Bangladesh lowest internet using country in Asia Pacific: study

Bangladesh, along with Pakistan, has the lowest level of mobile internet penetration in the Asia Pacific region, according to a report of GSMA, the global trade body of mobile operators.

Only 21 percent of the population of both Bangladesh and Pakistan have mobile internet connection -- the lowest among regional peers.

In 2017, one in five Bangladeshis subscribed to mobile internet services despite 3G networks covering in excess of 90 percent of the population.

Even countries like Nepal and Myanmar, both of which have lower GDP per capita than Bangladesh, have higher mobile internet penetration: 28 percent and 35 percent respectively.

The majority of subscribers in Bangladesh primarily use their phones for basic voice and SMS services, the report said.

As a result of this low level of engagement, the country also generates one of the lowest subscriber average revenue per user (ARPU) levels in the world at $2.9. This is considerably below the averages for Asia Pacific and the world of $10.4 and $14.6 respectively, limiting the ability of operators to engender the required transition to mobile broadband technologies, the report said.

“The enablers critical to creating the right conditions for mobile internet connectivity to flourish rank low in Bangladesh, despite the progress made in recent years.” 

In particular, the country scores below average on infrastructure and affordability enablers relative to its regional peers.

The slow transition to mobile broadband technologies in Bangladesh is also, in part, a matter of timing: the 4G/LTE spectrum auction only took place in February, making it one of the last countries in South Asia to award licences for the technologies.

“Affordability represents a major barrier to the uptake of mobile services in Bangladesh,” said the GSMA, which has approximately 800 members.

A medium consumption basket of 1 GB of data would cost an individual in the bottom 20 percent by income distribution approximately 11 percent of their monthly earnings in Bangladesh, which is above the affordability threshold recently adopted by the United Nations.

High levels of taxation and fees applied to the mobile sector affect the total cost of mobile ownership (TCMO) by directly raising the retail prices faced by consumers, and thus represent a significant barrier to digital inclusion.

For example, taxes on the use of mobile services in Bangladesh represent a higher share of tariff costs (22 percent) than in a number of neighbouring countries, said the report.

To date, the limited allocation of 3G spectrum in Bangladesh and its price in previous auctions have had a significant negative impact on the quality of mobile services, hindering the uptake and use of digital services.

At the end of 2017, just over 71 percent of connections were 2G, with 3G comprising the remainder.

In the February 2018 spectrum auction too, the high reserve prices and the associated licence fees remained.

When coupled with a mobile market with some of the lowest ARPU levels in the world, some of this high-priced spectrum went unsold.

This highlights the importance of setting reserve prices for future spectrum auctions at levels that consider operators' needs to not only finance access to spectrum, but also to deploy infrastructure to use that spectrum.

Without sufficient spectrum, quality of service for users will suffer, impeding the use of digital services.

“The government should ensure both the timely release of spectrum and fair prices for access to that spectrum to facilitate better quality and more affordable services.”

Although taxes and fees from the mobile industry remain an important source of revenue to finance public expenditure in Bangladesh, the current tax system is not conducive to improving the affordability of mobile services, the GSMA said.

“Taxes and fees on the mobile sector in Bangladesh are disproportionately high relative to other sectors in the economy and to other countries in Asia, and are often levied in ways that do not account for key investment and economic features of the industry.”

In 2014, the mobile industry in Bangladesh made a large contribution in taxes and fees relative to its size in the economy: tax and fee payments from the sector, as a share of total tax revenues, were 4.5 times greater than the sector's revenue as a share of GDP.

“A forward-looking regulatory environment will help boost the uptake of mobile internet services,” said the GSMA report that will be unveiled today in Dhaka.

The number of mobile internet subscribers in Bangladesh is forecast to reach 7.3 crore by the end of 2025, representing 41 percent of the population. However, approximately 10.6 crore people will remain without access to the mobile internet, factoring in population growth.

The report, however, went on to state that the mobile industry in Bangladesh has scaled rapidly over the last decade to become the fifth largest mobile market in Asia Pacific, with 8.5 crore unique subscribers in 2017, which is half the population.

“The country still faces a significant digital divide and steps must be taken to enable the right conditions for mobile internet connectivity to flourish in Bangladesh,” said Alasdair Grant, head of GSMA Asia Pacific.

The mobile ecosystem provided employment to more than 7.60 lakh people in Bangladesh, both in formal and informal sectors.

A third of the jobs were created directly in the ecosystem, while the rest were generated indirectly in other sectors as a result of the consumption of inputs generated by the mobile sector, it said.

Looking ahead, total employment is expected to grow around 9 percent to 8.5 lakh in the period from 2016 to 2020, largely driven by direct employment creation in the mobile industry.

“We expect that the economic contribution of the mobile ecosystem in Bangladesh will continue to grow. In value-added terms, we estimate that the ecosystem will generate $17 billion by 2020.”