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The liberalization of Bangladesh’s telecommunications sector began with small steps in 1989
with the issuance of a license to a private operator for the provision of inter alia cellular mobile
services to compete with the previous monopoly provider of telecommunications services the
Bangladesh Telegraph and Telephone Board (BTTB). Significant changes in the number of fixed
and mobile services deployed in Bangladesh occurred in the late 1990s and the number of
services in operation has subsequently grown exponentially in the past five years.

The incentives both from government and public sectors have helped to grow this sector. It is
now one of the biggest sectors of Bangladesh. As a populous country, it’s huge market has
attracted many foreign investors to invest in this sector.

Bangladesh is a country which is densely populated and also is a flat and easily extends able
coverage. The infrastructure and Tele-density is low which on the other hand made the market a
perfect place for telecom business. The demand is very high and the consumer base is very large
but the investment is low because of the topographic layout. The government has a receptive
foreign investment policy with no restrictions on repatriation of profit. Even though the current
infrastructure is not much developed but it is suitable for foreign investment.

The government is encouraging private sector to invest more in the industry as they think that the
industry is playing a vital role in developing the socioeconomic structure of the country. And to
ensure that, the government has taken several attempt. Giving private sector the license for fixed
line telephone is one of those attempts. Due to the environmental facts, the foreign entrants
should adjust their equipments according to demand of the environment
2. Literature review:

Based on the perspective of determining the significance of telecommunication on the economic

development Jha and Khaleja (2008) argued that telecommunication has a crucial impact on the
development of the economy. In this 21st century telecommunication is one of most pivotal
factors for the development of the socio-economy of a country. The continuous improvement of
the telecommunication and information technology and the effective implementation of this
technology enhance and promote the growth as well as the development of the various sector of
the economy such as various business services, industry, agriculture etc. Jha and Khaleja (2008)
also argued that the modern telecommunication technology is an impressive gift of modern
science. The infrastructure of the telecommunication is different from the other traditional
infrastructure so that telecommunication has a momentous influence on the economic
development than any other conventional infrastructure.

Hudson (2000), Huff (2001), Wei and Kolko (2005), Gher and Amin (1999) Fandy (2000) all of
these researchers strongly suggested that internet is the miracle tool that transform the traditional
politics and commerce which eventually have a major impact on the economic affairs in
developing countries. By conducting a comprehensive study based on the 25 OCED countries
with a data of 1996-2007 Czernich et al., (2009) postulated that internet and its continuous
development have a positive and significant relationship with economic growth. Freund and
Weinhold (2000), Choi (2003) and Goaeid (2013) argued that internet has a positive impact on
the trade and foreign direct investment of an economy. By conducting a panel data analysis Choi
(2005), Sassi (2013) found that internet lowers the inflation rate. Norris (2001) observed that in
the western region the internet is not only used for the communication purpose but also used for
the electronic commerce. The products generated from this kind of networked technology have a
substantial impact on the economy in most of the developed country. World bank (2006)
reported that most developed country like USA has a extension of electronic business based on
internet in a larger number which is six time greater than any developing country. Zhang (2013),
Bowles (2012) both of them argued that the presence of internet continuously transform the
economy of Australia as the internet user was increased from 73 percent in 2007 to 87 percent in
2009. In another study based on the internet consumption model Zhang (2013) found that
internet diffusion has a strong positive correlation with GDP per capita. Weinhold (2004)
investigated that internet usage impulse the international trade of an economy. Frederick (2009)
argued that in Ghana the growth rate of internet subscribers is potential in both private and public
sector which eventually reduces paper consumption, error rate and saves money as well as time.
As a result, in Ghana there are 15,000 subscribers whom has a direct internet connection and
more than 5,000 users have the access to the internet through shared connection such as cyber

