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BTTB's destruction of telecom economics

The government's refusal to interconnect with the private operators has been suicidal. BTTB annually earns Tk. 15 million from each interconnection link with its local network. It also annually makes Tk. 90 million and Tk. 180 million from each NWD and ISD link respectively. Therefore, the artificial crisis of interconnection has deprived the exchequer from earning at least Tk. 2 billion by now. This loss will further escalate when the mobile industry adds one million customers by 2004.

Abu Saeed Khan
first GSM service in April 1997. As opposed to CityCell charging Tk. 2.00 per minute, GrameenPhone charged nothing to receive the calls coming from BTTB's network. GrameenPhone received overwhelming response from the market. Mobile phone, which had been perceived as a luxury, was turned in to people' s gadget.
The nation watched how a telecom technology makes the socio-economic paradigm shift. But this metamorphosis was pro-
Telecommunications is a unique amenity. Unlike water, power or gas a user does not have any alternate solution when the telecom system fails. It is also the only utility, which must be connected with other networks to be fully functional. Such dependence on the rival operators has made "Interconnection" the sectoral cornerstone while revolutionising the evolution of telecom landscape through competition.
Bangladesh remains the only SAARC country having less than 1 teledensity (telephone per 100 people). Being purely a government body, Bangladesh Telegraph and Telephone Board (BTTB) deposits its entire earning to the exchequer. BTTB survives on the government's mercy to develop its infrastructure and human resources. Such a practice has been impeding the qualitative and quantitative development of BTTB's performance.
The government took its first step to liberalise the telecom sector by introducing competition in the mobile market. The objective was to increase the ailing teledensity through the proliferation of mobile phones. It was expected to be the cost-effective, reliable and available substitute of BTTB's prohibitive, unreliable and uncertain connections.
Accordingly three GSM licences were granted to GrameenPhone, Aktel and Sheba in November 1996. CityCell, the incumbent mobile operator, had little over 3,000 customers at that time. Its network coverage was limited within Dhaka city. BTTB had nearly 390,000 subscribers in 1996.
GrameenPhone launched the
gressing with a genetic flaw. GrameenPhone needed adequate interconnection with BTTB to meet the growing demand, which the latter was refusing. In the back-drop of such dispute Aktel and Sheba launched their networks.
The three GSM operators gave BTTB an undertaking in April 1998. They would pay interconnection fees while accessing BTTB's network whereas BTTB pays nothing while terminating its traffic to the GSM networks. "They were 'forced' to sign the agreements, or not get connected at all to BTTB's system," commented PricewaterhouseCoopers in its study in April 1999.
However, the mobile operators accepted such condition for the seamless interconnectivity with BTTB's network. But BTTB drifted from its fundamental obligation immediately after closing the unilateral deal. It was like killing the hostage despite getting the ransom. The government lost its moral authority by deceiving the mobile industry.
Because the mobile licences were awarded to provide universal access. The operators fulfilled their obligation by paying the licence fees and investing on rolling out respective network. But the government's refusal to interconnect allowed the operators to drift from their commitment.
GrameenPhone imposed charges for the incoming calls from BTTB's network. It also launched mobile packages without any connectivity to BTTB. Other operators followed the footprint of GrameenPhone. But the government never intervened while the consumers became unnerved by such deception.
Bangladesh is the only country where the government prohibits its mobile users from making a standard phone call. There were such 812,150 "confined" mobile users, representing 74 per cent of million plus clientele, until December 2002.
GrameenPhone alone had 87 per cent (710,000) of such captive customers who are larger than BTTB's total subscribers. The remaining 13 per cent such customers ofCityCell, Aktel and Sheba only receive calls from BTTB.
The mobile operators have, undoubtedly, succeeded where BTTB failed providing connection on demand. It has enabled the six years old mobile market gaining 80 per cent compound annual growth rate (CAGR) and 40 per cent growth in 2002. Mobile had also outsized BTTB' s fixed line network in 2001.
But such a skyrocketing growth of mobile has not supplemented to our embarrassingly poor teledensity. Because the industry analysts preclude the so-called "mobile-to-mobile" connections while calculating the teledensity of Bangladesh. It is the basic principle of not comparing an apple with an orange.
The government's refusal to interconnect with the private operators has been suicidal. BTTB annually earns Tk. 15 million from each interconnection link with its local network. It also annually makes Tk. 90 million and Tk. 180 million from each NWD and ISD link respectively. Therefore, the artificial crisis of interconnection has deprived the exchequer from
earning at least Tk. 2 billion by now. This loss will further escalate when the mobile industry adds one million customers by2004.
The continuous growth of already oversized "mobile-to-mobile" market has also become malignant for BTTB. Terminating and originating overseas calls, bypassing BTTB's international gateway, has been a lucrative informal venture. Many Internet Service Providers (ISPs) have been doing it using own satellite gateways.
BTTB retaliated with scrapping the outgoing feature from most of the ISPs phone lines. Because its annual earning from international traffic fell from 34 per cent of total revenue in 2001 to 24 per cent in 2002. But it has been business as usual with some ISPs having strong political clout.
However, the ISPs immediately responded with originating the traffic by selling the prepaid calling cards. This business model was further diversified with another high-yield segment, the mobile market. Because the Internet telephony rate to call a mobile is at least double than the rate to call a
fixed line.
BTTB also finally decided to terminate incoming international calls using Internet technology. Initially BTTB will only receive the Internet call traffic from overseas. It will be also sending the international calls using Internet in near future.
The incumbent carriers sending 12,000 minutes per circuit per month will send Internet call traffic at maximum 0.05 SDR (US$0,625) per minute. Monthly volume of Internet call traffic must not be more than double the volume of conventional traffic being sent at 0.20 SDR per minute. The carriers will bear all expenses, including the satellite bandwidth, to set up Internet telephony facilities at BTTB's end.
But since the "mobile-to-mobile" market is larger than BTTB's fixed network, the ISPs will be able to keep on pumping their voice traffic through own VSAT gateways. Such informal ventures have been mushrooming at exponentialrate.
This is the ripple effect of BTTB's another disaster on interconnection. The ISPs have been pleading to get connected with BTTB's network through 2 megabit per second (Mbps) links. It would have saved their "unofficial" expenses to keep the telephone lines alive.
If the 2 Mbps links were given to the ISPs, the call termination and origination ventures would have been marginalised by now. Moreover the phone lines realised from the ISPs could have been given to BTTB's waiting subscribers. But BTTB never conceives any rational and practical solution.
Its pretension as a service provider ends up with the arrogance of civil service. All the prices it charges are nothing but telecom taxes. Yet the state-owned telecom monopoly laments when the competing technologies challenge its fictitious supremacy. John Keats rightly said, "There is nothing stable in the world; uproar's your only music."
The writer is a telecom analyst