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Research Report

Submitted in Partial Fulfillment of the Requirement Course

MBA 515: Legal and Ethical Issues in Business

Submitted by
Ahmed Sayed Jamal (0421035)
Md. Sultan Mahmud (0925021)
Md. Shawkat Hossain (0925044)

Submitted to
Dr. Tanvir A. Khan
School of Business

Independent University, Bangladesh


ACKNOWLEDGEMENT

This is my humble attempt to present gratitude in preparing this report. This


project would not have been possible without the dedication and
contribution of a number of individuals.

First and foremost, I would like to express my gratitude to Mr. Dr. Tanvir A.
Khan for his support for the preparation of this report. His eagerness helps
me in every step of the way and encouraged me to propel myself higher.

Than I want to show my gratefulness to the staff’s of Grameen phone


Gulshan Branch Dhaka, Specially to Mr. Kazi Habibur Rahman for their
continuous and cordial support during my research.

Finally, I thank to Independent University Bangladesh for providing me such


opportunities to work and gain experience in the professional field.
Executive summary

The 21st century has seen a tremendous development in the technological


sector. It made the entire human life easier. VOIP is one of those discoveries
that generate more value for the customers. In the age of cost cutting this
technology allows users to save some more money. Developed countries use
this technology very efficiently and make the most benefit.

Unfortunately in our country we have made this technology as way to earn


illegal money. The top mobile operators in the country involve in the illegal
VOIP activities for a long time. Government did not take the proper action to
stop it. The situation has change little bit in the Care taker Government but
still it exists.

We need to take proper steps to remove illegal VOIP in the country and
make it more valuable for the users and country.
Hypothesis of the research

“Government and Private Sectors are equally responsible for the VOIP
corruption“

Methodology

Sampling Plan:

• Population – All the employees of Grameen Phone.


• Sample Unit - Employees of Grameen Phone in Gulshan Branch,
Dhaka.
• Sampling type: Non Probabilistic Sampling.
Two types of Non Probabilistic Sampling will be use in this research
1. Judgmental Sampling.
2. Convenience Sampling.

The purpose of using Non probabilistic sampling in this research is, it’s very
difficult to get the list of all employees which is required in Probabilistic
sampling. Also contact with all respondents during the research period is
also not easy because of limited time and the respondent’s busy schedule.
That’s why Non Probabilistic Sampling method is used in this research.

• Sample Size- 10 respondents. All the respondents will be the user of


Grameen Phone in Gulshan Branch, Dhaka. Sample will be selected
from different age group and Designation.
Methods of Data Collection

The report is composed of both primary and secondary sources of data.

Primary Data:
Primary data may be collected by the following two tools.

1. Direct Interview Method.

Primary data have been collected by informal interview with the officers.
Some information regarding my report objects has been collected through
discussion with different executives of the Grameen phone.

Secondary Data:

The secondary data have been collected from some journals. Also some
important information is collected form Internet for the analysis.
Survey period

The survey is being conducted from January 25th to February 10th 2009.

Scope

The scope of the report is limited to the opinions of the Officials of Grameen
Phone in Gulshan Branch only.
Limitations:

Some barriers and limitations were faced while gathering information.


These are as follows:

 The study is restricted to only Grameen Phone in Gulshan Branch


Dhaka .
 .It was very difficult to collect the information from Bank, because of
some confidential facts.
 Short period of time.
 Some important respondent may be missing during the questionnaire.
 Because of the limitation of information, some assumption was made.
So, there may be some mistake in the report.
Introduction

What is VOIP?

VOIP, which stands for Voice over Internet Protocol, is a technology that
allows voice conversations to be carried over the internet. Even though it is
highlighted for voice communication, it is a protocol which serves various
other technologies like video, fax etc. VOIP sends voice information in
digital form, in discrete packets rather than by using the traditional circuit-
committed protocols of the Public Switched Telephone Network (PSTN),
Bangladesh's BTTB version. VOIP has become popular largely because of
the cost advantages to consumers over traditional telephone networks.

How it reduces a cost for a user

VOIP uses internet as transport network and thus uses a packet-switched


network. As oppose to VOIP, PSTN opted for circuit switched network. In
traditional telephony once a circuit is established between caller and called
party, it remains connected for the duration of the session. Whereas packet
switching opens a brief connection to send small chunk of data from one
node to another. Moreover, in circuit switched network, links between nodes
that make a path cannot be used by other nodes in the network.

On the contrary, in a packet switched network the link that make a route
from one node to another can be shared by other nodes. This scenario
depicts, packet switching allows several calls to occupy the same amount of
resources that is occupied by only one in a circuit switched network. As a
result traditional telephony providers charge more than VOIP providers.

