Regulation and Investment Bangladesh Case Study

Regulation and InvestmentRegulation and InvestmentBangladesh Case StudyBangladesh Case Study

Harsha de Silva Harsha de Silva

and Abu Saeed Khanand Abu Saeed Khan

LIRNEasia 17-18 September 2004, Colombo

ObjectiveObjective

To assess the relationship, if any, To assess the relationship, if any, between the TRE and telecom between the TRE and telecom investments in Bangladesh.investments in Bangladesh.


StructureStructure

1.1. Introduction Introduction 2.2. Methodology and data issuesMethodology and data issues3.3. TRE TRE

1.1. Market EntryMarket Entry2.2. Access to ResourcesAccess to Resources3.3. InterconnectionInterconnection4.4. TariffTariff5.5. Anti-competitive practicesAnti-competitive practices

4.4. InvestmentsInvestments5.5. ConclusionsConclusions


Introduction:Introduction: South Asia South Asia

Private Investment in Telecom. Developing World vs. South Asia

4.60

10.40

6.208.00

15.5017.10

24.90

39.60

51.00

35.70

45.50

39.60

23.70

0.01 0.03 0.02 0.06 0.06 0.6 1.504.00

0.7 1.30 0.83.60 4.90

0

10

20

30

40

50

60

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

US$

bill

ions

Developing World

South Asia

Source:Private Participation in Infrastructure Database, The World Bank


Introduction:Introduction: India leads in volume… India leads in volume…

Comparison of private investments [without divestiture]

0

500

1000

1500

2000

2500

3000

3500

4000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

USD

million, In

dia

0

100

200

300

400

500

600

700

800

USD

million, Bangla

des

h, Pakis

tan

and

Sri

Lanka

India

Sri Lanka

Bangladesh

Pakistan

Source: Calculated from The World Bank database on Private Participation in Infrastructure Projects


Introduction:Introduction: Sri Lanka higher per capita Sri Lanka higher per capita

Comparative Investments, 1989 - 2002 [excluding divestiture proceeds]

10.65.3

32.2

3.91.4

0

10

20

30

40

India Bangladesh Sri Lanka Pakistan Nepal

USD

/p

er c

apit

a

Source: Calculated from The World Bank database on Private Participation in Infrastructure Projects


Introduction:Introduction: Bangladesh structure Bangladesh structure

Fixed Sector

BTTB, 0.9

BRTA, 0.02

0

0.5

1

1.5

2

2.5

3

3.5

Mobile Sector

Grameen, 2

PBTL, 0.3

AkTel, 0.8

Sheba, 0.05

0

0.5

1

1.5

2

2.5

3

3.5

Mill

ion

line

s

As at July 2004

Methodology and Data Methodology and Data IssuesIssues


Methodology and Data IssuesMethodology and Data Issues

MethodMethod• Samarajiva et al: Sri Lanka CaseSamarajiva et al: Sri Lanka Case

TRE; 5 componentsTRE; 5 components Fit with investment dataFit with investment data No periods, compare with regionNo periods, compare with region

Data issuesData issues• AvailabilityAvailability

Brief study, non scientific data collectionBrief study, non scientific data collection Investment figures not readily availableInvestment figures not readily available

• QualityQuality Discrepancies; WB database vs. Operators vs. GoBDiscrepancies; WB database vs. Operators vs. GoB

TRETRE


TRE:TRE: Market entry Market entry

Fixed SectorFixed Sector• Inconsistent Inconsistent

licensinglicensing PBTL, Sheba, PBTL, Sheba,

WorldTelWorldTel Formula OneFormula One

• PSTN licensing PSTN licensing [2004][2004]

Mobile SectorMobile Sector• Inconsistent license Inconsistent license

feesfees• PHSPHS• BTTB mobileBTTB mobile


TRE:TRE: Access to resources Access to resources

Fixed SectorFixed Sector• Non-existent Non-existent

spectrum spectrum managementmanagement

• SMCSMC• Bangladesh RailwayBangladesh Railway

Mobile SectorMobile Sector• BTRC reserving BTRC reserving

spectrum for BTTBspectrum for BTTB• Disparity in Disparity in

spectrum spectrum distributiondistribution

• BRBR


TRE:TRE: Interconnection Interconnection

Fixed SectorFixed Sector• Interconnection Interconnection

with BTTBwith BTTB• Licensing private Licensing private

interconnection interconnection operator?operator?

