S Asian telecom defies recession | The Daily Star
11:00 PM, October 20, 2009 / LAST MODIFIED: 11:00 PM, October 20, 2009


S Asian telecom defies recession

Regional mobile forum chief speaks to The Daily Star

Mehboob Chowdhury

The South Asian mobile industry has been demonstrating a strong presence even in times of recession, although telecom companies in some developed nations have faced blows, said Mehboob Chowdhury, chairman of South Asia Mobile Forum (SAMF).
Such performance indicates a sustainable telecom future of the region, however operators in the region did plough back investment returns into the business, he said.
In an interview with The Daily Star, Chowdhury said an "unholy price war" among operators in the region has barred them from becoming profitable for a while.
Chowdhury, who previously worked for the two top telecom operators in Bangladesh in key positions, also thinks that the VoIP technology should be opened in the greater interest of the country.
Global recession hit the global telecom giants just like any other industry. However, South Asian telecom ventures remain out of danger. Global telecom giants also appreciated South Asian mobile operators for their strong performance during recession.
Norway-based Telenor recognised Grameenphone, its venture in Bangladesh, for a strong performance in 2008, as some other Telenor ventures were slightly affected by the economic meltdown.
"Performance wise, South Asia did well during recession. We did not see massive job cuts in the telecoms industry in South Asia, unlike other developed nations," Chowdhury said.
Each South Asian country enjoyed expected growth. However, the more important issue to address is the price war practiced by mobile operators in the region, said Chowdhury, who is set to chair the fifth summit of SAMF in Dhaka today.
SAMF is an organisation that brings together telecommunication industry players in South Asia. Members of the forum include companies from Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka.
The forum plays a role in enhancing business and the quality of services through discussions and conferences.
In reference to the onset of the recent price war among operators in India, he said operators are offering one rupee call charge a minute to any destination.
"Such a strategy raises questions of industry viability. We should understand that the offer can be suitable for one operator but not others."
Price wars are obvious for competitive markets. But operators should be rational in setting tariffs. Prospective investors also become reluctant to come forward in a market where price war is being practiced.
The Bangladeshi market could become a good example of the outcomes of price wars, he said, as only a single operator enjoys profit despite two others having a significant customer base.
"Profitability has become uncertain for irrational pricing," Chowdhury said, adding affordability should also be considered.
Chowdhury said the Bangladeshi market is lucrative for technology investors as users here are more willing to adopt technology than any other market.
"There are no religious or social barriers among customers to adopt new communication technology," said the SAMF chairman, sharing his experience on the Bangladeshi market.
In Bangladesh more than 50 million customers are using the mobile phone.
Bangladeshi customers are extremely price conscious and the general notion among them is 'either you earn money or save money with the technology', he said.
Keeping this in mind, the government should move forward in implementing its vision to create a Digital Bangladesh.
The government should digitalise itself first, Chowdhury said, and to make this happen, there is no alternative to involving the private sector in the process.
He believes that if the government provides policy support, investment will follow automatically to introduce new communication technology.
Bangladesh is adopting new communication technology at more or less the same time as other technology-advanced nations. WiMax, the high-speed wireless broadband service, will soon be introduced in the market.
"Any technology should be welcomed, but the quality of services should be ensured by the regulator and operators."
Bangladesh is only country where wire based technology did not significantly improve, though some developed nations had focused on wire-based technology.
"We should ensure the quality of technology services that are coming to the market, no matter what," he said. "I hope WiMax will do good to the internet market."
Internet penetration for Bangladesh stands at 4 percent, according to government statistics.
Chowdhury said to extend internet to the masses, bandwidth prices should be further reduced. Presently, the internet bandwidth rate is Tk 18,000 per mbps (megabits per second).
The VoIP (Voice over internet protocol) technology is still a matter of debate in the market as it is now allowed under law. The SAMF chairman thinks illegal practices should not be controlled forcefully.
"The government should legalise the technology so that it can earn more revenue from the sector," he said.
In regards to the Bangladesh landline market, he said the operators took inappropriate steps from the beginning. Bangladeshi operators failed to do what the Indian PSTN (public switched telephony networks) operators have done.
Until 1990, Bangladesh depended only on PSTN telephony. There was a chance to make it viable. Globally, PSTN is still viable.
Local PSTN operators want to do what mobile operators do here. "But they should realise, in terms of investment capacity, mobile operators are in a very strong position.”


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