1. Telecom Regulatory Environment in “Digital Bangladesh”: Exploring the Reasons behind Poor Sector Specific Performance CPRSouth 6, Bangkok, Thailand December, 2011 Faheem Husain (faheem.hussain[at]gmail.com)faheem.hussain[at]gmail.com This work was carried out with the aid of a grant from the International Development Research Centre, Canada and the Department for International Development, UK.

2. Digital Bangladesh and the Telecom Industry Internet Subscribers in Bangladesh Market Shares (based on SIMs) in the Mobile Sector Telecom Sector as % of Total Tax Revenue Fixed Internet Mobile Internet

3. Analytical Framework This study used perceptions of key stakeholders (e.g., operators, legal experts, civil society, etc.) –to evaluate the effectiveness of the regulatory and policy environment in three telecom subsectors (fixed, mobile, and broadband) along seven dimensions The average TRE score for all three telecom sectors across the seven regulatory dimensions turns out to be 2.6, which is below the satisfactory level of 3 TRE Scores by Regulatory Dimensions Average TRE Scores

4. Key Findings Good Interconnection Enabled Better Telecom Diffusion –Extensive competition facilitated better customer service –Availability of effective telecom network all over Bangladesh Growth of SIM/Access Paths in Bangladesh

5. Key Findings Uncertainty in Policy Formulation and Implementation –High renewal fees for spectrum allocation and mobile phone operating licenses stalled rollout of 3G –Arbitrarily calculated Market Contribution Factor creating disincentives for the stakeholders to grow –State incumbent’s monopoly over Bangladesh’s submarine cable landing station made access to infrastructure costly

6. Key Findings Failure in Developing an Effective Regulatory Framework –Rolling back regulatory liberalization- significantly curtailed the power for the Regulator Telecommunication Act of 2010 Provisions for heavy fine and punishments –Stagnant market place with ministry at the helm; long delay and bureaucratic red-tapes on tariff decisions Failed to cope up with the dynamic telephony market Unregulated broadband pricing

7. Key Findings Absence of Long Term Planning –Incoherency between Telecom Policies and “Digital Bangladesh” vision

8. Key Findings Absence of Long Term Planning –Anti-competitive practices in VAS market Disputes with revenue sharing, intellectual property rights –Lack of QoS guidelines BTRC is yet to publicize its documents QoS is somewhat balanced in Mobile Phone Industry due to competition As shown in LIRNEasia studies, broadband operators are failing to keep the promises on QoS* –No clear definition of “Bangladeshi” Universal Service Do we need it? How does the funding get disbursed? * Broadband Quality of Service Experience (QoSE) Indicators, 2009, LIRNEasia

9. Recommendations Pro-market 3G Licensing –Present private operators should be allowed to have transition from 2G to 3G services –Provisions for Refarming the incumbents can be required to pay a certain amount of spectrum utilization fee, consistent with that for the new 3G licensees* Ensuring Prompt Tariff Regulations –MoPT needs to transfer back the responsibility of Tariff regulation to BTRC –For broadband sector, price ceilings/floors should be set * Guermazi, B., & Neto, I. (2005). Mobile License Renewal: What Are the Issues? What is at Stake? The World Bank

10. Recommendations Acting against Anti-Competitive Practices –Clear directives on abuse of dominance, cross subsidization, predatory pricing, bundling, and related practices* Active implementation of the infrastructure sharing guidelines to prevent non-tariff barriers for the market entrants in voice, internet, and VAS sectors –Broadband operators should be allowed to negotiate with the international carriers to reduce bandwidth pricing and for efficient internet traffic management * Monson, C., Banarjee, A., Briceño, A., Ros, A., Tardiff, T., McKinley, A., Kalba, K., & Frieden, R. (2007). ICT Regulation Toolkit. NERA Economic Consulting

11. Recommendations Clarity in Guidelines for USO and SOF –Bangladesh can follow Pakistan’s example to include private participation in the governance of SOF* It helps to expedite the decision making process of identifying potential projects and fund disbursement** Should focus on developing local content and broadband network Effective QoS Obligations –BTRC needs to share its guidelines of QoS for voice and data services, and facilitate inclusive consultation Specific focus on “Broadband” services * Guermazi, B., & Neto, I. (2005). Mobile License Renewal: What Are the Issues? What is at Stake? The World Bank ** Sambandaraksa, D. (2010). All of Pakistan to have fibre access. The Bangkok Post.

12. Acknowledgements LIRNEasia, IDRC, DFID Helani Galpaya, Aslam Hayat, Sriganesh Loknathan, Abu Saeed Khan, Rohan Samarajiva Thank You!