Mobile SectorMobile Sector• Interconnection Interconnection

with BTTBwith BTTB• Mobile-mobileMobile-mobile

ATOB Tandem $2MMATOB Tandem $2MM UNDP/ITU switchUNDP/ITU switch


TRE:TRE: Tariff regulation Tariff regulation

Fixed SectorFixed Sector• Ministerial Ministerial

interferenceinterference• VoIP [budget IDD] VoIP [budget IDD]

Mobile SectorMobile Sector• Regulatory vetting Regulatory vetting

in tariff reductionin tariff reduction• Non-compliance Non-compliance

with BTTB long with BTTB long distance reductiondistance reduction


TRE:TRE: Regulation of anti-competitive Regulation of anti-competitive practicespractices

Fixed SectorFixed Sector• BTTB BTTB

interconnectioninterconnection• GP + X-NetGP + X-Net• PGCBPGCB

Mobile SectorMobile Sector• Denying access to Denying access to

budget IDDbudget IDD• BTTB: One-way BTTB: One-way

revenuerevenue• PHS + BTTB Mobile PHS + BTTB Mobile

interconnection and interconnection and tarifftariff

• GP + X-NetGP + X-Net• PGCBPGCB


TRE summaryTRE summary

FixedFixed MobileMobile

EntryEntry PoorPoor PoorPoor

AccessAccess PoorPoor UnsatisfactoryUnsatisfactory

InterconnectInterconnect PoorPoor PoorPoor

TariffTariff UnsatisfactoryUnsatisfactory UnsatisfactoryUnsatisfactory

Anti-competitionAnti-competition PoorPoor PoorPoor

Scale: Poor, Unsatisfactory, Neutral, Satisfactory, Excellent

InvestmentsInvestments


Investments:Investments: Fixed sector: pattern? Fixed sector: pattern?

Development Expenditure in BTTB

0

100

200

300

400

500

Period

USD

mill

ion

1990-95 1995 -97 1997-2000 2003

Source: AHM Shafiqul Islam, 2004


Investments [lack of]:Investments [lack of]: Reasons Reasons Poor/unsatisfactory TRE Poor/unsatisfactory TRE GoB budgetary allocationsGoB budgetary allocations

• Difficult times Difficult times low investments low investments Continuous difficultiesContinuous difficulties

• Competing prioritiesCompeting priorities Unable to “close” dealsUnable to “close” deals

• External interferenceExternal interference Driven by donor interestDriven by donor interest


Investments [lack of]:Investments [lack of]: Mobile pattern Mobile pattern

Investments by Mobile Operators

0

20

40

60

80

100

120

140

160

96-97 97-98 98-99 99-00 00-01 01-02 02-03

USD

mill

ions

PBTL

AkTel

GP

Sources: External Affairs Director GrameenPhone, Managing Director AKTEL and Finance Director PBTL.


Investments [lack of]:Investments [lack of]: Reasons? Reasons?

Poor/unsatisfactory TREPoor/unsatisfactory TRE• Missed opportunities?Missed opportunities?

GPGP• Growing “private network”Growing “private network”

More recently AkTelMore recently AkTel ““Getting ready” for “unfair” BTTB Getting ready” for “unfair” BTTB

mobilemobile


Conclusions:Conclusions: circumstantial evidence of circumstantial evidence of better TRE better TRE higher investments? higher investments?

Per Capita Private Investment in Mobile Telecoms 1996/ 97 -2003

0

0.5

1

1.5

2

2.5

1997 1998 1999 2000 2001 2002 2003

USD

Bangladesh Sri Lanka

Sources: From Operators in Samarajiva et al [2004] for Sri Lanka, Operators for Bangladesh

Bangladesh Case Study Ends.Bangladesh Case Study Ends.

Help in funding, information, time and views are Help in funding, information, time and views are greatefully acknowledged.greatefully acknowledged.

Harsha de Silva: Harsha de Silva: [email protected]@lirne.net Abu Saeed Khan:Abu Saeed Khan:[email protected]@bol-online.com

Regulation and Investment Bangladesh Case Study

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