Bangladesh telecoms market
15 December 2010 |
Similar to India, Bangladesh has shown promising signs of economic growth and development in the last decade.
However, on a far more unprecedented scale than its neighbour, the country continues to suffer from vast overpopulation, shocking levels of poverty and a vulnerability to natural disasters.
In the backdrop to all this, the country’s telecommunications market has had its own fair share of dramas. A recent forecast from BuddeComm highlights how one of the most densely populated countries on the planet still has the lowest fixed-line teledensity in south Asia. A staggering 99% of Bangladeshi homes remain without a telephone and a four-year waiting list for fixed-line services will continue to prevent them from obtaining one. On the other hand, the country’s mobile market has blossomed in the last few years – growing at an impressive annual rate of approximately 30% to reach 60 million subscribers (36% of the population) by midway through 2010.
Bangladesh was the last country in south Asia without an independent telecoms regulator before it established the Bangladesh Telecommunications Regulatory Commission (BTRC) in 2001. The regulatory body was designed to open up the market to more competition and in 2004 a series of new licences were issued to private operators in a bid to expand the country’s fixed-line network. Such momentum, however, has been temporarily dampened by the government’s recent amendment of the country’s 2001 Telecommunications Act.
The controversial amendment act received fierce opposition over its increase to the maximum fine limit for telecoms operators from BDT1million (US$14,200) to BDT3 billion (US$42 million). The act also enables the government to imprison an operator for up to ten years for offences such as anti-state activities using telecoms equipment and shifting telecoms equipment ownership without government approval. The move is widely viewed as the government’s attempts to politicise the telecoms sector in order to control the media. Since coming into power in December 2008, Prime Minister Sheikh Hasina has received increasing levels of criticism from the press regarding her alleged failure to address the country’s law and order situation. Prior to the passing of the new act, the American Chamber of Commerce said the bill had the potential to damage foreign investment in the country.
According to Peter Evans, senior analyst at BuddeComm, the country’s regulatory and economic deficiencies must be overcome before the domestic telecoms sector begins attracting high levels of foreign investment. “Although Bangladesh has a liberal foreign investment regime, it has continued to struggle to attract foreign investment. One of the challenges facing Bangladesh’s telecoms sector is the strengthening of its institutions and administrative systems,” says Evans.
Despite the recent negativity surrounding the new legislation, network operators still have reason to feel optimistic about the future of the country’s telecoms market. Bangladeshi cellular operator Grameenphone, for example, has managed to grab a significant slice of the mobile market in the last five years, after seeing its subscribers climb from five million in 2005 to 29 million subscribers in 2010. The company has recently targeted providing low-cost handsets and products for the less affluent members of Bangladeshi society in an attempt to reduce what it terms the country’s ‘digital divide’.
Likewise, a government crackdown on illegal VoIP activities, which sparked an investigation by BRTC into the total consumed bandwidth of the country’s ISPs in March 2010 and subsequently led the regulator to close the operations of 19 ISPs and five private-line phone operators, presented a market opportunity for Mir Telecom. After being one of four companies to be awarded an international gateway licence by the government, Mir Telecom became the first to launch operations and today handles a total incoming volume of 56 million minutes at the weekends.
“Putting aside the illegal volumes, the market and revenues have grown over the last three years. Above all though, migrant workers are now able to call home to Bangladesh much more economically,” says Zahir Ahmed, CEO of Mir Telecom.