Data connectivity and quality: Significant challenges persist in Bangladesh

In the digital age, robust telecommunications infrastructure is essential for economic growth and social development. Bangladesh has made notable progress in mobile connectivity, with over 170 million mobile subscribers in 2024, according to the Bangladesh Telecommunication Regulatory Commission (BTRC). However, significant challenges persist regarding the quality and accessibility of data services. This document outlines critical areas for reform, aiming to establish a citizen-friendly telecommunications framework that guarantees affordable and reliable data connectivity.

Regulatory Unpredictability and Investor Exits
Regulatory instability poses a significant challenge for investment in Bangladesh's telecommunications sector. Frequent changes in licensing costs and fiscal policies create an unpredictable environment. A report from the BTRC indicated that 15 foreign telecom operators exited the market between 2008 and 2022 due to regulatory challenges, including rising costs and complex compliance requirements. This trend hampers sector growth and the overall economy, leading to a loss of Foreign Direct Investment (FDI) opportunities. According to a 2023 study by the Bangladesh Investment Development Authority (BIDA), the telecommunications sector has witnessed a decline in FDI by approximately 25% over the last five years.

The exit of significant players like Singtel, NTT Docomo, and Warid Telecom and a reduction in investment by companies such as Grameenphone highlight the urgent need for a stable regulatory environment. Reports suggest that regulatory uncertainty could lead to a potential loss of $1 billion in FDI annually if not addressed.

Spectrum Pricing Strategy
Historically, till 2011, the Bangladeshi government allocated spectrum either for free or at heavily subsidized rates. This policy facilitated a rapid increase in tele penetration—from just 0.5 million subscribers in 1997 to over 70 million by 2011.

However, following the renewal of 2G licenses in 2011 and the subsequent introduction of 3G licensing in 2013, the pricing structure underwent a dramatic shift. Spectrum allocation for 15 years became a way to support the national budget for one year.
Comparative Spectrum Pricing and Net Neutrality by Bands:

2100 MHz:
Bangladesh (2013): ~$0.5 million per MHz (not net neutral; additional BDT 5 billion for neutrality in 2018).
Pakistan (2014): ~$0.3 million per MHz (net neutral).
Sri Lanka (2016): ~$0.4 million per MHz (net neutral).
1800 MHz:
Bangladesh (2018): ~$0.5 million per MHz (net neutral).
Pakistan (2016): ~$0.2 million per MHz (net neutral).
Sri Lanka (2020): ~$0.3 million per MHz (net neutral).
900 MHz:
Bangladesh (2022): ~$0.6 million per MHz (net neutral).
Sri Lanka (2016): ~$0.4 million per MHz (net neutral).
Philippines (2022): ~$0.25 million per MHz (net neutral).

2300 MHz:
Bangladesh (2022): ~$0.3 million per MHz (net neutral).
Vietnam (2022): ~$0.3 million per MHz (net neutral).

2600 MHz:
Bangladesh (2022): ~$0.4 million per MHz (net neutral).
Philippines (2022): ~$0.2 million per MHz (net neutral).

Impact of High Spectrum Prices and Suggestions
The steep increase in spectrum prices has stifled investment in Bangladesh's telecommunications sector. The financial burden on operators has limited their ability to expand and enhance their networks, particularly for smaller players who struggle to meet these high entry costs. Over 40% of the country's population still lacks access to the internet. High spectrum prices directly affect operators' ability to roll out services in rural and underserved areas, exacerbating the digital divide.

A study by the International Telecommunication Union (ITU) suggests that lowering spectrum fees by 20% would increase broadband penetration by up to 10%, benefiting millions of citizens.

An alternative of imposing a high upfront fee could be a tenure-long revenue-sharing model, akin to those implemented in Canada and Indonesia, could provide a more sustainable framework for spectrum pricing.

To foster a more conducive environment for investment, it is crucial to implement a secondary market for spectrum trading which can help to achieve better utilisations of underutilized spectrum allocated by the regulator.
Enhancing Wireless Data Networks
A robust wireless data network is critical for improving utilization of spectrum, particularly in urban areas where demand for data services is surging. Currently, Bangladesh has approximately 40,000 mobile base stations. In contrast:

Indonesia:
● 90,000 base stations,
● 50 million mobile connections,
● 555 connections per base station.
Brazil
● 70,000 base stations,
● 200 million mobile subscribers,
● 2,857 connections per base station.
Mexico
● 50,000 base stations,
● 80 million mobile connections,
● 1,600 connections per base station.
This data illustrates that while Bangladesh has a significant number of base stations, with above 4,000 connections per base station, the coverage ratio is lower than in these countries. This disparity emphasizes the need for increased investment in infrastructure to enhance connectivity. According to the ITU, a 20% increase in the number of base stations can lead to a 30% improvement in data quality and accessibility.

