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Legitimate competition in telecommunication sector

| Updated: October 24, 2017 00:50:31


Legitimate competition in telecommunication sector
Telecommunication (Telco) services are no longer a luxury; they have now become a necessity. According to the Bangladesh Telecommunication Regulatory Commission (BTRC), 83 per cent of the total population of Bangladesh is using telco services. 
 
The total number of mobile phone subscribers in Bangladesh is 13,31,80,000 until the end of November 2015. There are six different telcos operating in Bangladesh at this moment. Operator- wise subscriber and tri-month (January-March) revenue distribution has been presented in table 1. The GrameenPhone (GP) tops the list with over 42 per cent subscriber and 86.9 per cent revenue. In terms of subscribers, Banglalink is placed second (25 per cent), Robi third (21 per cent), followed by Airtel  fourth (8.0 per cent), Teletalk fifth (3.0 per cent) and CityCell sixth (0.7 per cent). In terms of revenue, Robi is once again placed second (22.6 per cent), Banglalink third (21 per cent), following Airtel fourth (6.3 per cent), Teletalk fifth (2.6 per cent) and CityCell sixth (0.6 per cent).
 
Operator-wise spectrum distribution is shown in Table 2. By analysing the distribution, it is found that GP has 32 MHz (27 per cent), Banglalink 20 MHz (17 per cent), Robi 19.8 MHz (17 per cent), Airtel 20 MHz (17 per cent) and Teletalk has 25.2 MHz (22 per cent). These operators are using GSM technology. Only CityCell uses CDMA technology. Its spectrum is 8.82 MHz in 850 MHz band. The government still has an unsold spectrum of 25 MHz for both 1800 and 2100 band and has also reserved 10 MHz for 2100 Band.
 
In 2013, an auction took place for 2100 MHz band for 3G service. GP bought 10MHz spectrum for 2100 MHz band. None of the other operators was able to buy more than 5 MHz spectrum. Therefore, GP subscribers (42 per cent) are enjoying high-speed dual carrier 3G network. On the other hand, the majority (58 per cent) of the subscribers are deprived of this opportunity.
AIRTEL INVESTMENT AND DEFICIT: Investment and deficit calculations of Airtel from the year 2006-2015 are shown in Table 3. Despite  continuous investment by Airtel, it failed to achieve the revenue and was unable to get rid of the deficit.  In 2006, the investment was around Tk 12.00 billion where deficit was Tk 200 million. In the next year, investment was Tk 11.50 billion  taka but still the deficit increased to Tk 3.20 billion. In 2014, the investment was Tk 15.30 billion and deficit was Tk 8.40 billion. From the above data, it can be said that Airtel is never able to profit and unable to deal with the deficit.
 
REDUCTION OF CALL RATE AND COMPETITION: In 2001 voice call per minute was over Tk 10. In 2005-06 when Sheba telecom started to operate in the name of Banglalink, it decided to increase the competition and decreased the price of telecom services. This competition is shown in Table 4 . According to the table, it shows that in the year 2014-15 Banglalink forced the other two operators GP and Robi to lower their call rate (Tk 0.77 and Tk 0.66 respectively) by reducing their call rate to Tk 0.66. Later, Banglalink reduced their call rate further to Tk 0.61. As a result, GP reduced it to Tk 0.63 and Robi to Tk 0.64. So Banglalink played a key role in creation of competition in the market.
 
DOMINANT MARKET EMPOWERMENT: Depending on market contribution of the dominant operator in a variety of indicators are shown in Table 5. Index of revenue, profit and customer's monthly revenue per mobile user and the index value is determined on the basis of calculations from October- December in 2015. After reviewing of operator-based index value, it is found that the GP over the year has achieved dominant market power. The reason behind the dominant market power of GP is that it has the opportunity of dual carrier 3G service to customer on a single optical fibre and railway network (2010 km). Moreover, GP has almost one and half times more 3G BTS network than other operators. Because of that, it can provide fastest internet service and network coverage compared to other operators. As a result, with 42 per cent of total customers, 47 per cent of total revenue and 19 per cent of profit from their revenue GP has earned the single dominant market power. 
On the other hand, due to lower call rate of Banglalink compared to other operators, average use of mobile phone turns into 305 minutes per customer per month and Robi has 123 minutes per customer. Nevertheless, though the power spectrum is equal in Robi and Banglalink,  the latter could not be equal with Robi in terms of market dominance. Airtel gained  revenue per month from the customer Tk 140 whereas Robi gained Tk 136. The power spectrum of both operators are the same but still Robi is able to achieve Tk 1.07 billion in three months where Airtel's deficit is Tk 2.29 billion. Airtel spectrum is worth up to $ 2.03 because of its small number of subscribers. Expenses increase instead of profit and therefore it faces deficit. As GP has the large number of subscribers so the spectrum cost of GP is $ 0.37 per customer. For this, it has reduced the cost and increased the profit for GP. So in the current situation GP dominates the marketplace while Airtel-Robi merger is taking place.
 
The writer is Professor and Dean, the Faculty of Engineering, 
Daffodil International University.
 
 
 
 

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