Withdraw VAT on internet prices | The Daily Star
12:00 AM, October 14, 2015 / LAST MODIFIED: 12:00 AM, October 14, 2015

Withdraw VAT on internet prices

ISPs urge govt to reduce transmission costs

Internet service providers have called for withdrawing VAT on internet prices and reducing transmission costs, saying the moves will bring down expenses of end-users.

The Internet Service Providers Association Bangladesh (ISPAB) also thinks more licences should be given to operate the National Telecommunication Transmission Network (NTTN).

The platform urged the government to merge international internet gateway (IIG) operators with ISPs, to reduce operational costs.

They will soon put forward the recommendations to policymakers to help cut internet prices and increase bandwidth consumption, said MA Hakim, president of the trade body. In the last couple of years, the government cut bandwidth prices significantly, but end-users did not see a fall in internet prices, he said.

“We cannot reduce internet prices if transmission costs and taxes are not brought down.”

Imdadul Haque, general secretary of ISPAB, said: “We pay 15 percent VAT when we buy bandwidth from the IIGs, and our customers pay another 15 percent VAT on bills. This fuels internet prices."

IIGs have to share 10 percent of their gross revenue with the government, which also leaves an impact on the charges at the user level, Haque said.

The government should take steps to help flourish the Tk 130-crore industry instead of imposing heavy taxes on it, he said. Transmission cost is the major expense for an ISP, he said. "We buy bandwidth at only Tk 625 per Mbps. But, we need another Tk 800 to Tk 1,000 to transmit it to users."

In 2009, the transmission charge was fixed at Tk 2 for each kilometre. The charge remained the same although bandwidth prices were cut several times since then.

The association demanded the charge should be only Tk 0.30 for each kilometre.

Bangladesh Submarine Cable Company Ltd had earlier requested the government and the regulator to cut transmission costs to help people reap benefit from the reduction in wholesale bandwidth prices.

Early this month, the leaders of the association highlighted the issues at a meeting with Bangladesh Telecommunication Regulatory Commission, where all stakeholders of the industry were present.

Out of 5.22 crore internet connections in Bangladesh, ISPAB serves only 13 lakh households, who consume most of the bandwidth.

Currently, there are 400 ISPs across the country and as of June, total bandwidth consumption stood at 136.45 Gbps, according to the telecom regulator.

The ISPs also want a reduction in the tax on equipment imports and expansion of the network of the NTTN operators up to upazila levels.

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