Let us uphold fairness | The Daily Star
12:00 AM, May 16, 2011 / LAST MODIFIED: 12:00 AM, May 16, 2011

2g Licence Renewal

Let us uphold fairness

A woman on the phone. Mobile operators said proposed high spectrum charges will hurt the growth of the telecoms sector.Photo: STAR

The guidelines and especially the fees proposed by the Bangladesh Telecommunications Regulatory Commission (BTRC) to renew the 2G licences of four operators (GP, Robi, Banglalink and Citycell) have come under severe scrutiny and criticism from all quarters, some even remotely related, immediately after their publications.
The concerned operators were understandably very perturbed and lost no opportunity to portray the guidelines as unfriendly to the industry and even detrimental to the establishment of 'Digital Bangladesh'. They described the fees as unprecedented and too exorbitant for even the banking system of the country to support. This was followed by a visibly well orchestrated campaign and lobbying of anyone and everyone of who is who in telecoms in Bangladesh.
Predictably, a chorus followed from various think tanks and experts, local and international, condoning this view and by now, public perception is well established in their favour. The posts and telecommunications ministry has also taken note of these arguments and has decided to slash the renewal fees by about Tk 4,000 crore recently. This is good news for the mobile operators and so, we may expect smooth sailing in the days to come towards our journey to a digital future.
However, it is also pertinent to take a look at the underlying guidelines and fee structure followed in determining the new renewal fees and ensures that these are based on the universal principles that guide all telecom regulators, which are, simplicity, flexibility, consistency, predictability, non-discrimination, fairness and transparency. The fundamental aim is to create an enabling operational environment where the interests of all the stakeholders, especially the subscribers, the operators and the government are equitably served. Let us take a critical look at the guidelines as they stand now.
In preparing the guidelines, BTRC has appreciably been guided by the principle of unbundling the licence fee into its constituent elements, in order to make it logical and transparent to all the stakeholders. Important among the constituent elements are regulatory charges, spectrum charges, and revenue sharing.
Regulatory charges cover the administrative costs incurred by the telecom regulator and other government organs in supporting the activities of the operator. The proposed charges are reasonable and well-founded.
Spectrum charges cover the costs for the frequency resources provided to the operator by the government. Spectrum is a very valuable resource and its price should be set at international levels and at the very least, on par with our neighbouring countries, and not below any benchmark that we have already established in our country.
BTRC has rightly proposed a differentiation in the spectrum assignment fee for the primary band 900 MHz GSM/EGSM band spectrum over the 1800 MHz GSM band. This is due to the superior radio propagation characteristics of the 900 MHz spectrum and we must note here that it takes roughly 2.5 to 3 times fewer base stations to build a network. The telecom ministry's decision to equate the spectrum assignment fee for both the 900 MHz and 1800 MHz bands is fundamentally flawed as it goes against the principle of fairness and it has the potential to create serious misgivings now and in the future.
In regards to the argument that the fee of Tk 300 crore per MHz of 900 MHz spectrum is unprecedented and too exorbitant, I would submit that the detractors compared the fee paid by the Indian operators for 5 MHz of 3G spectrum in the Delhi circle alone. It was above Rs 3300 crore for each operator, which calculates roughly to Tk 1000 crore per MHz. I am certain that the total Bangladesh market for 2G mobile services has better potential than 3G services for the Delhi circle alone.
Spectrum utilisation factor: The BTRC proposal to multiply the spectrum assignment fee by a factor based on an operator's subscriber base is not rational. It amounts to punishing the most successful operator by levying a higher fee per MHz of spectrum compared to an operator who has not been equally successful even though it had the same spectrum resource at its disposal. This guideline is fundamentally flawed and goes against the principle of fairness, non-discrimination and level playing field for all operators. It is unfortunate that the telecom ministry has also condoned this proposal.
Revenue sharing by the mobile operators with the regulator is currently fixed at 5.5 percent of AGR and the same should be maintained in the future as well.
Social obligation fund: The BTRC proposal to share 1.5 percent of AGR to create a Social Obligation Fund came under heavy criticism from the operators. They argued this fund was unnecessary as 98 percent of Bangladesh territory has already come under mobile network coverage and it would serve no valuable purpose.
I would argue that the creation of such a fund would be very beneficial to the nation if it is utilised for the proliferation of broadband internet across the country so that the vision of building a 'Digital Bangladesh' is implemented fast. However, special care should be taken to administer this fund so that it is used transparently and it generates maximum benefit to the nation. The telecom ministry's decision to retain this fund, thought at 0.5 percent contribution, is appreciable.
Non telecom issues: The operators have objected certain non-telecom issues in the guidelines. Their arguments are valid for the IPO issue, but as regards MNP, SMP, Universal Licence etc, we may certainly argue that these are legitimate BTRC concerns.
Finally, I would submit that if we maintain the differentiation in spectrum assignment fee and reduce charges to Tk 250 crore and Tk 125 crore for the 900 MHz and 1800 MHz bands and not apply the spectrum utilisation factor, the total applicable fee for all operators comes to about
Tk 8,400 crore initially, which is roughly equivalent to the ministry's figure. The government will receive the same amount of money but it will be distributed among the operators in a fair and equitable manner. Currently, it appears the most successful operator is being punished unduly and inefficiency is encouraged.

The author is a telecom analyst and can be reached at akm.shams@yahoo.com

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