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GLOSSARY OF ABBREVIATIONS 3
LIST OF TABLES 4
APPENDICES 20
APPENDIX 1: INFORMATION SOURCES ON THE TELECOMMUNICATIONS AND
INFORMATION TECHNOLOGY SUB-SECTORS 20
APPENDIX 2: LIST OF KEY CONTACTS 21
APPENDIX 3: LIST OF FIRMS OPERATING IN INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS IN
BANGLADESH 22
Telecommunications and IT Sector in Bangladesh Page 4
GLOSSARY OF ABBREVIATIONS
ADB Asian Development Bank
IDCOL Infrastructure Development
AMPS Analogue Mobile Phone Systems Company Limited
DFID UK Department for International PRTS Paging & Radio Trunk Subscribers
Development
TMIB TM International (Bangladesh)
ECNEC Executive Committee of the
National Economic Council TRI Technology Resources Industries
Bhd.
EPB Export Promotion Bureau
TRIPS Trade Related Aspects of the
FBC First Bangladesh Consulting Ltd. Intellectual Property Rights
Table 2.1: A Quick Look at the Telecom Scene in Bangladesh and its Asian Neighbours 8
Figure 2.1
ECNEC
Planning Ministry of
Commission Finance
Commission, and ECNEC, operating under the over 300,000 telephone lines in rural and urban
Prime Minister’s Office. Bangladesh, 90% of which are cellular mobile
and radio trunking phones, with
BTTB is mostly concerned with voice GrameenPhone, the most successful private
telephony. It has a small data services group sector operator (www.grameenphone.com)
with useful capacity, but BTTB does not claiming to now have some over 200,000
actively market its services. It also offers customers.
Internet access to about 3,500 users, many
internal. Since there is still a large unmet demand for
telephone lines, this sector has very large
The proposed National Telecommunication potential for expansion and is expected to
Policy of 1998, which is yet to be fully attract considerably more investment from
adopted by the Government through a new both large and small investors, once some
Telecommunications Act, called for
mobilisation of both public and private sector
resources to develop the telecommunications However, expansion in the sector is still
highly constrained by the constant
sector, and increasing private sector difficulties experienced by the
participation (PSP). Bangladesh Telephone and Telegraph
Board (BTTB) to provide the necessary
inter-connectivity, with one complete
In addition to BTTB, there are at present seven collapse of the network having been
experienced in 2000, which resulted in
private sector operators licensed to provide all of the subscribers being cut off.
basic telecom services and value added
services including paging and cellular services.
fundamental policy decisions such setting up a
They include, as stated earlier, two rural
telecom regulatory body, and allowing private
operators; one Analogue Mobile Phone
sector to set up an alternate long-distance
Systems (AMPS) based cellular service
network within the country, etc. are taken and
company that is providing cellular mobile
implemented.
