lao Internet

3. Laos Internet

The Lao People’s Democratic Republicfaces huge barriers in Internet accessand use. First, since incomes are low,the price of the equipment needed toaccess the Internet is prohibitive.Second, even if Internet access wasaffordable, telecommunicationinfrastructure is lacking outside mosturban areas. Third, due to bothtechnical and motivational reasons,Laotian content is practically non-existent. Fourth, because of relativelylow levels of literacy and educationalattainment, awareness of the Internetis not high among most of thepopulation.

Despite these barriers, there is agrowing interest in the Internetamong the educated and urban youth.One unique aspect of Lao is that dueto the only recent opening of thenational university (October 1996),most college educated citizens studiedabroad. Many came into contact withthe Internet during their overseasstay. They are multi l ingual andcosmopolitan and keen to stay inelectronic contact with the world.Another factor raising awareness isthat urban areas close to the Thaiborder are becoming familiar with theInternet through televisionadvertising. Laotian secondary andpost-secondary youth are also awareof the Internet. Many are learningEnglish because of the large amountof content in that language. Thenumber of Internet cafés is growingand while they first sprung up to servetourists they are increasinglyattracting curious Laotians.

The Laotian government has at timesbeen suspicious about the potentiallydestabilizing influence of the Internet.This partly explains the Internet’sdelayed arrival in Lao PDR. On theother hand the governmentincreasingly recognizes that Internetis important for development. Theentry of Laos to the Association of

South East Nations (ASEAN) in 1997has also brought a boost to theInternet. ASEAN has a number ofprojects that call on its membercountries to establ ish Internetconnectivity, notably the e-ASEANinitiative <www.e-aseantf.org>.

3.1 Multiple initiatives

The history of the Internet in Lao ismarked by different projects, drivenby Lao expatriates, bi- lateraldevelopment assistance andcommercial interests. These initiativeswere often taken independently, withlittle coordination among them.

In 1994 Lao expatriates and otherswith an interest in the country set upan electronic bul let in board(Soc.Culture.Laos). They formed agroup called LaoNet with the goal ofestablishing Internet connectivity inLao. In December a member of LaoNetvisited Vientiane and established adial-up e-mail service from theNational Polytechnic Institute toWashington DC. Financial problemsand other obstacles led to the servicebeing discontinued.

The Canadian InternationalDevelopment Research Centre (IDRC)launched a project in July 1996 throughits Pan Asia Networking (PAN) initiativeto provide e-mail connectivity in Laos.Working with the predecessor of theScience, Technology and EnvironmentAgency (STEA), IDRC provided a grantto purchase the needed equipment. Thise-mail service worked through a dial-up connection to a server inSingapore.11

Parallel to these efforts, a number oforganizations were using InternetService Providers (ISPs) inneighbouring Thailand. Although thisinvolved long distance telephone calls,it served to illustrate the demand forthe Internet. Some international

12


organizations were grantedpermission by the government tooperate their own Very Small ApertureTerminal (VSAT) satellite connectionsto the Internet using the SociétéInternationale de TélécommunicationsAéronautiques (SITA) network.

In August 1998, Globenet <www.laonet.net> established the firstpermanent Internet connection in Lao,using a satellite operating via thePhilippines. Globenet, a companyestabl ished by an Americanexpatriate, obtained permission forthe l ink from the Ministry ofInformation and Culture as part of aproject to provide connectivity for theLao news agency (Khaosan PathetLao, KPL).12 Globenet also provide abroadband wireless service to almost50 customers in Vientiane usingBreezeNet equipment on the 2.4 Ghzfrequency.

In January 1999 the Lao NationalInternet Committee (LaNIC) of thePrime Minister’s office awarded ISPlicenses to Globenet and PlaNetComputers <planet.laopdr.com>.PlaNet launched in February 1999 butwas limited to only a few dial-upcustomers due to a lack of telephonelines. In 2001 PlaNet signed anagreement with ETL for 128 phonelines, and launched a full dial-upservice in January 2002 using the CSCfibre-optic cable to Bangkok forbackbone connectivity in partnershipwith ETL.

Although licensed by the MCTPC to doin 1997, the national telecommuni-cation operator LaoTel <www.laotel.com> only launched its commercialInternet service in August 1999 undercommercial pressure from Globenetand PlaNet Online. Its internationalconnectivity was via a 64 kbps link toSingNet in Singapore.

3.2 The market today

There are three commercial ISPsoperating today, PlaNet Online, LaoTeland GlobeNet. At September 2001,they had around 2’900 subscriberswith LaoTel controlling around threequarters of the market. There are no

surveys regarding the number ofInternet users in the country. Basedon a multiplier of the number ofsubscribers, it is estimated that therewere around 9’000 users in thecountry in September 2001. Thisresults in a ratio of 1.63 Internet usersfor every 1’000 inhabitants of Laos.Put another way, the number Internetusers has increased from one per10’326 inhabitants in 1998 to one in615 by September 2001.

Besides dial-up service provided bythe three commercial ISPs, STEA alsoprovides connectivity for eightgovernment ministries. Some usersstill connect to Thai ISPs. Internationalorganizations with a waiver from thegovernment can also establ ishInternet connectivity via their ownVSAT links.