Other advantages of VOIP

VOIP gives the ability to be mobile. Thus can be in contact anytime,


anywhere with an internet connection. Different VOIP protocols are similar
to other internet protocols. Thus it provides with a chance to intermingle
different software solutions with the telephony system. One such great
example is the way VOIP conferencing is done. Compare to PSTN
conferences we can now simultaneously share voice, video and files in a
conference. By using a single network for different purposes, it is possible to
reduce overall operating costs and increase employee efficiency.

VOIP installation and maintenance can be based on software rather than


hardware. Thus the system is more robust and easy to upgrade. Beside these,
VOIP promises with lots of job creation all over the world, especially for the
women. For example, call centers, which is enabled via VOIP.

Furthermore, new software solutions will integrate real time voice system
more and more into their system. Thus VOIP infrastructure may help
country like Bangladesh which is looking for a good share from the global
software outsourcing.

Moreover, legalization of VOIP can benefit a country in several ways.


Significant cost saving in the government, private and home telephone bills
would definitely make a mark in the economy. In the world of globalization,
unlimited long distance calls are desired to take the home businesses to the
global market. VOIP is the cheapest solution to take your voice to the world
business community.

An Example

Calling cards (using VOIP) are available for 850 minutes conversation from
UK to Bangladesh at the rate of only 5 pounds (about 700 Taka). In spite of
the recent devaluation of US Dollar the VOIP rates are dropping like
anything. According to Carrier Exchange Bangladesh mobile rate is very low
which was almost double a few months earlier when most of the grey
operators remain closed.

History of VOIP in Bangladesh

The use of VOIP technology in Bangladesh’s telecom Sector was not new.
BTTB has been using VOIP since 2003 through its 012 access code. BTRC
has been allowing the BTTB to use VOIP calls without any license.
However because of cheap setup costs and simple technology hundreds of
private VOIP operators sprung up tapping a huge market.

VOIP benefit in developed countries

All the developed nations are embracing VOIP and its growth is
exponentially high. Vonage, one of the largest VOIP providers from USA
has earned 261.939 million US dollar according to the 2005 calendar with
total user of 2 million subscribers. However, VOIP provider such as Vonage
earns not only from mere telephony but also from other sources of services
that can be provided with VOIP with more ease. As VOIP protocols can be
affable with all other existing internet protocols, VOIP provider can come
out with more and more lucrative services from the internet to the telephony.

Demand of VOIP in Global Economy

Our development partners in general and the World Bank in particular


recognize the importance of access to telecommunication as an element
within the agenda of economic development and poverty reduction. The
World Bank has adopted a strategy that includes universal access to
telecommunications as a goal.

The VOIP technology paves the way for the cheapest, efficient and perhaps
the best global telephonic communication system for the developing country
like ours. The VOIP communications dramatically reduces the cost in
telecommunication and this cost effective communication has tremendous
impact on overall development of business and the growth of GDP. The
VOIP has also opened up new avenue for employment by initiating call
centers.

Even in Bangladesh some business concerns have already started the


practice of arranging video-conferencing using VOIP It has been marked
that especially in the case of software development sector, this sort of video
conferencing has boosted up in procuring work orders from global markets.

It is true that due to use of VOIP, worldwide the revenue earned from
telecommunications has declined abruptly. The same scenario has been
found

In the developed countries like the UK, USA and Canada. Still at the policy
level the developed world have not adopted any policy that hampers the
establishment of the VOIP communications as it facilitates the alternative
sources of revenue generation, new job opportunities, and above all quality
and economical telecommunication services for the people which should be
prime concern of the good governance.

Even many developing countries have encouraged the rapid expansion of


VOIP taking risk of reduction of direct revenue earned from the traditional
telecommunications. Besides, common people there are more than happy to
get quality and low cost telecommunication services. For this reason many
VOIP operators are working there and people are enjoying competitive
VOIP based services and indirect revenues earned from VOIP services have
also increased significantly.

So, it is evident that the many of the developed and developing countries as
well have given priorities for rapid expansion of VOIP services. Rather than
focusing on direct revenue earned from the telecommunication these
countries have given concentration on indirect increase of huge revenues
from VOIP based services. Besides, due to widespread use of VOIP, citizens
of those countries are also enjoying quality telecommunications services at
low cost.

Recent VOIP occurrence in Bangladesh


Government filed a case against 10 former and in service high officials
including two former CEOs at the country's top mobile phone operator
Grameen phone, accusing their involvement in illegal international call
termination or VOIP. Grameen phone, AccessTel, a local internet service
provider, and Malaysia-based international call carrier DiGi
Telecommunications are also on the accused list.

The DiGi Telecommunications has been accused as it has a bilateral deal


with the GP to terminate the latter's international call. Norway- based
Telenor, the major stakeholder of Grameen phone, is also a shareholder of
Digi Telecommunication.

