Telecoms Reform In Bangladesh Would Yield Major Benefits

GSMA calls for urgent overhaul of international gateway and spectrum policies

Bangladesh’s telecommunications regulation needs wide-ranging reforms if the world’s seventh most populous country is to realise the full social and economic benefits that flow from the widespread use of mobile phones, according to a study by economics consultancy CRA International and law firm Gilbert + Tobin for the GSM Association.

Among the study’s main recommendations: Bangladesh needs to dismantle its international gateway monopoly, which makes international calls hard to complete and excessively expensive, strengthen its telecommunications regulator so that it can more efficiently allocate spectrum and issue licenses for 3G mobile services before the third-quarter of 2008.

“There is extensive evidence that the widespread use of mobile phones can boost economic growth, raise living standards and reduce poverty*,” said Tom Phillips, Chief Government & Regulatory Affairs Officer of the GSMA. “This report sets out the short-term and long-term steps Bangladesh needs to take to enable mobile telecommunications to realise its full potential to increase the efficiency of the domestic economy, as well as improving Bangladeshi citizens and businesses’ access to global markets.”

Boosting the capacity of the existing international gateway, which is run by state-owned BTTB, and then opening this market up to other companies, is particularly urgent, as the study found the current situation is imposing a substantial economic cost on Bangladesh. The existing monopoly limits communications between Bangladesh’s businesses and their international customers and between Bangladesh’s consumers and relatives and friends in other countries. The study found that dismantling the monopoly would lead to a major rise in call volumes and a 125% increase in government revenues from international gateway services in 2008.

Another priority identified by the study is to give adequate funding and budget authority to Bangladesh’s telecommunications regulator, BTRC, to enable it to act independently and acquire and retain appropriate expertise, particularly in the vital areas of spectrum management and license enforcement. The study found the current licensing regime allocates spectrum in an inefficient way and some of the country’s mobile operators don’t have sufficient spectrum to enable them to provide services to more Bangladeshis.

The authors recommend that BTRC conduct an immediate strategic spectrum review and then allocate spectrum in the internationally harmonized 2100Mhz band for 3G mobile services before the third quarter of 2008. This spectrum should be licensed in a way that reflects its economic value and ensures it is efficiently used, the study argues.

Notes to Editors

*The link between mobile phone penetration and economic growth in developing countries is well established – a recent study by Deloitte for the GSM Association, for example, found that an increase in mobile penetration of 10 percentage points typically boosts GDP growth by 1.2 percentage points per annum in developing nations.

According to Wireless Intelligence, Bangladesh has a mobile penetration of 15% – significantly lower than in many other Asian countries

The report also makes several additional recommendations, including the following:

  1. Restructure taxation to encourage growth in mobile usage – The burden of taxes on the mobile industry should be reduced, particularly by removing taxes that inhibit the growth of the sector, such as taxes on new SIM cards and handset and equipment imports. Telecommunications capital equipment should have import duty no higher than 5-6%.
  2. Reform interconnection arrangements – Bangladesh is characterised by an unusual asymmetric interconnection regime, through which the mobile sector subsidises fixed networks. As these subsidies are holding back overall access to telecoms services in Bangladesh, the interconnection arrangements should be revised and suitable fixed-to-mobile wholesale charges introduced.

The full report can be found at here

About the GSM Association:
The GSM Association (GSMA) is the global trade association representing more than 700 GSM mobile phone operators across 218 countries and territories of the world. In addition, more than 200 manufacturers and suppliers support the Association’s initiatives as key partners.

The primary goals of the GSMA are to ensure mobile phones and wireless services work globally and are easily accessible, enhancing their value to individual customers and national economies, while creating new business opportunities for operators and their suppliers. The Association’s members serve more than two billion customers – 82% of the world’s mobile phone users.

For more information please contact:
Mark Smith or David Pringle
Email: [email protected]