A too-high 3G license fee, plus the associated network rollout costs, will likely dampen operators’ investment in basic services for mid- and low-tier phone users, apart from resulting in lower network investment in rural areas and less emphasis on low-cost handset innovation, reports UNB.
Drawing on the experience of 3G license auctions in neighbouring countries such as India, coupled with an analysis of the present state of the telco industry, Mohammed Tufael Chowdhury, a London-based telecommunications expert, expresses these concerns in an article published in this week’s edition of the Dhaka Courier.
The government is expected to hold the auction for handing out 3G spectrum by November, when the 2G licenses of four telco operators- Grameenphone, Banglalink, Robi and CityCell- are up for renewal. The four recently released a joint statement in which they expressed deep reservations about the “abnormally high” spectrum acquisition fee (Taka 120.5 billion) set out in a recently published draft guideline by the Bangladesh Telecommunications Regulatory Commission (BTRC).
“If you look at the 3G auction last year in India, the moment valuations started going above operators’ expectations, bidding tactics immediately refocused onto securing the important metros like Mumbai and Delhi,” writes Chowdhury.
The reason for this, according to Tufael- a British-Bangladeshi who has held senior positions in companies like Vodafone, PwC and IBM- was that in order for the high rates to make economic sense, the operators had to make sure they could access the most “lucrative” customers.
“These high-value customers are the ones who have the potential to spend more money on voice, and importantly, data services. High-flyers who will download videos, read emails on the move, and pay subscription fees for many other services.”
Capital investment in the industry too, will get affected, as operators will apparently “skew projects” into building better urban networks, and drive services and customer care standards for “the rich and tech-hungry.”
The present situation in the industry on the other hand, means that focusing on high-value customers usually comes “at the expense of innovating for the rest of the customer base.”
Chowdhury lists limited human, management and financial resources as the reasons for this. More effort into developing data services for iPhone and Blackberry users and email services, means less goes into what are “low-cost data services”, such as distribution of price information, mobile health services, and even cheaper local and international calls.
He also argues that a high fee is not a “necessity” for the government to achieve its fiscal objectives. If the BTRC plays it right, he finds that over a 5-10 year period, the government’s overall revenue in two separate scenarios, one with a “high” and the other with a “low” 3G fee, works out to more-or-less the same.
“Any cut to the 3G bill today could be recovered in higher taxes plus wider macroeconomic and social impacts over as little as 5-7 years,” he writes in the article, where he also expounds upon how the government, through BTRC, can use the leverage they gain over the operators by lowering the fee to specifically encourage a “social-enablement focus” in the industry’s future investments. This could eventually result in high-speed internet access in rural areas, and the availability of more basic data services in Bangla.
It seems the 3G license auction has much more riding on it, than merely the fate of the telecommuni-cations industry.
The intrinsic role mobile phones have grown to play in people’s lives, particularly in developing countries like Bangladesh where the number of subscribers crossed 70 million just recently, means that the BTRC’s eventual decision will go on to have an effect at the level of society as well.
-The News Today