A substantial body of empirical evidence supports the conviction that there is a strong positive
correlations between telecommunications development and economic activity of a nation. That
evidence is summarized in a number of places, including Shapiro (1976), Hardy (1980),
Saunders et. al. (1983), Cronin et. al. (1991). However, the causal1 relationship between
telecommunications and economic development is not clearly established though a large number
of literatures had focussed on that aspect as well. Shapiro (1976) is one of the few earliest
researchers who had addressed this causality factor in examining the relationship between GDP
per capita and telephone density2 in ten Latin American countries. In Shapiro’s findings,
causality is observed in both directions. The same finding is advanced in Hardy (1980), Cronin
et. al. (1991), DRI/McGraw Hill report (1991)3. Using time lagged statistical analysis, Hardy
(1980) found statistically significant result in both directions, including specifically a strong
relationship between the number of telephones per capita in a third world country in one year and
the per capita GDP in the following year. Hardy used data from 45 countries for the period 1960-
73. He found that both business and residential telephone contributed to that effect. He also
found that the magnitude of the effect was greater for countries with a lower density of
telephones per capita. Hardy also examined the relationship of radios per capita to GDP and was
unable to find any statistically significant relationship. Another most recent but extensive
research in this regard is done by Cronin et. al. where the relationship between GDP per capita
and investments in telecommunication is examined. In their analysis with 31 years of U.S. data
(1958-88, inclusive), Cronin et. al. found not only that increases in output or GNP lead to
increases in telecommunications investment, but also that the converse is true: increases in
telecommunications investment stimulate overall economic growth. This same hypothesis
advanced by Cronin et. al. in 1991, is tested by Cronin (1993) at the more localized state and
substate level and for two specific sub categories of telecommunications infrastructure
investment : central office equipment, and cable and wire. For time series of these two sub
categories of telecommunications investment compiled for Pennsylvania and 2 of its counties,
the analysis tested two causal hypothesis : 1. The level of economic activity at any point in time
is a reliable predictor of the amount of telecommunications investment at a later point in time. 2.
The amount of telecommunications investment at any point in time is a reliable predictor of
economic activity at a later point in time. The findings at both the state and county level support
the conclusion that telecommunications investment affects economic activity and that economic
activity can affect telecommunications investment.

Specific analysis on a particular country level is also done by Chen (1985). In his analysis with
data from Singapore, it is evident that telecommunications infrastructure depends on a sound
economic base for growth and optimal utilization. However, growth in telecommunications
facilitates economic development by providing an efficient information system for management,
marketing, production, and distribution.

The relationship between telecommunications infrastructure and developing country export

performance is examined by Boatman (1992). Boatman asserted that a high quality
telecommunications system can enhance a country’s export performance in atleast three ways.
First, telecommunications capabilities increasean exporting firm’s ability to receive accurate
information about the overseas market which it serves. Second, a good telecommunications
system can promote exports by helping to attract exporting multinational corporations and
facilitating the global integration of production. Finally, a high quality telecommunications
system can promote exports by facilitating entry into nontraditional export markets. In
Boatman’s study, results of OLS regression on aggregate per capita exports suggest that
telecommunication plays an important role in explaining developing nations’ export
performance. The results also suggest that telecommunications quality has a positive influence
on incoming direct foreign investment.

Despite its influential effect on the economic development of a nation, telecommunications in

most developing nations are not given due priority in the sectoral investment allocations. In most
developing nations, telecommunications investments follow that in other infrastructures like
transportation, energy, and education. However, the recent trends in technological change,
increased demand for information and communication related services, convergence between
computers and communications, and global shift to an information era reasonably question the
validity of such traditional ranking in infrastructure investment decisions. Such is the argument
also advanced by Parker (1992). Though, a large number of literatures address the relationship
between economic development and telecommunications assuming the later as the single
developmental input, empirical work on the ranking of infrastructures, including
telecommunications, with respect to their relative influence on economic development is very
few- Stone (1991), and Dholakia (1994).

Stone’s analysis purported to ’rank order’ the infrastructure investment alternatives on their
respective impact level is done with nine country cross sectional time series data. It concludes
that telecommunications shows relatively greater importance in those countries with higher level
of per capita GNP. Overall in the sample, telecommunications is fourth in relative importance
leading to the conclusion that they should not be priority investment alternative for government
spending. In sharp contrast to Stones (1991), Dholakia (1994) contended that investment in
telecommunications infrastructure can be justified due to the positive impact on economic
development. In an econometric analysis with data for 50 U.S. states, Dholakia’s findings
suggest that the influence of telecommunications is very strong when viewed as the only
developmental input as well as when it is compared with other inputs such as education, energy,
and physical infrastructure.

