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Country Overview: Bangladesh Mobile Industry Driving Growth and Enabling Digital Inclusion

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Country Overview: Bangladesh Mobile Industry Driving Growth and Enabling Digital Inclusion Country overview: Bangladesh Mobile industry driving growth and enabling digital inclusion Copyright © 2018 GSM Association GSMA Intelligence The GSMA represents the interests of mobile GSMA Intelligence is the definitive source of global operators worldwide, uniting nearly 800 operators mobile operator data, analysis and forecasts, and with more than 300 companies in the broader publisher of authoritative industry reports and mobile ecosystem, including handset and device research. Our data covers every operator group, makers, software companies, equipment providers network and MVNO in every country worldwide and internet companies, as well as organisations – from Afghanistan to Zimbabwe. It is the most in adjacent industry sectors. The GSMA also accurate and complete set of industry metrics produces industry-leading events such as Mobile available, comprising tens of millions of individual World Congress, Mobile World Congress Shanghai, data points, updated daily. Mobile World Congress Americas and the Mobile GSMA Intelligence is relied on by leading 360 Series of conferences. operators, vendors, regulators, financial For more information, please visit the GSMA institutions and third-party industry players, to corporate website at www.gsma.com support strategic decision making and long- term investment planning. The data is used as an Follow the GSMA on Twitter: @GSMA industry reference point and is frequently cited by the media and by the industry itself. Our team of analysts and experts produce regular thought-leading research reports across a range of industry topics. www.gsmaintelligence.com [email protected] This report was authored by Mike Rogers, Senior Analyst 2 COUNTRY OVERVIEW: BANGLADESH Contents Executive summary 2 1 Bangladesh as a digital society 6 1.1 Bangladesh in numbers 7 1.2 Country context, Vision 2021 and Digital Bangladesh 9 1.3 How mobile supports achievement of the SDGs and Vision 2021 12 1.4 Mobile makes a vital contribution to the economy of Bangladesh 15 2 Bangladesh mobile market overview 18 2.1 Sustained growth as mobile penetration reaches half the population 19 2.2 Focus shifts to mobile broadband adoption 21 3 Accelerating the impact of mobile on Vision 2021 and the SDGs 26 3.1 Affordability represents a major barrier to uptake of mobile services in Bangladesh 28 3.2 Improving access in Bangladesh through mobile-enabled services 31 3.3 Falling smartphones prices will help drive smartphone adoption to three quarters of total connections by 2025 34 3.4 Spectrum and tax barriers reduce operators’ ability to invest in network coverage and expansion 35 3.5 Tax reform can facilitate greater investment and improve affordability 40 3.6 Allowing all types of network infrastructure sharing can increase accessibility and help close the coverage gap 41 4 A forward‑looking regulatory environment 44 COUNTRY OVERVIEW: BANGLADESH Executive summary Executive summary 2 COUNTRY OVERVIEW: BANGLADESH A burgeoning mobile industry, but significant challenges to digital inclusion remain The mobile industry in Bangladesh has scaled rapidly While network coverage remains a barrier to access, over the last decade to become the fifth largest mobile particularly in rural and remote areas of the country, market in Asia Pacific, with 85 million unique subscribers coverage by itself does not guarantee access. in 2017 – half the population. By helping to promote digital inclusion and support the delivery of essential The enablers critical to creating the right conditions services, the mobile industry makes a vital contribution for mobile internet connectivity to flourish rank low to the economy of Bangladesh and plays a crucial role in Bangladesh, despite the progress made in recent in supporting the achievement of the government’s years. In particular, the country scores below average Digital Bangladesh and Vision 2021 initiatives, as well on infrastructure and affordability enablers relative as the UN’s Sustainable Development Goals (SDGs). to its regional peers. The slow transition to mobile broadband technologies in Bangladesh is also, in part, However, with a predominantly 2G mobile market, a matter of timing: the 4G/LTE spectrum auction only the country faces a significant digital divide: only one took place in February 2018, following similar delays in five Bangladeshis subscribed to mobile internet to the 3G auction, making Bangladesh one of the services in 2017, despite 3G networks covering in last countries in South Asia to award licences for the excess of 90% of the population. Bangladesh has one technologies. of the lowest internet penetration levels in the region. Affordability