Table 2.1
A Quick Look at the Telecom Scene in Bangladesh and its Asian Neighbours
Competition in Separatio
Inde- n of
VOIP Tele- Privatisa-
pendent Inter- Dominant Policy
Country Fix Cellul NL IS Lega densit tion in
Regulat nation Operator and 2 3
ed ar D1 P l? y Progress
or al Regulatio
n
Banglade Ye
No No Yes No No Govt. No No 0.6 No
sh s
Ye Ye Ye 6
India Yes Yes Yes Govt. Corp. No Yes 3+ Yes
s s s
7 No 7 Ye 6
Pakistan Yes No Yes 7 No Govt. Corp. No Yes 4+ Yes
s
Ye Ye Ye 6
Sri Lanka Yes Yes Yes Govt. Corp. ? Yes 4+ Yes
s s s
Yes Ye Yes Ye Yes Ye
Nepal Privatised4 ? Yes 1+ Yea
s s s
Ye Yes Ye Yes Ye
Thailand Yes Govt. Corp.5 Yes Yes 4+ Yes
s s s
Ye Yes Ye Yes Ye 4
Malaysia Yes Privatised ? Yes 22+ Yes
s s s
Ye Yes Ye Yes Ye 6
China No Govt. Corp. Yes No 20+ Not fully
s s s
1. Nationwide long distance service on fixed line phones.
2. The world average is 11 +, and the developed country average is about 55.
3. Privatisation of current/former government monopolies in telecom services.
4. Privatised former govt. monopoly.
5. Privatisation in progress.
6. Autonomous corporation.
7. Monopoly expires in 2002.
Sources: ITU website, and websites of regulators or dominant operators of the relevant countries.
Note: The table is quoted from a market study commissioned through IIFC by MOPT and conducted by Canada-
Bangladesh Infrastructure Consultants of Ottawa, Canada.in April 2001
Table 2.1) in building a telecom infrastructure compared to other South Asian and South East
suitable for giving thrust to the IT sector. So, Asian countries, such as India, Pakistan,
recent Government telecommunications policy Philippines and Sri Lanka. However, it is
includes long-term plans to privatise BTTB believed that this sector could have
and to install fibre optic and microwave links. considerable growth potential, if it were to
The Bangladesh Government recently receive better support from the Government.
announced plans to increase the number of Consequently, it may offer increasing
telephone lines to 1.3 million by the year 2002, opportunities to small and medium sized
and to 1.6 million by 2005. investors from Europe. Up to now, IT
investment in Bangladesh has mostly been
2.2 Information Technology (IT) Sub-Sector confined to information processing by
Bangladeshi firms who developed business
The IT sector in Bangladesh is relatively small alliances with international firms, mostly from
America, for data entry, medical forms
processing etc. However, growth has proven to
Following intense lobbying from the
Bangladesh business community, the be very slow, on account of the poor
Government of Bangladesh has now infrastructure in Bangladesh for information
declared information technology to be a
"Thrust Sector". This in practice means technology, which includes poor connectivity,
that IT should be given the highest level high costs of data transmission, poor
of support from the government, in the
form of zero customs duty on import of productivity, lack of trained programmers and
IT equipment, and other fiscal incentives.
Telecommunications and IT Sector in Bangladesh Page 10
managers, and poor market promotion by The annual domestic market size for
Bangladeshi firms. information technology, which includes
computer hardware, peripherals and software
Several European companies, over the last five was estimated by the US Embassy in Dhaka to
years or so are known to have considered be worth about US$20 million a year, which is
investment in this sector in Bangladesh, as rapidly increasing at a rate of about 25% per
they sought to source reliable and cheaper year. There are approximately 200,000 desktop
information processing services. PCs in Bangladesh with sales dominated by
locally assembled clones, with many local
One result of declaring IT as a Thrust Sector, computer assemblers importing mother boards,
is that duties on both computers and with most components from either Taiwan or
components imports have been eliminated, South Korea.
which has already led to reductions in retail
prices of up to 40% on assembled computers. Vendors are now targeting small offices and
The weak telecommunications infrastructure is home users. The growing number of computer
also starting to be strengthened as the training schools that are now operating in
government has opened up installation of very
small aperture terminals (VSATs) to the
One particular area of interest for
private sector, in order to make the use of the Europeans is geographical information
Internet cheaper and to lower the cost of data systems (GIS), which are key
components in various environmental
transmission to allow Bangladeshi information impact assessment studies needed for
processing services to compete with other project development as well as for
project planning. Since high levels of
Asian countries. Since March 2000, there are
data entry and data management are
no longer any restrictions on getting licenses key components of GIS, European firms
from BTTB for the installation of VSATs and wishing to offer these services in
Bangladesh, try to develop business
the annual license fee has been reduced from collaboration with local partners. In
US$8,000 to US$3,500. The Government is many cases, the European partner may
supply key specialised equipment for
also investing in a digital data network, which digitising plus training to use it.
will enable Internet service providers to
increase transmission speeds from 128 kilobits
per second to two megabits per second. Bangladesh is expected to rapidly increase the
number of computer personnel available.
even attempted to obtain it. This puts In 1983, BTTB started to install a national
Bangladesh at a competitive disadvantage automatic long distance telephone dialing
against neighbouring countries such as India, system to link all major cities of the country
Pakistan, Philippines, Sri Lanka, where an and by June 1997, some 100 stations including
increasing number of firms are obtaining all 64-district headquarters and 10 Thana
certification. headquarters and 36 Thanas were brought
under this system.