The only leased lines are thoseprovided by GlobeNet’s fixed wirelessservice. This utilizes microwave andis available in Vientiane. Speeds cango up to 444 kbps but are rarely above33 kbps.

Approximately 60 Internet cafésoperate in Laos, with about 45 of thesesituated in Vientiane. The combinedcomputers available at cafés in Laosis estimated by an operator of a chainof five Internet cafés as being about480 terminal nationwide. Considering

Figure 3.1: Internet users in Laos

Source: ITU estimates.

500

2'000

6'000

10'000

1.8

1.2

0.4

0.10

2'000

4'000

6'000

8'000

10'000

12'000

1998 1999 2000 2001

0.0

0.5

1.0

1.5

2.0

Users Per 1'000 inhabitants

13

the amount of use each Internet caféterminal receives, Internet cafésarguably provide more hours on theInternet than any other form ofInternet access in Laos.

3.3 Who is in charge?

The Lao National Internet Committee(LANIC) was formed in 1998 toregulate and establish Internet policyfor the nation. It was created basedon an Internet Decree issued by thePr ime Minister. The committeecons ists of the Min istry ofCommunication, Transportation,Posts and Construction (MCTPC); theMinistry of Information and Culture(MoIC); the Ministry of Interior; theMinistry of Foreign Affairs (MoFA)and STEA.

It was never c lear i f LaoTel ’sexclusivity included Internet servicesespecially since GlobeNet and PlaNetobtained their license from LANIC.In any case this is no longer an issueas LaoTel’s exclusivity ended inOctober 2001. It appears that LANICis ready to grant a limited numberof additional ISP licenses.

Internet cafés are theoretical lysupposed to be l icensed. Mostoperate without a license but aretolerated. Few have occasionallybeen shut down for overtly providingIP Telephony. IP Telephony is illegal,

except for l i censed te lecomproviders. The MCTPC has indicatedthat if an IP Telephony serviceprovider gets approval from LaoTel,then this would be acceptable.

The MoIC is theoretically responsiblefor approving content providers.However as there are so few Laotians i tes i t has not exerc ised th isresponsibility. The MoIC is equallyresponsible for content and accessto pornographic and pol i t ica l lysensitive sites is meant to be blockedvia a firewall.

3.4 How many gateways?

Up to now, ISPs have been allowedto provide their own internationalgateways. Each of the four Internetproviders (three commercial and onegovernment) has i ts owninternational connection (see Table3.1). Since Laos is landlocked,connectivity is mostly via satellite.PlaNet/ETL, LaoTel and STEA havesymmetr ical connect iv i ty whi leGlobeCom has more incomingbandwidth than outgoing. LaoTel waspaying around US$ 3’100 per monthfor i ts internat ional Internetbandwidth in November 2001.

The government is keen to merge allgateways into a single connectionwith a capacity of two Mbps. This‘One Gateway’ project may beinitially hosted and managed bySTEA, then handed over to MCTPCunder the new regulations. So far,little progress has been made in thisarea. One advantage might be toconsolidate bandwidth requirements,thus theoretically obtaining cheaperprices. However, the main motive forthe government seems to be thedesire for control, both over contentand potential revenue. It is allegedthat firewalls are already in placethus restricting access to sensitiveweb sites. Disadvantages of thesingle gateway proposal would be alack of redundancy as well as theinability of ISPs to plan their networkgrowth and manage their quality ofservice and their expenses. In anycase, STEA currently lacks sufficienttechnical staff to maintain theproposed gateway.

3. Lao Internet

Table 3.1: Laos international Internet connectivity

Note: For PlaNet/ETL actual bandwidth in February 2002 was256 kbps.

Source: ITU adapted from ISPs.

November 2001

ISP International

Bandwidth

(kbps)

Note

GlobeCom 640 in

220 out

Via Mabuhay Satellite

Lao Tel 512 Via SingNet

STEA 512 Via Thaicom

PlaNet/ETL 2’000* Fibre opitc connection

to Bangkok (CSC)

TOTAL 1’664 in

1’244 out

14


3.5 How much does it cost?

Dial-up Internet access tariffs are pricedin United States dollars. Telephoneusage charges also apply; they are45 Kip per minute (34 US cents perhour). Table 3.2 shows dial-up Internetprices for LaoTel as well as thecorresponding telephone usage charge.Unlimited dial-up packages are notcurrently available nor are pre-paidcards. Dial-up Internet pricing isrelatively expensive for the South EastAsia region with Lao having the secondmost expensive tariffs after Cambodia.Internet cafés in Lao were chargingbetween 80 – 200 Kip per minute (US$0.55 – US$ 1.51 per hour) for Internetaccess in November 2001.

GlobeNet charges US$ 200 per monthfor its wireless solution. The advantageis that the service is flat fee so heavyusers do not have to pay local telephonecharges. A typical installation costsaround US$ 2’500.

3.6 Laos or Los Angeles?

According to Network Solutions, STEAis the registrant for the ‘la’ domain namewhile SingNet, Singapore Telecom’s ISP,

11 Chin Saik Yoon. “PAN Laos: Connecting Vientiane to the Internet.” IDRC Reports. 16 January 1998.http://www.idrc.ca/reports/read_article_english.cfm?article_num=179.