Operator Amount of Fine (in crore)


Grameen Phone 168.4
City cell 150
Aktel 145
Banglalink 125

According to Government officials GP terminated international calls through


DiGi. The GP's earnings from international calls are deposited with
Webstein Bank, Singapore. But a considerable amount of money might be
siphoned off from the bank instead of its dispatch to Bangladesh, apprehends
BTRC.
The law enforcers tapped GP's calls and found that AccessTel was being
used in terminating calls through E1 technology. E1 is an all-digital
communications line that allows the transmission of voice, data, video, and
graphics at very high speeds over standard communication lines.

BTRC fined Grameen phone Tk168crore for its involvement in illegal VOIP.
The BTRC also fined City Cell Tk150 crore, AKTEL Tk 145 crore, and
Banglalink Tk 125 crore for illegal VOIP trade.

How much revenue we loose

BTTB's income in the year 2005-06 was 13,300 million Bangladeshi taka
with only 1.07 million users. This revenue figure is the lowest compared to
last few years. This drop is caused by excellent cellular network of
Bangladesh and illegal VOIP businesses.

However, if BTTB had 22 million VOIP users they could earn much higher
with monthly low fixed charge. 22 million is the current number of users in
cellular world of Bangladesh. That clearly indicates there is a high demand
for telephony in Bangladesh.

With such rapid growth of users BTTB should not have any concern
regarding their income target and return on investment in VOIP
infrastructure.
VOIP licenses and dirty games in Bangladesh:

Despite the fact that the installation and configuration of VOIP


communication rely on high-tech, in Bangladesh the trend of VOIP
communication, though illegally, has already been started for about last four
years. However, three years back in January 2004, due to demand of various
quarters including ICT sector, the Bangladesh Telecom Regulatory
Commission (BTRC) announced legalizing VOIP and awarding licenses
within two months. But ironically, since then long three years have passed
but the question of issuance of license is yet to be resolved.

Previous Government Policy regarding VOIP

The 4-party alliance government, in October, 2006, BTRC took a hurried


motion to issue VOIP licenses without ensuring first a common platform for
VOIP operators. In response to BTRC’s call it received 51 applications for
VOIP licenses on October 8, 2006. Among these applicants, many were
powerful illegal VOIP operators, very close to power center of the then
political government.

High licensing fee to restrict small providers

These illegal VOIP operators were so powerful that they could successfully
influence the BTRC in chalking out very high licensing fees for this business
to minimize the number of competitors and to monopolize this business. For
providing license, the BTRC has categorized VOIP into three groups
namely, Category A: Cellular Mobile operator VOIP License, Category B:
PSTN operator VOIP License and (iii) Category C: Nationwide ISP VOIP
License. For the inquisitive readers, the following table shows the required
licensing fees set by BTRC for these three categories VOIP operators.

Presumably this sort of very high license fees will bar many real IT enabled
and genuine business professionals to acquire license from the BTRC.

Problem in the Government policy

Unstructured planning
The unusual delay in taking decision for issuing licenses is a technical one.
Bangladesh Telephone and Telegraph Board (BTTB) has pointed out that for
the security of the country as well as for ensuring the inflow of revenues to
the government from the private VOIP service providers , a strong
monitoring system must be implemented. At the policy level, initially, there
was some dilemma regarding infrastructure of Information exchange, for
instance, whether the management of all the traffic be made through a
gateway or, in this context, set up an Internet Exchange.

Common platform for the total system

The original proposal of BRTC suggested that the international phone traffic
would be managed through existing very small aperture terminals (VSATs)
but later on it was modified and decided that management of all Internet
traffic, including that of the ISPs, would be done by a single gateway or
exchange managed by the BTTB. The rationale of such a common platform
is that without a common platform, nobody will know how much the VOIP
operators are earning. It is ridiculous to expect that the VOIP operators will
give genuine revenue reports to the government and pay taxes. In line of this
argument, subsequently, it has been decided that the license for VOIP would
be given after setting up a common

Platform in four areas of the country under BTTB through which Internet
phone calls will be channelized . The four areas are Dhaka, Chittagong,
Sylhet and Bogra. Such a common platform has to be connected to the
submarine cable with a view to connecting our VOIP systems to global
Information High Way.

Highly political influence

Meanwhile, vested interest groups using their political influence slowed


down the BTTB’s move to set up a common platform. The BTTB floated
tender for installation of such a platform several times but due to allegation
of corruptions involved in tender evaluation this initiatives could not be
effective. For instance, in its second tender, the BTTB picked up a bid of
Chinese company Huawei, represented by the youngest son of a very
powerful minister of the 4-party alliance government.