Developing nation’s underinvestment in telecommunications is also pointed out by Saunders

(1983), Norton (1992), and Leff (1984). Saunders’ (1983) analysis with cross country data
supports the contention that there is significant underinvestment in telecommunications services
in less developed countries. Norton (1992), in an analysis with data from 47 countries, contended
that a low telecommunications is one reason why some parts of the world have not developed.
According to Norton, one possible reason for low investment in telecommunications is the
failure of the policy makers to recognize its impact on economic activity. The same argument is
also advanced in Leff (1984). Leff specifically pointed out the indirect benefits of
telecommunications : reduction in transactions, information, and coordination costs; spillover
effects from positive externalities; consumer surplus; and the shadow prices of the benefits. In
project evaluation, all of these benefits are not accounted properly. Leff strongly argued that if
all the direct and indirect benefits are counted, the social return on telecommunications will far
exceed the present conservative estimate. Leff (1984) also criticized World Bank for its research
emphasis on the development of ’Social Benefit Cost Analysis (SBCA)’ as a tool for project
appraisal by government in developing nations while the bank itself does not use SBC A for its
own investment project evaluation. However, World Bank officials recognize that despite the
underestimation of the benefits of telecommunications investments, the conservative estimate is
still much higher and the non adoption of SBC A tool may have had non neutral allocation

In the last decade, telecommunications industry have faced dramatic structural changes. Major
OECD countries have deregulated their telecommunications industry inducing competitions. In
general, deregulation have spurred competitions, and induced telcos to integrate into other
related and unrelated industries. The publication of literatures addressing the structural reforms
in the developed countries is quite large in volume. Some of those extremely relevant to the
present study are mentioned here. Staranczak (1994) in his cross sectional time series
econometric analysis with data from OECD countries concluded that private ownership of the
network increases productivity while competitions have no significant effect on
telecommunications industry productivity. His findings of greater output leading to greater
productivity coupled with the non observance ofsignificant relationship between competition and
productivity, support the existence of natural monopoly in telecommunications industry. Post
divestiture performance of U.S. telecommunications industry is examined by Noam (1993), Noll
(1994), and Majumder (1992) among many others. While Noam’s study shows some
improvements in telecommunications productivity, rate structure, and service quality in post
divestiture era, Noll argued that the decrease in the long distance rate is due to forward progress
of technological innovations coupled with increases in productivity and market demand.
Majumder (1992) examined the impact of deregulation on the performance of firms in the U.S.
telecommunications service industry. The performance of the top 39 local exchange companies
is measured over the period 1981-87 using a multiperiod, multiproduct ratio analysis. The
findings indicate that deregulation has a significant effect on different dimensions of firm’s
performance in general, and it is also found that individual firms display different pattern of
response in each of these dimensions of performance.

Developed and developing nations alike are increasingly recognizing the importance of
telecommunications. To modernize the network, developed countries have responded through the
deregulation of the industry thereby opening the opportunities for competition. Apart from the
developed countries, most developing nations have their telecommunications industry
administered as the state owned monopoly until the late 90s. On recognizing the global trend,
most developing nations are also formulating strategy to reorganize the industry in order to
achieve modernization and induce competitions. Reorganization strategy in the
Europeancountries are discussed in a large volume of literatures published in the
"Telecommunication Policy" journal in the last few years. For the sake of brevity, those are not
mentioned in the present discussion. However, one extensive work revealing major structural and
organizational reforms in France, Germany, and Britain is credited to Pospischil (1993).
Reorganizations in other OECD economies -Japan, USA are also discussed in a large volume of
publications in "Telecommunications Policy". However, apart from some detailed literatures on
how ASEAN countries are responding to the global trend of reorganizations4, literatures on the
status of other least developed countries are very rare5. However, most literatures reveal
privatization as the common strategy being adopted by developing nations. No empirical analysis
evaluating privatization as the strategic tool is noticed so far. However, Parker (1992), Kok
(1992), Thompson (1992) addressed the different pros and cons of privatization as a strategic
tool for telecommunications reorganization.

3. Research Gap:

A research gap is defined as a topic or area for which missing or insufficient information limits
the ability to reach a conclusion for a question. A research need is defined as a gap that limits the
ability of decision-makers (policy-makers, patients, practitioners) from making decisions.

After going through literature it has been found that now much work has been done in evaluating
economic contribution of telecommunication industry.A few studies presented relationship and
impact of telecommunication infrastucture , investment, teledensity, internet users rate, in the
GDP or econnomy of a country. A few number of work has been done specifically in Bangladesh
which has a great opportunity to develop its econmoy through investing more on the
telecommunication sector to foster its economic condition. Therefore the current study tries to
find out the contribution of telecommunication industry in the economic contribution through its
impact on GDP and other field and to find out which deteminants should have more importanace
in the economic development of Bangladesh as an emerging nation compared to other.

