Cell phones contributing to development

The country's mobile phone subscription base increased from mere 4 million in 2004 to 40 million in April 2008. An estimated 1 million people are either directly or indirectly dependent on mobile phone sector.

There is an established saying-an increase of 10 mobile phones per 100 people boosts GDP growth by 0.6%. In the recent years Bangladesh mobile sector witnessed a phenomenal growth with a staggering BDT 24,000 crore flowing into this sector, subscriber base increased from mere 4 million in 2004 to 40 million in April 2008. Mobile sector now contributes 1.46% of GDP and this sector contributed BDT 5,639 crore to the government in 2007 in terms of direct and indirect tax, VAT, revenue sharing with Bangladesh Telecommunication Regulatory Commission and Bangladesh Telegraph and Telephone Board. The contribution in 1997 stood at only BDT 62 crore.
Apart from direct employment generation, a whole new industry has been built up around selling airtime, top-up cards and mobile handsets or providing maintenance and repair services. I obviously don't want to bring in the corporate social responsibility (CSR) dimension of these companies here or their sponsoring of so many socially responsible programmes in the media or community. An estimated 1 million people are either directly or indirectly dependent on this sector. While there have been discussions on the impossibility of having informationally efficient markets, now a farmer knows how much his produce would fetch in capital cities or across the country. He can easily argue with the middleman as he is now more aware. A powerful TV ad reminds us of economist Jeffrey Sachs article, where he mentions that communication empowers people and stimulates the economy.
While we can easily quantify the statistics of direct investment, contribution to the national exchequer etc., other intangible benefits are too often neglected by us. Who would quantify the benefits of having all the family members pursuing fairly independent activities and yet be constantly in touch? The recent inclusion of the three hill districts into the mobile network would not only integrate the population left isolated for so long, they would also be integrated into the mainstream economy and the mistrust or disconnects would only gradually diminish. It truly establishes the dream of Nobel Laureate Professor Yunus's `inclusive society'.
While the total telecom subscriber is around 41 million, mobile subscriber base within a very short span of time reached 40 million. This figure contrasts with more developed western economies having a long history of development. Due to cost of deployment and infrastructure, many developing countries have leapfrogged the fixed lines into the next trajectory of mobile communication. To get the maximum benefit from this sector, we must realise that mobile communication is not a luxury and also recognize that the correlation between mobile penetration and GDP growth has been proved correct in empirical study conducted in 57 countries. Government can stimulate the already existing vibrancy around this sector further and given that Bangladesh has the lowest tariff in the world, the multiplier effect on the economy would be much larger. Coming back again with Jeffrey Sachs, the director of The Earth Institute, to improve access to healthcare and education, create new business opportunities and access to markets, and ultimately to help eradicate extreme poverty, mobile communication is perhaps the single most transformative technology.
Government can play a vital role in encouraging the rollout of telecommunications services. Customs duties, SIM taxes, license renewal all influence the take-up of mobile communications. A World Bank survey found out the indirect benefits to the economy of having affordable access to telecommunications services far outweigh any short-term benefit to the budget. By removing mobile specific taxes more consumers will connect, boosting economic growth, at a very limited cost to total government tax receipts. In some cases long-term government tax receipts may even be positive. Government can fuel this powerful economic growth engine by lowering taxes on mobile services, SIM taxes etc.
Government can also help in reducing the cost of setting up infrastructure. A new government policy in India mandates the sharing of base station towers every new rural tower has to be shared by three operators. This not only lowers cost to the operators but also reduces pressure on fuel etc.
The single most important measure that government can take to boost mobile coverage is to liberalise its telecom market, rest will fall in place as all these services are being run by operators as sustainable, profit making business. Mobile operators are often criticised on making excess money, though the statistics of outward remittance is nowhere close to the investment. We must realise that there is nothing wrong in making profit and history of economic development says only profit making companies can sustain in the long run and can ensure distribution of their profits for right causes too.
We, as independent citizens of the country, cannot be isolated from the benefits of technology we have to appreciate that only due to the private telecom operators, average call charges have come to an affordable level and we can now connect with our near and dear ones across the world. This sector only deserves due appreciation and support from the government and the people who believe connectivity can empower people, integrate people with shared vision and ensure growth at the `bottom of the pyramid'.

The writer is a banker and economic analyst.