Fair Pricing of 2G Spectrum for Bangladesh

Mustafa Hussain, Telcom Consultant and Assistant Professor, Department of Electronics & Communications Engineering, East West University, Dhaka, Bangladesh. mustafamhussain@gmail.com

Bangladesh had to offer free licenses 14 years ago, and all the foreign operators took advantages of the opportunity. Initially there was no spectrum acquisition fee for the access frequency of Mobile Operators.2G licenses issued to private telecom players at throwaway prices 14 years back. .Now the government should realize that foreign operators have earned huge revenue and profit in last 14 years from Bangladesh. Mobile operators got spectrum for free. If they had paid the fees, some billion would have been collected.

Future Revenue projection for Mobile Operators Operators Active ARPU Revenue in Next 15 years Subscribers Crore 2.9970 227 160 197 136 720 122457.42 55661.76 43856.928 4433.328 226409.436 Crore

Grameen Phone Ltd. (GP)

Orascom Telecom Bangladesh 1.9327 Limited (Banglalink) Axiata Bangladesh Limited 1.2368 W(Robi) Pacific Bangladesh Telecom 0.1811 Limited (Citycell) Total 6.3476

The total number of Mobile Phone Active Subscribers has reached 68.645 million at the end of December 2010 according to BTRC website. Next 15 years the number of subscriber will be doubled. Operator will actually earn more revenue what was projected here. Grameenphone Ltd (GP) reported Tk 43.40 billion revenues for the first half of 2011, a solid 21 per cent increase from the first half of 2010. Net profit after taxes for the first half of 2011 was BDT 6.77 billion with 15.6% margin compared to BDT 4.83 billion with 13.5% margin of the first half of 2010. EBITDA margin for the first half of 2011 was 50.6%, which also has increased by 2.0 percentage points compared to the first half of 2010.

BTRC and MOPT issued a Draft Mobile Operators' License Renewal Guideline on spectrum pricing and decided that the operators will pay at the rate of only Tk 150 crore for per megahertz of airwave, which will be multiplied by the total allocated spectrum and a market competition factor. The rate for all bands of spectrum -- including GSM 1800 Mhz, 900 Mhz and CDMA 800 Mhz will be the same: Tk 150 crore. The revenue sharing proposal of 5.5 percent for the mobile operators and operators will pay 1 percent of their revenue to Social Obligation Fund, a new idea to help implement the government's vision for a 'digital Bangladesh'.

Around the world, operators have paid significant sums of money for 2G spectrum allocations. The goal of Regulator is setting out a path for the current and future availability of spectrum and with the main principles of encouraging competition and growth and a level-playing field and maintaining a technology neutral stance.

Lets look at India as an example, At present, Indian Operators hold separate permits for each of the 22 circles in the country and these are valid for a period of 20 years. The government gave away mobile permits from mid-90s. About 11 mobile phone companies will have to renew their permits between 2014 and 2021. All leading GSM operators will have to give up 'excess' airwaves they have when their mobile permits come up for renewal beginning 2014. This implies companies such as Bharti Airtel, Vodafone Essar and Idea Cellular, among others, which currently have up to 10 MHz or units of 2G airwaves in many regions, will be given only 6.2 MHz of radio frequencies when they renew their permits. TRAI had recently prescribed that every MHz of 2G airwaves up to 6.2 MHz limit be priced at 1,769.75 crore INR ( BDT . 2919.26 Crore) which is 20 times higher than what is proposed for Bangladesh. You may think India population is huge, but indias mobile user is 800 million and Bangladesh 80 million. Subscriber in india is 10 times higher than Bangladesh. But Specrtrum is 20 times higher.

TRAI also fixed that each MHz of spectrum beyond 6.2 MHz should be charged at Rs. 4,571.87 crore INR ( BDT . 7840.58 Crore) which is 52 times higher than what is proposed by BTRC and MOPT. In Bangladesh, Most of the operators are holding more than 6.2 MHz frequency. GP is using 22 MHz of spectrum.

SL. No.

Operators 800Mz CDMA (MHz) 900MHz GSM/E GSMB and (MHz) 7.4 5 7.4 1800MHz GSM Band (MHz)

Total Assignment (MHz)

1. 2. 3. 4.

GP Orascom AXIATA PBTL

14.6 10 7.4

8.82 MHz for Dhaka 6.30 MHz for outside Dhaka

22 15 14.8 15.12

In India, Universal Service Obligation Fund (USOF) is 5% of all operators revenues. In Contrast Bangladesh has proposed only 1% for Social Obligation Fund. Our Telecom Policy is formulated to encourage local businesses and enterprises in telecommunication sector. I strongly recommend BTRC and MOPT to reassess its spectrum fees and expectations of revenue generation from these license renewals. About The author:

Mustafa Hussain Mustafa has considerable experience of the telecommunications industry including its market, standards and regulations. Amongst the recent engagements that Mustafa

has carried out are: The Implementation of Technology Integration Solutions, Telecom Technology & Regulatory Strategy Management, Network. Management, Operations and Rollout, Project Management, Marketing and Sales for a Telecommunications company, Tasks related to Product Road map, Product Proposals, Product Presentations, Solution write-ups, Technical Pre-sales, Concept papers, New Venture Roll out, New initiative and business opportunity, Design of Telecom Business models and innovative strategies. Mustafa operates effectively at technical, marketing and strategic management levels and is a competent and practical engineer in both academic and commercial environments. He is also a PR/Communication specialist. Mustafa holds MSc Engineering Degree in Telecommunications from Kings College London. He is an Assistant Professor of East West University. The author can be contacted at mustafamhussain@gmail.com