However following a formal complaint from a bidder, the planning ministry


at that time categorically recommended blacklisting Huawei for corrupt
practices to win the contract. Instead of taking decision as per the planning
ministry recommendation, the telecoms ministry sat on it, and approved
Huawei’s $ 3.5 million bid to set up the platform in Dhaka, Chittagong,
Sylhet and Bogra through which internet phone calls will be chanalized. But
following exclusive reports in the mass media, the PMO subsequently
cancelled the Huawei bid and directed the BTTB to re-tender the scheme.

Steps taken by care taker Government


Presumably with good intention has started a countrywide drive against
illegal VOIP operators. Many illegal VOIP operators have been shut down,
legal actions against the involved personnel have been initiated and their
equipments are seized by the law enforcing agencies. Apparently this drive
seems to be very effective and due to this drive, substantial increase of
revenue of BTTB earned from overseas phone call is being treated as an
optimistic step of the care taker government.

However, “the ban of VOIP is proportionate to the increase of revenues


earned from the telecommunication sector”, this simplistic notion must be
avoided if we want to analyze the implications of VOIP use and its long time
impact on overall growth of economics and the development.

Why VOIP is still in Bangladesh

BTTB being also a mobile operator

There is a question. Who are behind these operators? Is BTTB’s mobile


service Teletalk anyway involved in this business without proper license
from BTRC? These low costs portray that something is out of ordinary here.
One can argue that if the VOIP equipments seized by RAB were employed
thus reducing the investment cost such low costs can be offered by the
operators.

Whereas big telecom operators remain easy catch for BTRC and probably
they are scapegoats for those who were cashing in a lot of profit. There is a
huge amount of money playing here and they are not thinking about the
implications of harassing such big players.

Problem Government might face in the future

Government has been trying to encourage people to stick to its traditional


telephone network. They have been cutting down the consumer's bill by
reducing the charges. However, we have seen the traditional telephone

network will never be able to allow cheaper rate compared to VOIP network.
Rather the government itself can go for VOIP businesses in different form.
Moreover, recently it is found by the GSM Association (GSMA) that the
Bangladesh government protects the BTTB's monopoly over international
phone call business. Thus foreign investors are least interested to inject fund
in the country's telecom sector.

How to overcome form this situation

In Bangladesh, though the VOIP is legalized at least at the policy level but
the process of providing licenses has yet to be executed. It has been already
discussed that on the issue of providing license for VOIP some dirty games
have been played by the immediate past political government undermining
the public interest. Drive against illegal VOIP operators should not be
considered a positive step unless the procedure for issuance of license begins
immediately. In this regard some pragmatic steps that government may
follow are given below:
BTTB’s role in VOIP should be reexamined

BTTB wants to regulate the VOIP with a view to enhancing its revenues
earned from overseas telecommunications. But increase of direct revenues
from overseas telecommunications should not be considered as the overall
economic growth of the country. Rather it has been observed that the
reduction of telecommunication rate has the greater impact on the GDP of
the country.

Till to date, the telephonic call charge in Bangladesh is the lowest in the
world. But still BTTB has failed to contribute much to the net revenues
earnings of the country. The BTTB if at all wants to increase the revenue
then it should consider initiating other value added services for VOIP and
other modes of telecommunications using the facility of the submarine
cables.

Establish different platform under BTRB authority

The decision of management of Internet traffic through a common platform


should be reevaluated. But the question is why it should be under BTTB. If
at all such common platform has to be implemented then it should be under
BTRB. It is to be mentioned that such common platform should be used for
monitoring some technical issues for instance, ensuring the network security.

Reduced the license fee


There are gross allegations against BTRB on the question of issuing VOIP
licenses. For this present BTRB should be reconstituted and reformed
without any delay. Present hefty license fees for running the VOIP operation
must be reduced drastically so that small and medium scale entrepreneurs
can initiate this business. This, in turn, will create a competitive environment
following the core philosophy of market economy.

Quick and flexible decision making

Regulatory decisions should be made in a timely fashion and incorporate


flexibility, and should encourage innovation and competition.

Conclusion

The question of issuance of VOIP must be resolved as quickly as possible


otherwise we will fail to achieve success in global competitive business
arena. In the past due to delay or ill decision in taking the opportunity of the
technological advancement, the nation has slowed down to achieve the
economic growth. For taking pragmatic decision on the issue of VOIP, the
government may initiate an immediate national dialogue with different
stakeholders, experts, economists and other relevant people. In this context it
should be mentioned that through a national dialogue Singapore has
successfully resolved the question of VOIP regulation and relevant issues.
Bibliography
1. Md. Anwarul Kabir and Tamnun E Mursalin
Article: VOIP and Relevant Issues: Bangladesh’s Context
Faculty Member AIUB
2. www.thedailystar.com 20973

3. www.VOIPforums.com