The high spectrum price means the tariffs for end-users are bound to increase
The spectrum auction on March 8 fetched the government a neat amount and close to double the sum it received in the previous round in 2018.
But for Grameenphone, Robi and Banglalink, it meant paying possibly one of the highest prices in the world for each megahertz of airwave.
And the reason the three operators had to pay through the nose was that the reserve price at the auction was set irrationally high by the Bangladesh Telecommunication Regulatory Commission.
While it is tempting to coax out as much as one can from a valuable national resource, setting a high base price is not sensible either.
Earlier this month, neighbouring India had its spectrum auction and as much as 63 per cent of the airwave put up for sale went unsold for -- the prohibitively high reserve price set.
Over in Bangladesh, the three operators had to take what was on offer as the pressure on their network, thanks in part to a global pandemic and work from home, became overwhelming, resulting in poor service quality.
At present, Grameenphone has 1 megahertz (MHz) of spectrum for every 20 lakh subscribers, Robi for every 13 lakh subscribers and Banglalink for every 11 lakh subscribers. The global standard is 2-5 lakh subscribers for each MHz of spectrum.
A reserve price so high does not serve the economy or consumers as the operators will invariably pass the burden on to the end-users.
The BTRC had set $31 million as the base price for per MHz of spectrum on the 1,800-band and $27 million for airwave on the 2,100-band.
The base price for radio wave on the 1,800-band was higher in Italy, Taiwan and Germany, all vastly wealthier nations than Bangladesh and the market revenue to be had is exponentially more.
The average revenue per user (ARPU), which gives an idea of the revenue generation capability and growth at the per-unit level, in Bangladesh is $1.62 in comparison to $45.03 in Italy, $42.93 in Taiwan and $54.67 in Germany.
Curiously, Thailand has set a base price of $79.59 million and the spectrum went unsold.
Thailand had a higher reserve price for spectrum on the 2,100-band than Bangladesh along with Pakistan. The ARPU in Thailand is $7.87 and in Pakistan $1.43.
“Ultimately, the customers will be the losers,” said Shahed Alam, the chief corporate and regulatory officer at Robi, which forked out $225.6 million to acquire 7.6 MHz of spectrum to take its tally to 44MHz.
The higher spectrum does not mean that the data prices will come down; it would guarantee better speed, lesser call drops and clearer sound quality.
“The fees and taxes for spectrum in Bangladesh are the highest in the world,” Alam said, while calling for abolishing the auction system and setting a reasonable price for spectrum.
He also called upon the government to make more airwave available for the sake of improving the service quality for consumers.
“We have only three bands, but our neighbouring country India has seven bands. The government has to release more spectrum band for the quality service,” Alam added.
In the two-day auction at the beginning of March, the Telecom Regulatory Authority of India put up spectrum from seven bands on sale: 700, 800, 900, 1,800, 2,100, 2,300 and 2,500.
The 700 and 2,500 bands are premium spectrum and they remained unsold.
“The price of spectrum is higher than before,” said Taimur Rahman, chief corporate and regulatory affairs officer at Banglalink, which bought 9.4 MHz for $281.4 million to take its tally to 40 MHz.
The operators will try to increase their service charge to cover the costs, he added.
AKM Shahiduzzaman, a commissioner at the BTRC, acknowledged that the high spectrum price is one of the reasons the customers face higher tariffs.
“Too high a price is not good for the operators or the nation,” he added.
But for market leader Grameenphone, getting additional spectrum became absolutely imperative as its shrinking spectrum balance is causing the operator all sorts of problems.
The Telenor subsidiary purchased 10.4 MHz of airwave for $391.15 million.
With the reinforcement, Grameenphone would be able to meet its subscribers’ growing need for high-speed internet in rural and urban areas and ensure customer experience, said Md Hasan, the operator’s head of external communications.
As of February, Grameenphone has 8.04 crore subscribers, Robi 5.15 crore, Banglalink 3.59 crore and Teletalk 55.32 lakh, according to the BTRC’s recent data.
State-owned Teletalk participated in the auction but it decided not to purchase any spectrum. It has a total of 25.2 MHz of airwave.