12 For more on Globenet and early networking initiatives in Lao PDR see Paula Uimonen. “Connecting Laos:Notes from the Peripheries of Cyberspace.” Proceedings of the 9th Annual Conference of the Internet Society.June 1999. http://www.isoc.org/inet99/3a/3a_2.htm.

13 “dotLA Inc. to Register .la Top.” 12 December 2000.

http://asia.internet.com/asia-news/article/0,,161_675601,00.html.

is the technical contact. STEA has soldthe rights to market (and sell) secondlevel domain names on the .la ccTLD(country code Top Level Domain) to acompany called Sterling, who aremarketing it as “Los Angeles owndomain” and selling each domain forUS$ 100. Under the agreement withSterling, STEA is meant to be set upand trained to sell third level domainson the .la ccTLD (ie, .com.la, .org.la,etc.). Although the deal was signed twoyears ago, STEA still has not sold oractivated any third level domains. Also,despite Sterling having sold second level.la domains for US$ 200 more thantwelve months ago, these domains arestill not functioning and Sterling are nowasking for renewals of US$ 100. ThePrime Minister’s Office and MCTPC arecurrently trying to regain full control ofthe .la ccTLD.

As a result, there are no known Laotianorganizations that are using the ‘.la’domain name. There are about 50 sitesfor Lao companies and organizationsusing PlaNet’s laopdr.com, laopdr.netand laopdr.org third level domain levelservice (i.e., www.beerlao.laopdr.com).Most other local sites use second level.com or .net domain names.

Table 3.2: Internet dial-up prices in Lao PDR

Note: Telephone usage charges converted to US$ at rate on 1 November 2001 (7'932 kipper US$).

Source: ITU adapted from LaoTel.

LaoTel, November 2001

Monthly Telephone

Package Hours included ISP charge usage charge Total

Starter 1 6 $6.00 $2.04 $8.04

Casual 1 10 $12.00 $3.40 $15.40

Casual 2 15 $18.00 $5.11 $23.11Pro 1 25 $26.00 $8.51 $34.51Pro 2 35 $33.00 $11.91 $44.91

Busi Pro 50 $41.00 $17.02 $58.02

15

4. Sector absorption

This study has analyzed Informationand Communication Technology (ICT)developments in Laos by looking at thetelecom and the Internet markets,including the infrastructure and theregulatory framework. Another way oflooking at Internet developments is tofocus on how it is being used. How dothe different sectors of the governmentand the economy make use of theInternet? Making use of the Internetrefers to two things. On the one hand,the Internet may be used as a directtool, to facilitate administrative tasks,to communicate, or to research. As anindirect tool, the Internet may be usedto promote the purpose of a sector, forexample, through a web site or byproviding or making use of a particularapplication. In both cases, the Internetmay allow a government or the privatesector to increase efficiency, providenew services and expand its activities.

Laos was one of the last South EastAsian countries to adopt the Internet.Its recent introduction manifests itselfin limited use of ICT. Governmentministries make little use of the globalnetwork and the business sector hasequally been slow to implement Internetrelated applications. There are severalreasons, the most obvious one (but notnecessarily the most obstructive) is thelack of infrastructure. Nonetheless, onlya fraction of the existing PCs are actuallyconnected to the Internet. Fewgovernment officials use the Internetand if they do, it is mainly to exchangee-mail. This means that the benefits ofthe Internet, where it is used, remainrather subtle (after all, e-mail is verysimilar to fax).

Which takes us to the second barrier toICT development in Laos. It appearsthat there is an insufficientunderstanding of the benefits and thepotential of the Internet. Althoughgovernment officials agree that theInternet is important and needs to beexpanded, there are no concrete plans

for doing this. This lack of awarenessapplies to more sophisticatedapplications, as well as to basicapplications that could help to facilitatemany people’s lives. One might thinkof applications for the rural populationthat could provide them with weatherforecasts or agricultural market prices.

A third barrier to the development ofthe Internet in general and its use indifferent sectors in particular, is the lackof coordination between differentgovernment ministries and agencies.While different agencies and groupsseem to be working on ICT relatedprojects, there is no overall ICT MasterPlan. It is not clear whether differentinterest groups are competing with eachother or whether the government isfacing a lack of communication. It isobvious, though, that the governmentneeds to define and distributeresponsibilities.

The above-mentioned barriers arecharacteristic for all sectors of theeconomy and help explain why so littlesector absorption of the Internet hastaken place.

4.1 E-government

One of the main barriers to Internetdevelopment in Laos is the lack ofcoordination. It is not quite clear whichagency or ministry is in charge of ICTpolicies and there seems to be ashortage of communication betweendifferent parts of the government.Friction over the scope of responsibilitiesseems to exist especially between theScience, Technology and EnvironmentAgency (STEA) and the Ministry ofCommunications, Transport, Posts andConstruction (MCTPC).

