Gateway licensing plan raises eyebrows

80 new players will overcrowd the sector: analysts

Telecom analysts have opposed a government decision to roll out 80 new gateway licences and said an overcrowded sector will encourage companies to earn money through illegal ways.

And excessive competition created by too may players in the small market will cut into business, they said.

The telecom ministry approved a plan for 80 gateway licences, despite opposition from Bangladesh Telecommunication Regulatory Commission (BTRC).

The government will issue 24 licences for international gateways (IGW), 20 interconnection exchanges (ICX) and 36 international internet gateways (IIG).

IGWs deal with overseas call transfers, while ICXs offer interconnectivity services to telecom operators. IIGs supply bandwidth to internet service providers.

Bangladesh's telecom market is too small for so many new players and they will not be able to make business, Zia Ahmed, chairman of BTRC, said on February 11.

Nine such licence holders already exist in the market.

All telecom operators will have to connect with the new licence holders, and that will become cumbersome, Ahmed added.

Moreover, around 4.5 crore international call minutes will be distributed a day among the IGWs, which will not be viable, he said.

The situation in the telecom sector will no longer be stable if the proposed number of licences is eventually issued, he said earlier.

Arshad Zaman Dipu, chairman of NovoTel, an IGW company, said the equilibrium would no longer exist in the sector.

For excess competition among the gateways, the big telecom operators will try to control the market, he said.

Around 45 million minutes of overseas calls on average are divided among four existing IGW operators a month, said Zahir Ahmed, chief executive officer of Mir Telecom. When 24 new licence holders will come into the market, the players will not be able to recover investment, he said.

After an investment of Tk 50 crore to Tk 60 crore on equipment and Tk 15 crore in licence fees, companies cannot make profit, he added.

To earn from the business, the companies may adopt illegal channels, analysts said. It is suspected that half of all the international calls come to the country through illegal ways. They also said it will be tough for government agencies to monitor the calls.

Sumon Ahmed Sabir, senior vice president of Internet Service Providers Association of Bangladesh (ISPAB), said at least Tk 500 crore will be needed to buy equipment from abroad for the new internet gateways.

Fifteen big internet service providers (ISP) currently purchase bandwidth from two companies, he said. But now the same ISPs will have to purchase bandwidth from 38 IIGs.

Bangladesh consumes 24 gigabytes of bandwidth, and so the IIGs will be able to sell 500 megabytes of bandwidth to the ISPs, which makes no sense, Sabir said.

Kazi Monirul Kabir, chief communication officer of Grameenphone, said efficient systems offer fewer middlemen. But according to the new decision, middlemen will be increased in the same layer with no justification, he said.

He added that the six mobile operators will have to be connected with the ICXs and IIGs for their interconnection, while they are already connected. It has become a 'technical nightmare' for the operators, he said.

Zahir Ahmed of Mir Telecom said some years ago, Pakistan issued 12 and Sri Lanka issued more than 30 IGWs, but finally, just a few of them exist in those countries. Bangladesh would face the same situation, he added.

Sabir of ISPAB said the new licences will result in a waste of foreign currency used to purchase equipment. According to the International Long Distance Telecommunications Service (ILDTS) policy of 2008, nine new entities who were not involved in the telecom business came to the market. The current government is doing the same again, he added.

This policy was formulated to stop illegal voice over internet protocol (VoIP), but that did not happened. The new initiative will worsen the sector, he said. 

On February 15, Rashed Amin Biddut, joint secretary general of ISPAB, said the decision by the government would encourage illegal ways.Telecom Minister Rajiuddin Ahmed Raju earlier said the ministry approved the issue of the new licenses to be transparent.We want to make a competitive market. Those who will do good will survive and the poor performers will phase out.BTRC requested the ministry to reconsider the number but the ministry denied. An analyst said that a decade ago, the government issued more than a dozen fixed telephony licenses without any market research. They invested around Tk 2,000 crore but could not become successful and involved in illegal VoIP. In 2010, BTRC cancelled 5 licences for the allegation of involvement in illegal VoIP.