Any further disruption in internet-based services will impede telecom operators' efforts to drive growth in the 3G market, stall their plans to invest in network improvement and hurt promising online business in Bangladesh, according to a new report.
“The government's attempt to deter a recurrence of the recent slate of terrorist attacks by restricting the use of social media services is only a short-term measure which will do little to reduce the risk,” London-based BMI Research said.
The analysis, by BMI Research, a Fitch Group company that provides macroeconomic, industry and financial market insights, comes after a nearly 90-minute countrywide internet breakdown on November 18.
The government said it had taken the action in order to maintain stability as many had thought political violence might erupt in the wake of a Supreme Court ruling upholding death sentences for Salauddin Quader Chowdhury and Ali Ahsan Mohammad Mojaheed, both convicted of war crimes. Chowdhury and Mojaheed were executed on November 22.
Although the internet shutdown was lifted, the government is still maintaining restrictions on social media services such as Viber, Facebook and LINE in the face of security threats.
“Although the government has iterated that this is just a temporary measure, our country risk team highlights the downside risks to political stability and the investment climate,” the BMI Research said.
It said the restrictions on the internet could also dampen the government's plan to introduce 4G networks in 2016 in support of the Digital Bangladesh Vision.
With 3G just starting to gain traction, and an increased risk of internet censorship, operators may be hesitant to participate in LTE spectrum auctions, scheduled for 2016, and withhold investment in infrastructure development and services, according to the report.
As of the third quarter of 2015, Banglalink, the second-largest operator by subscriber market share, covered just 31 percent of the population with its 3G network, highlighting the need for more investment into mobile data networks. “With operators just beginning to introduce subscribers to mobile data and develop their 3G networks, poor service quality risks slowing down the speed of data adoption.”
Operators may also need to offer higher subsidies to make up for service disruptions, adding to revenue loss from internet shutdown periods, the analysis said.
As it is, market leader Grameenphone's strategy to introduce basic data services to subscribers is largely focused on subsidies, the analysis said, citing an example.
A survey conducted by TechinAsia from January to July finds that 4 percent of e-commerce users access the service through their smartphones.
“We believe risk of the Bangladeshi government's censorship on internet services will curb operators' willingness to increase investment in mobile data networks, thus hindering growth in the nascent, smartphone-based e-commerce industry,” the BMI Research said.
Local businesses have already said they were unable to fulfil orders during the blackout. They also added the long-term effect will be massive, with businesses based on social networking sites such as Facebook bearing the highest brunt.
Online sales have dropped by up to 90 percent since the ban on Facebook, according to an estimate by e-commerce operators.
In Bangladesh, the use of Facebook started in the second half of 2006, and there are some 1.8 crore users at the moment.