In 1996 STEA was given theresponsibility over IT and the mandateto prepare Laos for the 21st century. The“Lao National Plan on IT: Master Planup to Year 2000”, drafted by STEA,


16


called for a series of projects, includingthe computerization of the government.STEA was to develop different onlineapplications for the general public,connect all ministries with each other,and develop uniform software standardsto guarantee compatibility within thegovernment. None of these plans have,however, materialized and while theMaster Plan ended in 2000, there wasno follow-up.14

Currently the MCTPC, together with theJapanese government, is working on aTelecommunication Master Plan that willcover the period up to 2015. One ofthe objectives of this plan, which willalso cover IT policies, is to clarify theresponsibilities within the government.According to the MCTPC it will be incharge of all ICT policies.

4.1.1 Government as a user

Government as a user covers the waysin which the administration uses ICTtechnologies internally to increase itsefficiency. The Lao government doesnot extensively use the Internet or ICTin general. Although most ministrieshave some kind of computer network,they are very basic, allowing them toshare printers and files. Not allministries have Internet access andeven the MCTPC is limited to sevenInternet accounts. Most otherministries with Internet access havebetween 1-3 PCs, limiting access tothe top administration. Consequently,only few government employees havetheir own e-mail account at work.Although most ministries are planningto set up their own web site, none ofthem are currently online. The ForeignInvestment Management Committee,with assistance of the World Bank,have an investment portal whichprovides information for investors andonl ine investment appl ications(www.invest. laopdr.org).

4.2 Education

4.2.1 The Ministry

The Ministry of Education (MoE)employs about 250 people in Vientianeand some 35 people in each of the18 provinces (excluding teaching

staff). There are plans to install anintranet as well as a Wide-Area-Network (WAN). This network wouldsupport a Management InformationSystem (MIS) and increase overallefficiency, for example, by allowingofficials to coordinate different tasksand projects. The Ministry hasbenefited from several foreigndevelopment projects, and donorsprovided most hardware. Between1992-1998 the World Bank suppliedthe Ministry with personal computersand in 1999/2000, l’Agence de laFrancophonie set up a basic intranetand provided technical assistance.Today the Ministry is partlyinterconnected and eleven provincialoffices are able to dial-up to the headoffice in Vientiane and exchangeinformation. There are some 140 PCs,of which 40 are Internet–compatible.Currently, the Ministry has three dial-up connections but it is hoping toeventual ly set up an Internetconnection in every office (usuallyshared by between 3-5 people).

The MoE, as other ministries, has a‘top-to-bottom’ approach to thedevelopment of the Internet and itspotential applications. It will first tryto develop ICT within the Ministryitself, then within the University andonly then within the schools.

4.2.2 Primary and secondary

schools

No public primary or secondaryschools in Laos have access to theInternet. While the MoE plans toprovide two secondary schools in eachprovince with a computer and Internetaccess by the year 2005, they willprimarily be provided to administrativestaff. There are also plans to teachbasic computer courses at thesecondary level and some teachersfrom Laos will participate in trainingcourses in Singapore and Malaysia.Currently, IT is not part of the nationalcurriculum and if students want tolearn how to use a computer or theInternet, they have to do so outsidetheir class schedule.

Many involved in ICT in Laos seeyoung people as the driving force

17

behind the Internet. While Internetcafés used to be mainly in ‘touristzones’, this is no longer the case.Places with public Internet access are‘trendy’ among urban youth. Equallypopular are private traininginstitutions. Here anyone can learnhow to use PC applications, improvetheir typing skills, and advance theirEnglish—skills most often requestedon the job market. Thesedevelopments suggest that theeducational system is not adapted totoday’s requirements and demandsince important skil ls are beingacquired outside the formal network.

There is a non-governmentalorganization (NGO) project providingICT in a Laotian secondary school. Thisinitiative involves Schools Online (a USnon-profit organization), JhaiFoundation (composed of US Vietnamwar veterans), and the local communityof the village of Phon Song.15 They areestablishing an Internet Learning Centreat the local Phon Mee secondary school.A classroom has been renovated andPCs set up. Internet access will beprovided once a telephone line isinstalled. Some 40 teachers andstudents have received training. Inorder to defray costs, the centre will beopened after school hours for public andbusiness use.

4.2.3 University

Laos’ first and only public university,the National University of the Lao PDR(NUOL), was set up in 1995. Asopposed to many other countries, theacademic sector in Laos has not been

Table 4.1: Laos at school

Source: National Statistical Centre

Number of primary and secondary students

and teachers, 2000

Students Teachers

Total 1’091’000 40’000

Primary level 831’000 28’000

Secondary

and higher

secondary

level

260’000 12’000

a driving force in ICT. NUOL has11’740 students and 1’486 staff,790 of which are teaching staff.16 TheJapanese government has funded acomputer lab at NUOL that has around20 PCs connected to a LAN and accessto the Internet. The facility is locatedin the Faculty of Engineering and isprimarily intended for their use.However, paying courses are alsoavailable to others. There are also afew other locations at the universitywith dial-up Internet access but theseare mainly limited to faculty and staffand primarily used for administrativepurposes.

4.2.4 IT training and manpower

Laos lacks qualified IT manpower.Most government and private sectorIT staff studied abroad, with the helpof foreign grants. Lao studentscontinue to go to foreign universitiesin countries such as Austral ia,Malaysia and Singapore. Others gettraining within Laos, through theprivate sector, with several privatecolleges and companies offeringspecialized IT training courses. NUOLhas introduced an undergraduateprogramme in Computer Science andrecently graduated its first batch ofstudents.