3.1 Limitation of the study

The main problem faced in preparing the report was the inadequacy and lack of availability of
required data. This report is an overview telecommunication industry in Bangladesh but there are
some limitations which may hinder my work, are as follows:

 Secondary data are not available

 To continue study in such a vast are requires a big deal in time.
 To collect the secret information was also very difficult for me because of the excessive
nature of confidentiality maintained by the officials.
 Difficulty in accessing latest data of internal operations.
 Report making after the job period was tough to furnish the big report.
 To collect the secret information was also very difficult for me because of the excessive
nature of confidentiality maintained by the officials.
 Available and latest data also could not be verified. In most cases I simply did not have
any option but to furnish with data without verification.

4.1. Objective of the study:

The broad objective was defined at first. This broad objective was fragmented into some smaller,
clearer, specific objectives.

Broad objective:

Broad objective is economic contribution of telecommunication industry in Bangladesh.

Specific objective:

 To focus on the competitive advantages enjoyed by the telecommunication Bangladesh

over its competitors.
 To understand the need gap of mobile services in different regions of Bangladesh To
know the preferences and expectations of the subscribers from a government owned
mobile service providers in Bangladesh
 To know subscribers’ perception of the current mobile services offered by existing
providers in Bangladesh
 To measure the sensitivity towards Tariff structure and acquisition cost of mobile
 To measure the present and past financial condition of telecommunication industry and
compare with each other. Find the financial problem and the solution from it.

4.1. Trend of telecommunication industry:

1. Tightening competition:
How have we come to the conclusion that the tipping point is close enough to warrant
change? To a large extent, telecom companies have not succeeded in their efforts to
monetize the flood of data running through their networks. Their services have become
more commoditized. Their ability to reinvest in network upgrades and digital advances
has been severely constrained. At the same time, many carriers have tried to be all things
to all people, delivering a wide variety of services to their customers. But as a group, they
have not managed to excel at any of those services. So now they are vulnerable to
The competition has arrived. Over-the-top (OTT) players, which offer apps and
streaming content directly to consumers through the Internet, have increased their
dominance, even in core communication services such as messaging and voice.
WhatsApp, Viber, and Apple’s iMessage already represent more than 80 percent of all
messaging traffic, and Skype alone accounts for more than a third of all international
voice traffic minutes. As a result, many telecom carriers are facing significant decreases
in their basic communication service revenues: drop-offs of as much as 30 percent in
SMS messaging, 20 percent in international voice, and 15 percent in roaming. Combined
with intense competition due to lagging industry consolidation, this pattern has led to
steep declines in average revenue per user; at best, minimal revenue growth; and
tightening margins.
2. Modernizing operations:
Telecom companies have been so frugal in recent years that their basic operational
structure has foundered. Before moving into new revenue channels, you need to be sure
you have a “right to win” there by exhibiting the capabilities needed to compete
successfully, even against digital upstarts. To revitalize your operations, focus on the
following fundamental goals.
3. Redefining strategic identity:
After developing a modernization program — and even while implementing it — work
on adopting one or more new strategic identities that are relevant to customers, offering
them distinctive services and experiences with real value.
You may choose your core connectivity business to be your strategic identity. This is
essentially the approach Free Mobile has taken, betting everything on offering basic
wireless services at the lowest possible cost. So far, Free’s strategy is unusual, in part
because it had the distinct advantage of building its business as a startup, without the
huge legacy costs that weigh down other telecoms. That’s why Free’s approach is not a
profitable option for most operators; for them, it would be a one-way ticket back to more
rounds of cost cutting just to stay afloat. And it would obviate the investments needed to
compete in the current telecom environment.

4.2 Performance of telecommunication industry

Systems & Services (SS) is an important division of BTRC. The regular activities of this division
are to approve new services and tariff of new and existing services & value added services. This
is to monitor the market communication & promotional activities for maintaining a bilateral
relationship and to communicate with the Ministry of Posts & Telecommunications (MoPT) and
other government organizations/offices. Besides, SS division maintains bilateral relationships &
communicates with not only the telecommunication license holding entities but also with ICT
related non-governmental and International organizations & offices. It also arranges the support
and protects the rights of new service providers and provides the nation-wide dissemination of
important SMS on national interests. It also arranges counseling & dispute settlement among
telecommunication license holders, vendors, third party service providers and customers through
maintaining a complaining center.


protection SS Cyber


Service & Tariff approval:

This division works for ensuring the best performance of the telecommunication sector, to create
space for the new technology, to automate the life style & to introduce various new value added
services for the customer to increase their satisfaction. Telecom operators have heightened their
standard to the international level by extending various value added services beyond their basic
services. In recent times, many 3rd party service providers have come forward for providing old
and conventional value added services by ensuring the exploitation of their merit as well as by
creating the local entrepreneurs. On the other hand, licensed organizations have introduced
various research oriented services for proving its uniqueness to other operators, for ensuring
customer satisfaction to attract them.

