Flawed policies could drive small ISPs out of busines

Emdadul Hoque. Currently the president of the Internet Service Providers Association of Bangladesh (ISPAB). He is the head of Optimax, one of the leading broadband internet service providers in the country. He has been involved in the broadband internet service business for more than two decades. He has been in the leadership role of the ISPAB since the beginning of its journey. Earlier, he was the general secretary of ISPAB for two terms. He recently spoke to the Views Bangladesh about various aspects of the country's broadband internet service business. The conversation also covered the overall business and policy framework of the country's telecommunications sector.

Interviewed by: Zobaer Mahmud

Views Bangladesh: There are VAT and taxes on broadband services. Now, there is a proposal to impose charges on ISPs for the Social Responsibility Fund (SOF). What is your assessment?

Emdadul Haque: Our service system involves four layers. Starting from importing bandwidth through submarine or ITC to delivering it to users, we go through these four layers. The first layer is the submarine cable or ITC, where the government is already receiving VAT, taxes, revenue sharing, and SOF. The second layer is the IIG. For every stage, we require transmission services provided by NTTN companies. The government receives VAT, taxes, and revenue sharing at each of these stages. Then comes the ISP layer, where the government also collects VAT and taxes. Now, the government is proposing to impose SOF on ISPs as well.

Views Bangladesh: Do you find the imposition of SOF problematic for ISPs?

Emdadul Haque: At the end of the previous government’s term, there was an attempt to impose SOF forcefully. ISPAB resisted it. Discussions are ongoing with BTRC regarding this matter. As ISPs provide services to the grassroots and reach remote areas, our revenue is not significant. Hence, we request that SOF not be imposed on us.

Views Bangladesh: What are your observations regarding the expenditure of the Social Responsibility Fund?

Emdadul Haque: SOF is supposed to be utilized for underprivileged people and areas where the internet hasn’t reached yet. However, I believe that the funds spent so far have not been used appropriately. I was a member of the previous SOF committee, but I didn’t have the authority to oppose or deny decisions.

Views Bangladesh: Are you satisfied with the current revenue-sharing system?

Emdadul Haque: There are issues with revenue sharing, and it needs to be reviewed. For example, the IIG bandwidth price for ISPs is officially set at 365 BDT, but due to market competition, it has dropped to 200-250 BDT. To comply with revenue sharing at 365 BDT, either the sales volume has to be underreported, or funds have to be adjusted out of pocket. This creates a gap that jeopardizes the survival of smaller IIGs. BTRC should conduct a market survey and adjust revenue sharing to match the actual market price, preventing such gaps.

Views Bangladesh: Smaller ISPs face similar challenges. What is their current situation?

Emdadul Haque: Everything depends on government policies. If the policies are correct, there won’t be any issues. But flawed policies could drive small entrepreneurs out of business. Many new investors in the ISP sector could lose their capital, discouraging potential entrepreneurs and employment opportunities. Correct policies ensure a balanced market.

Views Bangladesh: The “One Country, One Rate” policy was introduced on June 6, 2021. What impact has it had on the market?

Emdadul Haque: With nearly 3,000 ISPs competing, it is not appropriate to fix prices. For instance, some areas have broadband services priced as low as 300 BDT, depending on minimal usage. In contrast, corporate packages range from 700 BDT to 50,000 or even 1 lakh BDT. Pricing should remain flexible based on user needs and operator offerings. Fixed pricing hasn’t positively impacted the market.

Views Bangladesh: The government has set voice call rates for mobile operators. Why not do the same for ISPs?

Emdadul Haque: There are only four mobile operators, and the government can regulate their prices to prevent monopolistic practices. However, with 3,000 ISPs, monopolies are not feasible. ISPs already operate on minimal profit margins due to intense competition.

Views Bangladesh: If the broadband price is reduced from 500 to 400 BDT, would operators face difficulties?

Emdadul Haque: Lowering prices further will compromise service quality. Operators might struggle to provide quality services since there’s minimal profit at 500 BDT. For instance, in India, the minimum price is equivalent to 600 BDT. Reducing prices here would lead to the collapse of many operators.

Views Bangladesh: Is there a level playing field for all operators in the broadband industry?

Emdadul Haque: No, there isn’t. Some operators hold licenses for all four layers, while others have licenses for only one or two. This creates disparities in competition. Moreover, mobile operators purchase bandwidth at 170-180 BDT per Mbps, while the fixed price for ISPs is 365 BDT. Such price differences are unfair and make it impossible for small or medium-sized ISPs to compete. This gap needs to be minimized.

Views Bangladesh: Should the government focus more on internet quality rather than pricing?

Emdadul Haque: I believe the focus should now shift to service quality. Pricing should be market-driven. We also need freedom to introduce services like IPTV and triple play. The government should involve industry stakeholders in policymaking to ensure effective decisions. Since the current government is interim and non-partisan, it has the opportunity to create sound policies without political bias. ISPAB is ready to collaborate for the benefit of the industry.