One of the country’s most ambitiousprojects is the Cisco Network AcademyProgramme (CNAP).17 Through CNAP,Cisco Systems, in cooperation withgovernments, the private sector andeducational institutions, provides ITtraining in the area of computernetworks. The project, which iscurrently discussed by Cisco, the Laogovernment, the UNDP and theuniversity, would provide a usefulsource of training. It is not quite clearyet where the Academy would behosted, but potential partners includeNUOL and the Science, Technologyand Environment Agency (STEA).

4.3 Health

The country has difficulties providingbasic health facilities to its citizens andInternet access is not a priority. ALocal Area Network (LAN) for theMinistry of Health is being established.So far, with the help of the World


18


Health Organization, each of theMinistry’s six departments hasInternet access. Internet access isessential ly l imited to topmanagement. The 200 Ministry’s staffin the Vientiane head office has a totalof 84 PCs, but not all are Internetcompatible.

4.4 E-commerce

Laos faces several barriers inimplementing e-commerce:

• Given the low number of Internetusers, the local market for buyingand selling online is limited.

• The national banking system isnot adapted to commercial onlinetransactions and none of the Laobanks provide credit cards.

• The country’s infrastructure isnot yet equipped to provide andsupport e-commerceapplications.

• There is only a small privatesector, both in the size ofcompanies and in their share ofthe economy.

• There is not yet a legalframework for e-commerce withappropriate laws for theacceptance of electronic

Table 4.2: Laos Health Facts

Source: Ministry of Public Health and National StatisticalCentre.

2000

Infant mortality rate (%) 8.7

Life expectancy at birth (years) 54.7

Number of hospitals 681

Number of health care centers 700

Number of doctors 1’517

Doctors to population ratio 1:3’427

Number of pharmacies 2016

Percentage of households more than

8 hours away from a hospital (1997/98)8

s i g n a t u r e s ,val idity ofe l e c t r o n i cdocuments ordefinit ion ofcomputer crime.

Apart from somehotels, fewbusinesses havetheir own websites. TheMinistry ofCommerce andTourism (MoCT)started using theInternet onlyabout fourmonths ago. TheTrade PromotionCentre (part ofthe MoCT) is

currently developing a web site topromote Lao products. This willinclude a directory of trade companiesas well as a database of exportproducts. Eventually, this coulddevelop into an e-commerce site.

Tourism has great potential as an e-commerce trendsetter for Laos. Thenumber of tourists visiting Laos hasbeen increasing around 20 per cent ayear, from less than 10’000 in 1991to over 700’000 in 2000. They spentUS$ 113 million, contributing some6.6 per cent to the country’s GrossDomestic Product. Most overseasvisitors come to Lao to learn moreabout the country—there are no beachresorts—and its unique clulture. Mostlikely there are the type of people thatuse the Internet, navigate Laotian websites and book their holidays online;if they could. This might also reducerevenues lost to Thai and Vietnamesetour operators that have taken theopportunity and advertise side tripsto Laos. Recognizing this potential, theLao National Tourism Authority hasestabl ished a web site <www.mekongcenter.com> with countryinformation, a directory of touroperators, and hotel and restaurantinformation. It is one of the fewgovernment agencies with an onlinepresence. The web site has beencredited with helping to raise tourismrevenue.18

19


14 Boualoykhong Chansavat and Phet Sayo. E-readiness assessment in the Lao PDR. UNDP/UNV Vientiane, LaoPDR, 2001 at http://www.undplao.org/unv/pdf%20Reports/IT%20Assessment.pdf.

15 For more information, see www.schoolsonline.org/whatwedo/laos.htm.

16 E-readiness assessment in the Lao PDR, Prepared by Boualoykhong Chansavat and Phet Sayo, UNDP/UNVVientiane, Loa PDR, 2001 at http://www.undplao.org/unv/pdf%20Reports/IT%20Assessment.pdf

17 For more information on the CNAP, see http://www.cisco.com/warp/public/779/edu/academy/.

18 A recent newspaper article quotes the Chief of the Vientiane Tourism Office as attributing the rise in tourismrevenues to the government’s tourism web site: “This is because we advertised our tourist spots on theInternet web-site of the National Tourism Authority.” Phonsavanh Vongsay. “Tourist numbers on the rise.”Vientiane Times. 6-8 November 2001.

20


5. Conclusions

5.1 State of the Internet

The Mosaic Group <www.agsd.com/gdi97/gdi97.html>, has developed aframework for characterizing the stateof the Internet in a nation. Theyconsider six dimensions, each of whichhas five ordinal values ranging fromzero (non-existent) to four (highlydeveloped). The dimensions are asfollow:

• pervasiveness: a measurebased on users per capita and thedegree to which non-techniciansare using the Internet.

• geographic dispersion: ameasure of the concentration ofthe Internet within a nation, fromnone or a single city tonationwide availability.

• sectoral absorption: ameasure of the degree ofutilization of the Internet in theeducation, commercial, healthcare and public sectors.