A key aspect of enhancing wireless networks is the implementation of active sharing among operators. The recent pilot project between Banglalink and Teletalk for active sharing is a promising step towards efficient resource use. The Telecom Regulatory Authority of India reported that active sharing led to a 30% reduction in capital expenditure for mobile operators, improving overall network performance.

Additionally, abolishing the revenue-sharing requirement on infrastructure and equipment trading will stimulate investment in network infrastructure.

Fragmented Gateway Operations
Bangladesh's International Long-Distance Telecommunication Services (ILDTS) policy allows numerous gateway operators, leading to inefficiencies in service delivery. Currently, over 12 operators are licensed, complicating the regulatory landscape and discouraging investment from global content delivery networks (CDNs). The fragmentation of gateway operations in Bangladesh has led to increased operational costs for telecom operators, affecting their ability to provide affordable services.

In Japan, the regulatory framework enables a limited number of gateway operators, resulting in lower costs and higher quality services. A report by the Ministry of Internal Affairs and Communications (MIAC) showed that Japan has achieved a 95% internet penetration rate largely due to efficient management of its gateway services.
Challenges for Local Internet Service Providers (ISPs)

Local ISPs are crucial for improving data connectivity, yet they face several challenges, particularly due to the "one country, one rate" policy that fails to consider regional cost variations. This policy makes it difficult for smaller ISPs to compete. Promoting tiered pricing based on geographic and economic conditions could support local ISPs and enhance competition, as demonstrated by successful models in Australia and Brazil.

According to a report by the Bangladesh Internet Service Providers Association (BISPA), only 35% of ISPs have the infrastructure to deliver broadband services effectively, which highlights the need for more investment in local ISPs. Furthermore, the absence of a supportive ecosystem for ISPs has led to underperformance in service delivery. A survey conducted by the Telecom Regulatory Authority of Bangladesh found that 60% of users experienced connectivity issues with their ISPs, which points to the urgent need for reform. Regional ISPs should be encouraged by way of easy licensing, easier access to transmission PoPs, subsidized bandwidth, and financing options.

Underutilization of the Social Obligation Fund (SOF)
The Social Obligation Fund, intended to improve access to telecommunications in underserved regions, has been underutilized. A BTRC report indicates that less than 30% of the fund has been allocated for infrastructure projects since its inception. A report by the International Telecommunication Union (ITU) highlights that without targeted investment in underserved areas, the digital divide in Bangladesh will continue to widen, limiting economic opportunities for many citizens.

SOF in Brazil has been instrumental in expanding internet access in rural areas, with over 4 million households gaining connectivity between 2010 and 2020 as a direct result of these investments. In Bangladesh, a more strategic approach to utilizing the SOF could lead to significant improvements in connectivity, particularly in rural and remote regions, where access to digital services remains limited.

Foreign Direct Investment (FDI) Promotion
Bangladesh's telecommunications sector has struggled to attract foreign direct investment due to a volatile regulatory environment and rising operational costs. The BTRC has noted a decline in FDI for both mobile network operators (MNOs) and nationwide telecommunications transmission networks (NTTNs). A 2023 report by the United Nations Conference on Trade and Development (UNCTAD) highlights that Bangladesh's FDI inflows dropped by 14% in 2022, with the telecommunications sector particularly hard hit.

Establishing a stable regulatory framework and offering long-term incentives could attract substantial investment, similar to the strategies employed by Vietnam and Singapore, which have fostered significant FDI by providing clear and consistent policies. For instance, Vietnam's telecommunications sector saw a surge in FDI after implementing a policy framework that incentivized investment in infrastructure development, resulting in a 30% increase in broadband access in just two years.

Moreover, FDI could stimulate competition in the NTTN market, enhancing service quality and reducing prices. A report by the Asian Development Bank (ADB) suggests that increasing FDI in the telecommunications sector could lead to an overall improvement in service quality, with a projected 15% reduction in prices for consumers.

Conclusion
To achieve a robust telecommunications framework that supports sustainable growth and improves data connectivity and quality in Bangladesh addressing the mentioned challenges is necessary. The author believes that by adopting these recommendations, Bangladesh can transform its telecommunications landscape, providing high-quality, affordable data connectivity for its citizens and paving the way for a connected economy that fosters innovation and growth.

Abu Nazam M Tanveer Hossain: Public Policy Advocate