Earlier, SMS based value added services were conventional; now a days services like Interactive
Voice Response (IVR), Unstructured Supplementary Service Data (USSD), Application Protocol
Interface (API), Application, WAP etc. are also in great use. Schedule of the BTRC’s recently
approved value added services, service tariff and other important activities are furnished below:

1) Mobile Financial Services: Web/International Recharge, E-Ticketing, Inward remittances,

Utility Bill payment, Mobile banking etc. are the various services provided under this. Mobile
Financial Services contributing a vital role in the economy through financial transaction.
2) Call Center based Information Services: Information services like Health Line, Agriculture
Info, Education Line, Legal Line, Blood Bank Info, Travel Line etc. are provided by call center
based information service organizations. Systems and Services division monitors the operator’s
helpline to protect customer’s right.

3) Tracking Service: Mobile customers can determine the position of their vehicles and can
manage them by using this service. Basing on the customer demand, this service is also used for
tracking human/materials/vehicles/water vehicles etc.

4) Directory / Recharge / Live Information Service: Mobile operators in co-operation with

companies having data based facilities, provide Yellow Page, Directory Services, Dictionary
Services, Public Examination Results, Stock Exchange Info, Entertainment Services etc.

5) News Service: In order to keep the people updated with latest news of home and abroad
news services have been introduced through SMS, IVR based News / Alert Service. To provide
this kind of service, Services and Systems division create specific policies for the operators.

Other important activities:

Besides carrying out the above activities, SS division is also performing other important
activities of which the important ones are discussed below:

1) National Security Related activities: BTRC & the Operators are constantly assisting Law &
Order enforcement agencies, Anti Corruption Commission, Customs, Courts & other
offices/organizations for protecting the national security of Bangladesh. As a part of these
activities, Call Detail Record (CDR), Subscribers Acquisition Form, Recharge / Balance
Information, Location Based Tracking, VOIP / Illegal Telecommunication service detection,
unregistered connection (RIM/SIM) termination etc. assistance and information are provided.

2) Formation of BD-CSIRT: For countering Cyber Crime, an organization named ‘Bangladesh

Computer Security Incident Response’ (BD-CSIRT) has been formed, through which internet
based crimes are suppressed. Various Government organizations website filtering through BD-
CSIRT are provided to assess the vulnerability of these sites regarding cyber security. Lots of
anti government and anti religion content for which objections are arised from LEA and different
govt. organizations are, blocked through IIG (except facebook and such content which are not
possible to block). Also the offensive contents against which objections come from general
public is also blocked at the IIG. To increase the power of BD CSIRT for internet safety, the
purchase order are on process to procure the specialized internet safety hardware/software. If it is
possible to establish these specialized equipment then we can block the contents which strikes
our existing law and religion at IIG level.

3) Public Awareness related activities: This division is responsible for sending important free
SMS nationwide (only national level facts/activities) for enhancing public
awareness/educational/services oriented facts in response to the request by various ministries,
government, international, multinational, service oriented and educational offices/organizations.
In implementation of this task, Cellular Mobile Operators play an important and praiseworthy

4) Steps adopted for Telecommunication activities during Natural disaster: Although

Bangladesh is now partially capable of communicating through VSAT / Satellite during disaster,
she will become completely capable in near future, as a part of gradual development in this
sector. As a part of this activity, all Gateway (IGW & IIG) operators have to keep aside 10% (as
reserve) Bandwidth Capacity of their Fiber-Cable Capacity for the crisis period. The
Commission may consider for reserve capacity enhancement of Gateway operators including
giving away Teleport (network-hub rich large satellite earth station which is considerably
satellite bandwidth capacity rich) licenses.

