3G won't be a hit without high-end handsets

Michael Kuehner

The upcoming 3G technology will not benefit people much unless high-end or 3G-enabled handsets are widely available, says the chief executive of a mobile operator.
In Bangladesh all the users may not be able to buy costly handsets and the benefits of the 3G services will get away from them, says Michael Kuehner, managing director and chief executive officer of Robi Axiata Ltd.
Kuehner also says 3G is not going to bring miracles although a lot of hype has been created around the launch of the technology.
He says 3G will facilitate a bigger amount of data transfer, but for daily use, such as mailing or surfing the net, the current technology -- EDGE (known as 2.75G) -- is enough.
The Bangladesh Telecommunication Regulatory Commission is going to hold an auction on September 8 to offer four 3G licences to private mobile operators.
However, the Robi CEO says, along with the upcoming 3G services, “still there is room to develop the existing EDGE technology.”
A significant portion of the population of Bangladesh needs internet or data connectivity and, Kuehner says it is the right time to go for 3G, as higher internet penetration will help the economy grow faster and bring about positive changes in education, healthcare services and many other areas.
However, for the last six months the government, the regulator and the mobile operators have been trying to reach a consensus to launch the 3G services, but that could not happen due to some tax-related disputes and court cases.
“We are very interested and well prepared to launch 3G. All the other companies of the Axiata Group have offered the services long ago.”
Kuehner says: “We can participate in the auction only when the disputed issues are resolved.”
“The shareholders have told me that if there is no clarity on the issues and if we don't know what we will face, we will not get a go-ahead (from the shareholders) to participate in the auction.”
The disputes centring the VAT issues and the pending cases regarding SIM replacement, among others, have to be resolved first, he says.
On the $20 million base price in the auction, Kuehner says, "It's not realistic and business friendly."
Recently Robi's shareholder Japanese mobile giant NTT Docomo has decided not to invest further in the operator.
A lack of predictability and investment protection, and a negative regulatory environment are the reasons why Docomo has taken such a decision, the Robi chief executive says.
Telecom is a very capital intensive business. Its capital expenditure is extremely high compared to its operational expenses, which take away a huge amount. On top of it, when the government takes more than 50 percent in taxes, it becomes very tough for an operator to do business, Kuehner says.
He also says, due to the tax burden Robi is not consistent in its profit. "The profit is mostly driven by taxation."
However, he says Robi is growing and doing "very well" despite the unfavourable tax regime.
"We are running our operations as cost efficiently as possible. But the profitability is far below the expectations of the shareholders," he says.
Recently Robi has signed an agreement with an internet service provider to offer Wi-Fi services.
About Wi-Fi, he says it is complimentary to the 3G services but cannot be an alternative. Wi-Fi can be rolled out at a low cost compared to building the 3G network.
Kuehner says the regulatory environment has improved in the last one year.
If the operators can put forward their opinions in all issues, a good regulatory environment can be created, he says.