represents a major barrier to the uptake of mobile services in Bangladesh A higher cost of mobile access will have a greater impact fees applied to the mobile sector affect the total cost on the poorest consumers, as it constitutes a higher of mobile ownership (TCMO) by directly raising the share of their monthly income. A medium consumption retail prices faced by consumers, and thus represent a basket of 1 GB of data would cost an individual in the significant barrier to digital inclusion. For example, taxes bottom 20% by income distribution approximately on the use of mobile services in Bangladesh represent 11% of their monthly earnings in Bangladesh, above a higher share of tariff costs (22%) than in a number of the “1 for 2”1 affordability threshold recently adopted neighbouring countries. by the United Nations.2 High levels of taxation and Owing to a sustained period of economic growth, by the time of Bangladesh’s 47th anniversary of independence in March 2018, the country had reached lower middle‑income status. By the 50th anniversary in 2021, Bangladesh aims to reach middle‑income status, with poverty eradicated. 1 “1 for 2” refers to 1 GB of data costing less than 2% of monthly income 2 2025 Targets: “Connecting the Other Half”, UN Broadband Commission, 2018 Executive summary 3 COUNTRY OVERVIEW: BANGLADESH Spectrum and tax barriers reduce operators’ ability to invest in network coverage and expansion To date, the limited allocation of 3G spectrum in service for users will suffer, impeding the use of digital Bangladesh and its price in previous auctions has services. The government should ensure both the had a significant negative impact on the quality of timely release of spectrum and fair prices for access mobile services, hindering the uptake and use of to that spectrum to facilitate better quality and more digital services. With the February 2018 spectrum affordable services. auction, Bangladesh policymakers made important steps towards introducing 4G/LTE services in the Although taxes and fees from the mobile industry country, in support of Digital Bangladesh. However, remain an important source of revenue to finance high auction reserve prices and associated licence fees public expenditure in Bangladesh, the current tax remained. When coupled with a mobile market with system is not conducive to improving the affordability some of the lowest ARPU levels in the world, some of of mobile services. Taxes and fees on the mobile sector this high-priced spectrum went unsold. This highlights in Bangladesh are disproportionately high relative to the importance of setting reserve prices for future other sectors in the economy and to other countries in spectrum auctions at levels that consider operators’ Asia, and are often levied in ways that do not account needs to not only finance access to spectrum, but also for key investment and economic features of the to deploy infrastructure to use that spectrum. This will industry. In 2014, the mobile industry in Bangladesh become even more important as mobile broadband made a large contribution in taxes and fees relative adoption scales and increased data demand further to its size in the economy: tax and fee payments from strains networks, requiring even greater access to the sector, as a share of total tax revenues, were 4.5× spectrum. Without sufficient spectrum, quality of greater than the sector’s revenue as a share of GDP. A forward-looking regulatory environment will help boost the uptake of mobile internet services As Bangladesh progresses to a more advanced digital society, promoting and extending connectivity has the potential to deliver substantial social and economic benefits to the country. It is therefore crucial for the regulatory and legal environment to recognise that mobile industry dynamics have evolved in recent years. Through review, reform and modernisation of regulation in key areas, policymakers and the regulator in Bangladesh can play a major role in expanding mobile broadband access and adoption across the country, supporting progress with Vision 2021 and the SDGs. A long‑term roadmap for spectrum at Rebalance taxation in line with affordable prices is required best‑practice principles to improve affordability and foster investment The government of Bangladesh should create a predictable roadmap for future assignments of Reforming taxation applied on the mobile sector spectrum (e.g. 700 MHz), in consultation with industry towards a more balanced and efficient structure, players to ensure fair and reasonable policies and in line with principles established by international regulations while also supporting effective pricing of organisations, can increase affordability of mobile spectrum. This will help create a stable and transparent products and services, and can add further value investment environment that takes into account to the economy through productivity
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