5) Environment friendly Telecommunication System: For the last one decade, the modern world
is mostly concerned about longtime health hazard of continuous use of various machine/system
in line with technological development. BTRC has taken steps for inclusion of necessary
guidelines regarding Green Telecom (so that network/system does not cause any long term
health hazard) in various ongoing (draft preparation stage) Regulatory & Licensing Guidelines.
Besides, BTRC can go forward for ensuring Green Telecom through the materialization of
Quality of Service Guideline & Spectrum-Emission Control Guideline. With the help of these
activities, we can also step forward in constructing Bangladesh rich with world standard
telecommunication services.

6) Current Voice, SMS and Data Tariff: At present, BTRC approved minimum call rate is BDT
0.50 per minute and Max BDT 2.00 per minute in case of mobile phone voice call. The average
call rate is BDT 0.83 per minute in different packages offered by mobile phone operators in
Bangladesh. By the way, it may be noted that in 2001, the average call rate was BDT 9.86 per
minute i.e. it has been decreased by BDT 8.77 per minute over last 10 years. It is hoped that it
will continue in the coming years. Max. 10 sec pulse regulation has enabled the subscribers to
have lower rate. The different packages offered by different operators have led to price-war to
attract the subscribers. It is not any type of illegal or fraud activities rather it is a competition
among the operators to expand the businesses.

7) International SIM: International Operators’ SIM are now available in Bangladesh. As a result,
people who are going abroad do not have to use high cost roaming facility. Instead, they can buy
international SIM before going abroad.

8) International Incoming Call Charge: International Incoming call charge has been reduced to
3.45 cent, whereas it was 4 cent in 2007. Collecting more information, BTRC is examing the
possibility of decreasing the call rate by considering the market demand and customers benefit.
5. Methodology of the study
The present study is descriptive as well as suggestive in nature. An attempt has also been made
to include the latest information whenever available. However, the major reliance is on
secondary data at national and international levels. Moreover annual reports of different telecom,
articles published in newspapers, conference papers and seminars proceedings have been
carefully studied to procure the needed information. The report only presents different data from
secondary sources. The findings of the study are collected from different research paper in this
field from the internet source. As no questionnaire is prepared to collect data from the primary
sources for that reason I don’t able to use any statistical tools to measure its effectiveness.

Role of Telecommunication Sector to Bangladesh Economy:

In Bangladesh the largest structure of privatization become possible due to the investment of
different telecommunication companies. The FDI in this sector till September 2008 was Tk. 30
thousand crore. Due to the global recession it may slightly decrease in the financial year2009-10.
According to a report of world famous Auditing Institution Deloitto, “In developing country, if
using of mobile phone increase by 10%, government revenue will increase by 1.2% in a year.”
Moreover it plays a significance role to develop the economic condition of Bangladesh.

 Listed in Stock Market in Bangladesh: Though telecom started its business in private
sector but currently phone has been listed in stock market and offered shares to the
public about tk 486 crore which is a good sign of this sector. This will also help to
operate their business and increase public image to the mass people in our country.
Shareholders of Grameenphone became profitable which can also help our economy.
 Dramatic Changes in Communication System: Cellular phone has brought a dramatic
change in the communication system in our society. Life has become fast, easy and
comfortable in terms of business and society. By using this device we can connect with
all over the world within short period of time and also can share information and
sophisticated technology.
 Develop Corporate Culture and Make more Competitive: Telecom sector specially phone
company is the pioneer to establish the corporate culture in Bangladesh. Now a day, most
of the private organization as well as some public organization are practicing this culture
which make the market more competitive and the employee, people and government can
be benefited from this cultural environment.
 CSR and Telecommunication: The telecommunication section also plays important role
by contributing to health, education, environment sports and all other social sector as
corporate social responsibility (CSR).it is contributing to cancer hospital, scholarship for
the students and arranging different types of training programs for human development. It
also contribute to the beautification of our different cities, provide relief in different area,
health line and service, make people aware to the environment and doing different types
of social works. This sector acts as a member of society.
Mobile industry accounts for 6.2pc of GDP