• connectivity infrastructure: ameasure based on internationaland intranational backbonebandwidth, exchange points, andlast-mile access methods.

• organizational infrastructure:a measure based on the state ofthe ISP industry and marketconditions.

• sophistication of use: ameasure characterizing usagefrom conventional to highlysophisticated and drivinginnovation.

Lao PDR values for these dimensionsare shown in Figure 5.1.

Pervasiveness is rated at level 2,Established. At September 2001,there were an estimated9’000 Internet users in the country or0.17 per cent of the population.

Geographic Dispersion is rated atlevel 1.5, between Single location and

Figure 5.1: State of the Internet in Laos

Dimension Value

Pervasiveness 2

Geographic Dispersion 1.5

Sectoral Absorption 1

Connectivity Infrastructure 1.5

Organizational Infrastructure 2

Sophistication of Use 1

TOTAL 9

Note: The higher the value, the better. 0 = lowest, 4 = highest.Source: ITU adapted from Mosaic Group methodology.

01234

Pervasiveness

Dispersion

Absorption

Connectivity

Organizational

Sophistication

21

5. Conclusions

Moderately dispersed. There is onlyone Internet Point of Presence.Internet access is however availablenationwide for the price of a local call.Nonetheless the low number oftelephone l ines and computers,particularly outside the capital, areserious barriers.

Sector Absorption is rated atlevel 1.0, Rare. This ranking is afunction of the type of connectivity ineducation, government, health careand business. Although the nationaluniversity has Internet access,accounts are very limited. Hardly anyprimary or secondary schools haveInternet connections. Fewgovernment departments have websites. Usage in the business sector isminimal.

The Connectivity Infrastructure isat level 1.5, between Thin andExpanded. International connectivityis 1.6 Mbps incoming and 1.2 Mbpsoutgoing. There is no nationwideInternet backbone nor is there adomestic Internet exchange. Thereare few leased lines in place and thereis no ADSL or cable modem forbroadband local access.

The Organizational Infrastructure

is at level 2, Controlled. There are twooperational ISPs. Entry into the ISPmarket is not possible at this timealthough it appears that may bechanged soon.

Sophistication of Use is at level 1,Minimal. The most popularapplications among most users appearto be e-mail, chat, Internet telephonyand information retrieval. There arefew local language web sites nor isthere signif icant appl icationdevelopment.

5.2 Recommendations

5.2.1 Making it Lao

Two intrinsically Laotian computerissues must be dealt with: its .LAdomain name and standardization ofthe Lao font. Laos must regain itsdomain name. The story of how the.LA domain name ended up being

administered by a US company basedin Los Angeles is shrouded in mystery.But the fact remains that a country’sInternet name is as much part of thenation as its flag or national anthem.Gaining control of the domain nameis particularly important for thedevelopment of government web siteswhose names should reflect wherethey are. A consultant should be hiredto investigate the situation andpropose solutions, in co-operationwith the ITU and ICANN.

Although there is a domestic standardfor the Lao font (around 80 per centof the market uses Lao Font forWindows), it does not matchinternational standards nor is itdesigned well for use on the Internet.Efforts should be made to make acommon standard based on computerindustry conventions.

5.2.2 Internet for Development

The international community is keento reduce the Digital Divide. As a LeastDeveloped Country (LDC), Laos couldbenefit from multilateral, bilateral,Non-Governmental Organization(NGO) and private sector ICT projects.The government should encourage theinternational community to help Laosimprove its access to ICT. One stepwould be to elaborate an ICT sectorstrategy that outlines key areas ofdevelopment that developmentagencies could assist with. Forexample, this might includeconnectivity in schools, a ruralinformation project and e-governmentapplications.

5.2.3 ‘NEM’ing the Internet

The New Economic Mechanism (NEM)introduced l iberal ization to theeconomy. This should now be appliedto the Internet market. Now that theexclusivity period of Lao Telecommu-nication has ended (October 2001),the telecommunication and Internetmarket is theoretical ly open tocompetition. Indeed there are signsthat this is happening. This processneeds to be accelerated and madeclear. Addit ional suppl iers oftelecommunication and Internet

22


infrastructure are badly needed sincethe existing level is so low and prices,for Internet access at least, arerelatively high. It might be argued thata relatively small market like Laoscannot handle too many suppliers andthat serious operators might bediscouraged from investment if thereare too many competitors. Anotherconcern is that there is a risk ofinfrastructure duplication and thuspossible waste of resources that couldbe used for other important activities.Possible solutions include extractingconcrete infrastructure and universalaccess commitments in return formarket exclusivities and encouragingoperators to collaborate on major civilworks projects (e.g., sharingbackbones, etc.).

5.2.4 Universal access

A policy on universal access to theInternet needs to be formulated.Presently only a small number ofLaotians have access to the Internet.Few people have or could afford dial-up Internet access. Internet access inschools is practically non-existent.There are a few Internet cafés in the

large cities and they are mainlyfrequented by foreigners. They are alsotoo expensive for the average Laotian.

