Cross digital divide to reach digital Bangladesh

Mobile operators told at The Daily Star roundtable
The mobile industry in Bangladesh, which is still lagging at the bottom rung of tele-density in the region, is at the crossroads of growth where the huge untapped rural market beacons it. But the challenge is strong enough as the cost of owning a mobile set and connection is too prohibitive, making the vision of a Digital Bangladesh a pipe dream, a roundtable organised by The Daily Star was told yesterday.
The options to overcome the odds to bring about a revolutionary change in rural lifestyle in terms of internet use, telemedicine help and e-education are quite a few and some of them could be addressed through budgetary measures.
Mobile operators said the Tk 800 tax on SIM card is a big hindrance for a poor person to buy a mobile connection and this single reason pulled down the mobile industry growth from a high 6 percent in January 2008 to a minus 3.5 percent in October 2008. This extra tax along with a 25 percent duty on mobile sets makes it prohibitive for the commoners to use mobile.
Since the mobile technology debuted in the country in 1993, six operators have added 46.41 million customers to their networks as of May this year. And of this customer base, maximum mobile penetration has been taking place in urban areas.
Bangladesh’s tele-penetration is about 34 percent with the industry having generated more than 6.75 lakh direct and indirect employments so far, they said at the roundtable styled “Mobile sector growth prospects”.
Operators blamed the tax on SIM card as the major digital divide between the rural and urban areas. They said such tax is one of the major barriers to expanding their costly networks to the rural areas as these areas may not give a healthy return in terms of revenue like in urban areas.
They said one option to close this divide could be withdrawal of the tax, which would ultimately increase the government’s revenue collection through high sales and use of mobile connections.
A monthly surcharge–a minimum fixed rent per connection–could be another option from which the government will receive more revenues than it now receives from the tax on SIM card, they said.
Mobile phone operators are willing to introduce cheaper SIM cards for rural areas if the government removes the existing tax. A special tariff package along with the connection could be offered to rural people under this cheap connectivity initiative.
Mahfuz Anam, publisher and editor of The Daily Star, said, “Our next growth lies in the rural areas. So, any rationale for any cost-cutting to penetrate into rural areas is the biggest justification.”
Now is the time to provide the cheapest possible connectivity to the rural population, he said.
CEOs and high officials of mobile phone operators, civil society members, telecom experts and representatives of telecom vendors were present at the roundtable.
“The government can introduce a surcharge of Tk 5 a month instead of continuing the existing Tk 800 tax on SIM card,” said Muneer Farooqui, chief executive officer of Warid Telecom, the last to enter the country’s mobile operation market.
“It takes more than one to two years to recover investment for each customer in the rural areas,” said Oddvar Hesjedal, chief executive officer of market leader Grameenphone.
“Like other sectors, mobile industry now suffers from the ongoing global recession, which has become a bar to more capitalisation in the market,” he said, backing waiver of SIM tax in the final budget.
The government imposed Tk 800 tax on SIM card in the budget for fiscal year 2005-06. The operators used to pay the tax to add more customers to their networks amid a stiff competition. But later they decided not to continue the subsidy, saying the tax is one of the major reasons behind incurring losses.
Ahmed Abu Doma, chief executive officer of Banglalink, urged the government to check the market’s present situation to find out why operators are incurring losses.
Dr Debapriya Bhattacharya, fellow of Centre for Policy Dialogue, said besides the tax on SIM card, price war and crackdown on illegal VoIP are the two other major reasons behind incurring losses.
It is the time to go to the untapped rural areas, said Ahmed Mushfeq Anam, managing director of X-Fer Limited and representative of Nortel Networks Netas. Operators should take up strategy to share infrastructure among them to expand networks in rural areas so that investment returns come to their expected level, he added.
M Rafiqul Islam, joint secretary of the post and telecommunications ministry, assured the mobile phone operators of passing their appeals to the telecom minister.
Md Rezaul Quader, director of Bangladesh Telecommunication Regulatory Commission, also expressed the commission’s support to the stance.

Courtesy of The Daily Star