Mobile technologies and services generated about $12.8 billion in 2015, which is 6.2 percent of
the country's gross domestic product that year, according to a report from GSMA. Of the sum,
$3.8 billion came from wages, taxes and business surplus and $1.4 billion from sectors providing
inputs in the supply chain of mobile goods and services. GSMA, a London-based trade body that
represents the interests of mobile operators worldwide, quantified the efficiency brought about
by the use of mobile technology and said it contributed $7.6 billion to Bangladesh's GDP in
2015. Of the $3.8 billion that came directly from the mobile industry, the operators accounted for
58 percent, handset manufacturers 1 percent, infrastructure providers 12 percent, distributors and
retailers 25 percent, and content applications and other service providers 4 percent. The industry
generated more than 765,000 jobs, directly and indirectly, that year, said the report titled
'Economic Impact: Bangladesh Mobile Industry', which was released yesterday. At present,
Bangladesh performs close to the regional averages across metrics of mobile market
development despite having lower income than neighboring countries. Notably, the country is
above the regional average in subscriber penetration, while only slightly below in mobile internet
and in the proportions of 3G connections. Bangladesh's subscriber penetration stands at 53
percent, which is higher than India's 48 percent and South Asia's 50 percent. Mobile internet
penetration is 33 percent, which is more or less the same as in India and South Asia. The
neighboring country's mobile internet penetration is 35 percent and South Asia's 34 percent.
Bangladesh's proportion of 3G connections is 20 percent, which is more than India's but less than
South Asia's figure of 21 percent. In terms of public contribution, the mobile ecosystem
generated about 10 percent of the government's revenue in 2015, valued at $2.42 billion through
general taxation, mobile-specific taxes and spectrum licenses. The association organized a
workshop at Pan Pacific Sonargaon Hotel in the city on spectrum allocation process and staged a
mock spectrum auction.“GSMA Intelligence findings clearly demonstrate the substantial
contribution that mobile makes to the Bangladeshi economy,” said Brett Tarnutzer, head of
spectrum at GSMA.“By systematically pursuing a policy framework that increases certainty,
acknowledges market realities and removes regulatory barriers to investment and innovation, the
Bangladesh government and its citizens stand to achieve so much in the coming years,” he
added. By 2020, the mobile industry is expected to generate $17 billion of economic value. They
said this forecast relies on a favorable macroeconomic environment and on a moderate expansion
in demand and supply in the mobile market. Earlier, in a budget proposal presentation by the
Association of Mobile Telecom Operators of Bangladesh, it was said the mobile industry
contributed to 2.63 percent of the GDP in fiscal 2013-14. In fiscal 2012-13 it was 2.56 percent.
Employment opportunities are also set to expand from 780,000 jobs in 2016 to 850,000 jobs in
2020, an increase of about 9 percent during that period.

Source: The Daily Star 18 Jan, 2017


Formal and Informal employment (thousands) Formal employment

Total 765 S

195 35

Formal 50 5
0 100 200 300 400 500 600 700 800 APPS AND


Source: Economic Impact: Bangladesh Mobile Industry (Report)


Mobile-specific taxation

70 380
2,000 TAX
USD Millions

680 44

Mobile services Handset VAT Corporation tax Employee Mobile-specific Total 11
VAT and Customs income and taxation SPECTRUM FEES
social security



Source: Economic Impact: Bangladesh Mobile Industry (Report)

What the future holds

With right policies in place, the GSMA expects the economic contribution of the mobile industry
in Bangladesh will continue to increase. By 2020 the mobile industry is expected to generate $17
billion of economic value.


14.0 9.5

8.5 9.0
10.0 1.6 1.7
1.5 1.5

8.0 4.8 5.0

4.0 4.3 4.5
2016 2017 2018 2019 2020
4.0 Direct Indirect Productivity
2.0 Source: Economic Impact: Bangladesh Mobile Industry (Report)
At the same time, total employment is predicted to grow by about 9% in the period from 2016 to
2020, which represents an increase from 780,00 to 850,00 jobs. This increase will be powered by
direct employment creation in the mobile industry.


780 800 820 835 850


535 535
700 530 535


500 300 315

270 285

2016 2017 2018 2019 2020
Direct employment Indirect employment

0 Source: Economic Impact: Bangladesh Mobile Industry (Report)

Analysis Techniques

Trend Analysis of Investment






1 2 3 4 5 6 7 8 9 10 11

Ye a r

 Series 1 indicates the Actual investment where as series 2 is forecasted investment

 Using Least square Time Series Analysis

Source: Online Report

Trend Analysis of Revenues



6000 Forecasted Trend

4000 Actual Trend

1 2 3 4 5 6 7 8 9 10 11

Source: Online Report

6. Findings
Active Internet Users: The number of the country's active internet connections increased about
20 percent year-on-year to 8.78 crore at the end of June on the back of fast-growing mobile
internet and the government's push for digitalisation.