3. LIST OF MAJOR LOCAL COMPANIES
AND REVIEW OF THEIR EXISTING In order to meet the broad objective of the
COLLABORATIONS WITH FOREIGN National Telecommunication Policy of 1998,
FIRMS which sets a target to substantially increase the
number of telephone lines in service by 2010,
3.1 Telecommunications BTTB has tried to plan a number of
programmes to increase its telephone capacity,
3.1.1 Public sector telecommunications replace and modernise existing exchanges.
However, BTTB's development plans have
The Bangladesh Telegraph and Telephone been considerably constrained by lack of
Board (BTTB) is the main operator of financial resources.
telephone services in Bangladesh and has until
recently maintained a monopoly position on The ongoing BTTB expansion programme to
domestic wire services, international allow Bangladesh to raise its telephone
(terrestrial) and satellites, with all international
dialing being retained as a Government
monopoly.
Table 3.1
BTTB Expansion Programme
Source: Telecommunications in Bangladesh. Paper presented by Fazlur Rahman of Multi Media, at the Workshop on Internet:
South Asian Realities and Opportunities, Dhaka, April 5-8, 1999
Telecommunications and IT Sector in Bangladesh Page 12
capacity to at least 1,000,000 lines by the year BRTA, after winning the concession to
2000, was presented at the Workshop on the provide rural telephone services, developed a
Internet: South Asian Realities and relationship with Nokia from Finland, who
Opportunities held in Dhaka from April 5-8, took total responsibility under a turnkey
1999, and is given above in Table 3.1 contract to provide digital linkages to 165 rural
headquarters. In turn, Nokia then developed
business collaboration with Cosmos Marketing
At the moment, there is somewhat of a
stand-off between the Government of Consultants to provide management and
Bangladesh (GOB) and the World Bank. operational support.
The World Bank wants GOB to appoint
an “independent” regulator for the
telecom sector before any further Ericsson has in 2000 signed a five year
reforms are introduced. But GOB has
contract with TM International (Bangladesh)
not agreed to this condition so far, and
consequently, the World Bank has put Ltd (TMIB) for the upgrading of their GSM
on hold any further funding by the cellular network. TMIB, who hold a 15 year
Bank, to support the growth of the
telecom sector. licence to build, own, operate and maintain a
GSM network in Bangladesh, launched their
network in 1997 using an infrastructure
supplied by Alcatel.
In 1996, in order to develop international
VSAT services to facilitate global high-speed The two Code Division Multiplex Access
data communications for their subscribers, (CDMA) networks that were launched in 1999
BTTB made an agreement with Pakistan by the Pacific Bangladesh Telecom Limited to
Datacom to install and operate VSATs in cover Dhaka and Chittagong, were totally
Bangladesh on a 5 year BOT (Build, Operate supplied and supported by Motorola from the
& Transfer) basis. Under this arrangement United States through their Network Solutions
Pakistan Datacom contracted to supply, install, Division.