One of the reasons for the lack of anInternet universal access policy isthat the government has beenhesitant to proliferate the Internet.Whi le the Internet has somenegative aspects, these are morethan outweighed by the positive.Furthermore, the Internet can beused in a decisive way to alleviatesome of Laos’ developmentbottlenecks. Interestingly, the lack ofaccess to information and knowledgewas cited as a significant barrier togenerating more income in villages.19

The Internet could help to overcomethat through its window to the worldof information. Another way theInternet can help with developmentis to overcome the lack of roadtransport in Lao. While it is difficult tophysical ly get newspapers andschoolbooks to rural communities,these items could be delivered via theInternet. The government shouldcreate a network of public Internetaccess points so that its citizens canaccess the information they need.

19 National Statistical Centre. The Households of Lao PDR. December 1999.

23

Annexes

Annex 1: List of meetings

No. DATE TIME ORGANIZATION

1 05/11/01 09:00 am

Ministry of Communications

Transport, Posts and Construction (MCTPC)

2 05/11/01 13:30 pm Lao Telecommunications (Laotel)

3 06/11/01 09:00 am UNDP Laos

4 06/11/01 10:30 am National Statistical Center

5 06/11/01 02:00 pm ETL, Engineer, Planning and

Development Division

6 06/11/01 15:30 pm JICA, Advisor to ETL

7 07/11/01 09:00 am Science, Technology and

Environment Agency (STEA)

8 07/11/01 10:00 am Ministry of Health

9 07/11/01 11:00 am Ministry of Commerce and Tourism

10 07/11/01 01:30 pm GlobeNets (ISP)

11 08/11/01 08:00 am Ministry of Education

12 08/11/01 11:30 am Ministry of Information and Culture

24


Annex 2: Acronyms and abbreviations

ACSC Asia Cellular Satellite Company

ASEAN Association Of South East Asian Nations

ccTLD Country code top-level domain

CNAP Cisco Network Academy Programme

CSC China-Singapore Cable (network)

EPL Enterprise of Post Lao

EPTL Entreprise of Post and Telecommunications Lao

ETL Enterprise of Telecommunication Lao

GDP/GNP Gross Domestic Product/Gross National Product

GSM Global System for Mobile Communication

HDI Human Development Index

ICT Information and Communication Technology

IDRC Canadian International Development Research Centre

ISP Internet Service Provider

IT Information Technology

kbps Kilo bits per second

LAN Local Area Network

LANIC Lao National Internet Committee

Lao PDR Lao People’s Democratic Republic

LaoTel Lao Telecommunications Company Limited

LDC Least Developed Country

LST Lao Shinawatra Telecom Company Ltd

MCTPC Ministry of Communication, Transport, Post and Construction

MIS Management Information System

MoCT Ministry of Commerce and Tourism

MoE Ministry of Education

MoIC Ministry of Information and Culture

MOU Memorandum of Understanding

NGO Non-governmental organization

NUOL National University of the Lao PDR

PAN Pan Asia Networking

SITA Société Internationale de Télécommunications Aéronautiques

25

STEA Science, Technology and Environment Agency

UNDP United Nations Development Programme

VoIP Voice over Internet Protocol

VSAT Very Small Aperture Terminal

WAN Wide Area Network

Annexes

26


Annex 3: Useful links

Organization Website

Telecom operator

Lao Telecommunications (LaoTel) www.laotel.com

ISPs

GlobeNet www.laonet.net

PlaNet Online www.planetonline.laopdr.com

Mass media

Vientiane Times www.vientianetimes.com

Rénovateur www.laolink.com/renovateur/renovat.htm

Lao News Agency (Khaosan Pathet Lao) asean.kplnet.net

Academic

SchoolsOnline Laos www.schoolsonline.org/whatwedo/laos.htm#

Portals

Vientiane Times www.vientianetimes.com/Others.html

Lao Net www.global.lao.net

Other

Lao PDR Embassy to the United States of America www.laoembassy.com

Lao PDR Permanent Mission the United Nations www.un.int/lao

UNDP Lao www.undplao.org

Lao National Tourism Authority www.mekongcenter.com

Japan International Cooperation Agency (JICA) Laos www.jica.laopdr.org/jicalaos.html

27

Annex 4: Framework dimensions

Table 1: Pervasiveness of the Internet

Level 0 Non-existent: The Internet does not exist in a viable form in this country. No computers with international IP connections are located within the country. There may be some Internet users in the country; however, they obtain a connection via an international telephone call to a foreign ISP.

Level 1 Embryonic: The ratio of users per capita is on the order of magnitude of less than one in a thousand (less than 0.1%).

Level 2 Established: The ratio of Internet users per capita is on the order of magnitude of at least one in a thousand (0.1% or greater).

Level 3 Common: The ratio of Internet users per capita is on the order of magnitude of at least one in a hundred (1% or greater).

Level 4 Pervasive: The Internet is pervasive. The ratio of Internet users per capita is on the order of magnitude of at least one in 10 (10% or greater).

Table 2: Geographic Dispersion of the Internet

Level 0 Non-existent. The Internet does not exist in a viable form in this country. No computers with

international IP connections are located within the country. A country may be using UUCP connections for email and USEnet.

Level 1 Single location: Internet points-of-presence are confined to one major population centre.

Level 2 Moderately dispersed: Internet points-of-presence are located in at least half of the first-tier

political subdivisions of the country.

