Make 4G guidelines more investment friendly

The government should revisit its recently-approved 4G guidelines to make them more investment-friendly and help operators roll out the fourth-generation technology, said the president of the Association of Mobile Telecom Operators of Bangladesh.

Erik Aas said all the major operators have expressed willingness to embrace 4G technology.

"The industry believes the guidelines, as they are now, are not investment-friendly because there are many conditions that are not pragmatic at all," he told The Daily Star in an interview on Sunday.

He said the operators will only participate in the process if all of their concerns are addressed and the guidelines are made favourable for further investment.

Aas served as the chief executive officer of Grameenphone from October 2004 to October 2007. Later, he joined a mobile operator in Indonesia as its top executive and worked for seven years before joining Banglalink in 2015 as its chief executive.

"At Banglalink, we are technologically prepared and we have already started making SIMs ready for 4G. One of our partners has successfully tested 4G on our network," said the CEO of the third-largest operator.

The guideline was issued last month. The AMTOB has raised 23 concerns over the 4G guidelines and is waiting for a response from the government.

He said they have found many unrealistic conditions in the guidelines. "If these conditions remain in place it will discourage our shareholders to invest in 4G rollout."

Operators fear they would not see return in the near future on an estimated Tk 22,600 crore investment that would be needed to deploy the 4G technology.

Aas said 4G is nothing but technological neutrality of 3G. However, the authorities have added a number of conditions that are not related with the 4G technology at all.

A conversion fee has been set to make all 2G spectrum technology-neutral, which Aas said will only push up investment requirement.

He said spectrum price for auction is significantly higher than that in the association's proposals.

The government plans to earn Tk 11,000 crore from spectrum sale.

"Bangladesh is one of a few countries where spectrum scarcity for mobile operators is very high. High spectrum prices are always an obstacle to a robust rollout because the service-delivery cost becomes high, making it difficult to offer better services."

If the government cuts spectrum price, mobile operators would be able to offer 4G services at affordable prices.

He said mobile operators are investing heavily in technology and would continue to do so, but it has to be within a regulatory regime where investment will yield right return.

The AMTOB said some conditions would create challenges for the operators to make positive decision on 4G. Some operators are unable to source funds locally, said Aas.

The guidelines also stipulate that operators would have to store data for 12 years – a provision that will also be a challenge for the operators.

Pierre Boutros Obeid, chief technology officer of Banglalink, said technologically it is possible to offer 1Gbps speed in 4G, but it will require huge investment.

"We look forward to launching 4G services as we continue to transform our network to make it affordable for our customers and help bridge digital divide."

He said Banglalink is committed to offering the best in 4G to ensure digital inclusion of everyone.

Aas said mobile operators are already burdened with some of the highest taxes in the world and higher fees which have made it challenging for them to expand the existing network and roll out future technology.

He said the current tax policy in Bangladesh is really an impediment to the growth of the telecom industry with unpredictable and uncertain financial regulations.

"If regulatory requirements rise because of the guidelines, it will practically be impossible for us to convince our shareholders to invest further in Bangladesh."

Aas said, right now there has not been a viable business for 4G in Bangladesh and the high costs and an unfavourable regulatory environment will further deteriorate business case.

Only 5 percent people in Bangladesh use 4G-enabled handsets, he said.

When the third-generation technology was introduced in Bangladesh in 2013, the penetration of 3G-supported handsets was very low. But now it stands at 35 percent, while mobile operators have brought 65 percent of the entire country under their 3G network, according to the GSMA, which represents the interests of mobile operators worldwide.

Aas said the 3G service still cannot be termed as a successful business case. Four years ago, spectrum price was too high. As a result, operators were not able to mobilise enough funds to buy spectrum.

Total investment for 3G was Tk 32,000 crore whereas the return has been only Tk 6,000 crore so far.

When asked about the future of 2G and 3G after the launch of 4G services, Aas said developed countries are switching off 2G networks because of cost efficiency.

"But here the industry is looking forward to technology neutrality as it will allow them to offer any service in any band, which will lead to reduction of cost of doing business and improve service quality," Aas said.

"Although, the technology neutrality fees have been slightly revised, I believe there should be no fee for technology-neutrality. There are several countries where there is no such conversion fee."