Number of Subscriber

The total number of Mobile Phone subscribers has reached 152.527 Million at the end of July,


Grameen Phone Ltd. (GP) 70.023

Robi Axiata Limited (Robi) 45.330

Banglalink Digital Communications Limited 33.379

Teletalk Bangladesh Ltd. (Teletalk) 3.796

Total 152.527

Source: BTRC
7. Recommendation and Limitation
It is essential to establish an ICT industry immediately to get continuous support from this sector.
To expand this sector we need to ensure a friendly environment and monitoring and control
system which will take care and give suggestions to solve the problems of this sector. More over
the aims and objectives of national telecom policy (NTP)/1998 and Bangladesh
telecommunication act (BTA)/2001 must have to apply properly to ensure the friendly
environment and solve the existing problem of this sector. Besides this the Government should
reconsider their tax policy. One study shows, if the tax on SIM and imported equipments is
totally reduced, the subscribers will increased 9.5 crore and business will increase form 30% to
56%. As result government can earn additional tk 50 billion. So our government should think
and reconsider the tax policy which also can help to ensure their election commitment/ agenda of
“Digital Bangladesh by 2021”. Investment in the telecommunication sector should also be
ensured by the concerned authority so that they can able to foster its economic condition. Several
limitations of the foregoing analysis are to be noted. This report is based on the economic
contribution of telecommunication industry therefore possibilities of some biased and
irresponsible information could be provided while collecting data from the secondary sources
which will be reflected in the analysis and interpretation that cannot be simply neglected. Time
and money constrains were also one of the limitations of the study. In the study only few
elements were taken into consideration, other elements can also be incorporated in the study like
productivity & quality of telecom industry, Internet subscribers, facilities and so on.Though there
is a limit to use statistical tools in making this report a structured questionnaire can be developed
to collect data .Then it is possible to find out the actual scenario of the economic contribution of
telecommunication sector in BD.
In this research paper we are focusing on only the economic contribution of telecommunication
industry but the telecommunication sector may have contribute to on other potential areas of
business. Furthermore this study was conducted only in Bangladesh, therefore a comprehensive
survey can be undertaken in different country may present interesting findings. The results of the
study were carried out by using few sources. To find out the relationship among variable other
advanced statistical tools and techniques can be used. Because of time limitation the study could
not have a good focus on the simplicity, digitalization, and standard of living.
8. Conclusion

The sector of telecommunication industry in Bangladesh is emerging day by day. Though there
are some problems in the sector of telecommunication in Bangladesh, there are some prospects
also have. If all telecom operator come in one platform for giving better service to all types of
subscribers, then total industry will able to earn more profit and confidence of general

The buyer is powerful in the industry, but since the market is growing largely, it will be easy for
the company to hold its own share, because of poverty; the population will be unlikely to avail
the switching cost. And this also reduces the risk of high availability of substitutes. The supplier
is not powerful in this case which is a plus for the company and the company can play with the
price to keep the production cost low. Since the market is yet to be matured and growing very
fast, I assume that the suppliers companies are also increasing. Some multinational companies
are showing their interest to enter into the market. This can lead some new suppliers to arrive
into the market and make the environment more competitive. So at some stage the bargaining
power of the suppliers will become very low.

So from the above discussion, it can be said that the Bangladesh telecom market has a lot of
potential to offer considering strategically ignorable or somehow alterable threats. The market
looks very potential and prospective. Lots of opportunities are waiting.

Bangladesh has cheap skilled and willing to be skilled labor. Communication infrastructure is in
good condition and has the ability to serve the international entrants. Customer demand for
telecom product is very high due to the high growth rate of the market. As the industry is
becoming bigger, availability of supporting industries are increasing and already there are lots of
supporting companies in the market. And finally the government policies are very welcoming
and liberal.

All these emerging concerns and phenomena in the industry offer both merits and demerits to the
operators at the same time. In the face of this new move towards mobile apps business, telecom
operators throughout the world share a common fate of becoming mere conduits to the successful
application stores of others in one hand, and due to the hard competition among the operators,
this phenomenon also provides numerous opportunities to stand out from the crowd. On the other
hand, especially in emerging markets like ours. It may put so many existing powerful players out
of their business and may give the business to the new entrants. In light of this reality, the
operators have got two simple choices: as to whether to adapt to this revolutionary trend by
incorporating mobile application in every offering and reap the substantial advantage out of it or
to bear the brunt of losing business. Similarly, excessive flexibility in regulations may sometimes
put a greater interest of the nation at risk. So check and balance on the part of the government are
the keys. The future surely holds a lot more shocks and surprises for us to witness.

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