Level 3 Highly dispersed: Internet points-of-presence are located in at least three-quarters of the first-tier political subdivisions of the country.

Level 4 Nationwide: Internet points-of-presence are located in all first-tier political sub-divisions of the country. Rural dial-up access is publicly and commonly available and leased line connectivity is

available.

Table 3a: Sectoral Use of the Internet

Sector Rare Moderate Common

Academic - primary

and secondary schools,

universities

>0-10% have leased-line

Internet connectivity

10-90% have leased-line


>90% have leased-line


Commercial-

businesses with > 100

employees

>0-10% have Internet

servers

10-90% have Internet

servers

>90% have Internet

servers

Health-hospitals and

clinics

>0-10% have leased-line


10-90% have leased-line


>90% have leased-line


Public-top and second

tier government

entities

>0-10% have Internet

servers

10-90% have Internet

servers

>90% have Internet

servers

Annexes

28


Table 3b: The Sectoral Absorption of the Internet

Sectoral point total Absorption dimension rating

0 Level 0 Non-existent

1-4 Level 1 Rare

5-7 Level 2 Moderate

8-9 Level 3 Common

10-12 Level 4 Widely used

Table 4: Connectivity Infrastructure of the Internet

Domestic

backbone

International

Links

Internet

Exchanges

Access Methods

Level 0 Non-

existent

None None None None

Level 1 Thin ≤ 2 Mbps ? 128 Kbps None Modem

Level 2 Expanded >2

– 200 Mbps

>128 kbps

-- 45 Mbps

1 Modem

64 Kbps leased lines

Level 3 Broad >200 Mbps

-- 100 Gbps

>45 Mbps

-- 10 Gbps

More than 1;

Bilateral or Open

Modem

> 64 Kbps leased lines

Level 4 Immense > 100 Gbps > 10 Gbps Many; Both Bilateral and Open

< 90% modem > 64 Kbps leased

lines

Table 5: The Organizational Infrastructure of the Internet

Level 0 None: The Internet is not present in this country.

Level 1 Single: A single ISP has a monopoly in the Internet service provision market. This ISP is generally owned or significantly controlled by the government.

Level 2 Controlled: There are only a few ISPs because the market is closely controlled through high barriers to entry. All ISPs connect to the international Internet through a monopoly

telecommunications service provider. The provision of domestic infrastructure is also a monopoly.

Level 3 Competitive: The Internet market is competitive and there are many ISPs due to low barriers to market entry. The provision of international links is a monopoly, but the provision of domestic

infrastructure is open to competition, or vice versa.

Level 4 Robust: There is a rich service provision infrastructure. There are many ISPs and low barriers to

market entry. International links and domestic infrastructure are open to competition. There are collaborative organizations and arrangements such as public exchanges, industry associations, and

emergency response teams.

29

Table 6: The Sophistication of Use of the Internet

Level 0 None: The Internet is not used, except by a very small fraction of the population that logs into

foreign services.

Level 1 Minimal: The small user community struggles to employ the Internet in conventional, mainstream

applications.

Level 2 Conventional: The user community changes established practices somewhat in response to or in

order to accommodate the technology, but few established processes are changed dramatically.

The Internet is used as a substitute or straight-forward enhancement for an existing process (e.g.

e-mail vs. post). This is the first level at which we can say that the Internet has "taken hold" in a

country.

Level 3 Transforming: The user community's use of the Internet results in new applications, or significant

changes in existing processes and practices, although these innovations may not necessarily

stretch the boundaries of the technology's capabilities. One strong indicator of business process

re-engineeering to take advantage of the Internet, is that a significant number (over 5%) of Web

sites, both government and business, are interactive.

Level 4 Innovating: The user community is discriminating and highly demanding. The user community is

regularly applying, or seeking to apply the Internet in innovative ways that push the capabilities of

the technology. The user community plays a significant role in driving the state-of-the-art and has

a mutually beneficial and synergistic relationship with developers.

Annexes

30


Annex 5: Bibliography

Paula Uimonen. “Connecting Laos: Notes from the Peripheries of Cyberspace.” Proceedings of the

9th Annual Conference of the Internet Society. June 1999. At

http://www.isoc.org/inet99/3a/3a_2.htm

Phet Sayo and Boualaykhong Chansavat. Lao E-readiness assessment in the Lao PDR. UNDP.

2001. At http://www.undplao.org/UNV/pdf%20Reports/IT%20Assessment.pdf.

National Statistical Centre. Basic Statistics of the Lao PDR 2000. State Planning Committee.

Vientiane, 2001.

National Statistical Centre. Basic Statistics of the Lao PDR 1975-2000. State Planning Committee.

Vientiane, May 2000.

National Statistical Centre. Results from the Population Census 1995. State Planning Committee.

Vientiane, April 1997.

National Statistical Centre. The Households of Lao PDR. Social and economic indicators. Lao

Expenditure and Consumption Survey 1997/98. State Planning Committee. December 1999.

Documents

Internet on the Mekong: Lao PDR Case Study - March 2002The Lao People’s Democratic Republic (Lao PDR, or Laos), with an area of 236’800 square kilometres, is South East Asia’s