operate and maintain VSATs in Bangladesh on
behalf of BTTB and by mid 1997, five BTTB had been forced to develop a number of
subscribers were given VSAT data based operational collaborations to allow not only an
circuits, with subscribers being charged a fixed enlargement of the current system but to
monthly rent for each VSAT circuit. maintain and upgrade the existing system, as
could be seen in Table 3.1. In November
1999, the BTTB signed a contract with the
3.1.2 Private sector telecommunications China National Machinery and Equipment
Import and Export Corporation (CMEC)
Seven licenses have already been awarded and valued at US$ 213 million, which gave CMEC
are listed in Table 5.1 in Section 5. The the responsibility to upgrade the
responsibility for rural telecommunication telecommunications infrastructure in 58
services was entrusted to two local private districts in Bangladesh, while 2 months earlier
operators, the Bangladesh Rural another contract, valued at approximately US$
Telecommunication Authority (BRTA) and 58 million, was awarded to the Pakistan
Integrated Services Limited, with rural Telecom Foundation, in collaboration with the
Bangladesh being equally divided between the Telephone Industries Pakistan to install an
two operators. additional 55,000 telephone lines in
Bangladesh by the end of 2000.
Telecommunications and IT Sector in Bangladesh Page 13
Finally in 2000, breaking the fixed telephone activities of the Bangladesh branch of the
line monopoly position of the BTTB, the GSM World Association can be found on their
Bangladesh Government has awarded a Web site at:
concession, which will allow WorldTel www.gsmworld.com/gsminfo/cou_bd.htm
Limited from the United Kingdom to supply a
complete telephone system to Dhaka with
300,000 digital lines on a build own operate
(BOO) basis. The system, which is expected to Constant problems of interconnection
with BTTB, have forced private
be operational in 2003, and designed to be operators to seek their own
expanded to 500,000 lines, would then transmission network, including using
compete with BTTB. However, recent reports the Bangladesh Railways Fibre Optic
network for cellular service.
indicate that WorldTel is finding it difficult to GrameenPhone Limited (GP) after
finalise the deal. taking out a long lease on the fibre
optic cable network that the
Bangladesh Railways developed along
WorldTel, which operates from London with a the entire length of their railway tracks
has since been upgraded. This has
branch office in Geneva, is a private sector provided GrameenPhone with a ready
development company that had been created made transmission network that covers
the whole of Bangladesh and has
by the International Telecommunications helped them expand their services
Union (ITU) in Geneva to develop and finance along the entire railway route. As a
result, GrameenPhone is now
telecommunications in developing countries on
expanding its customer base by almost
a commercial basis. WorldTel develops 20,000 a month. Of course, due to lack
strategic alliances with specific systems of adequate interconnection capability
of BTTB, most of the new Grameen
suppliers and equipment suppliers to design customers can communicate only with
build and operate their system and could well other Grameen customers.
represent potential business opportunities for
European investors in the telecommunications
sector. The other two cellular operators are also
constructing their own microwave links along
Cellular mobile telephone services were first the Dhaka to Chittagong highway.
introduced into Bangladesh by Pacific
Bangladesh Telecom Limited (PBTL), a joint
venture partnership that is owned by the local 3.2 Information Technology
conglomerate, the Pacific Group, in 1989 using
an Analogue Mobile Phone System (AMPS), From the field survey it was possible to
though more recently they have changed and identify the most important Bangladeshi
are now using Code Division Multiple Access Computer Companies, those who export and
(CDMA) technology. those who are seeking to strike strategic
alliances.
The other three Operators Grameen Phone
Limited (GP), TM International (Bangladesh) A few organisations and some individuals have
(TMIB) and Sheba Telecom are providing been exporting Software and Data Processing
Cellular service with GSM technology. Private services. Despite their best efforts, the Export
operators offer the mobile, paging and the Promotion Bureau (EPB) is still unable to
radio trunking services. Private operators are procure documented evidence of the actual
also given license to operate digital exchanges exports Bangladesh has made. Nonetheless,
at rural Thana headquarters. Details about their among the firms/organisations which have
Telecommunications and IT Sector in Bangladesh Page 14
Figure 6.1
Although there are a number of European
investors who may have a significant presence Projected Private Capital Flow s in
the Telecom Sector
in this sector, a large part of it appears to be
dominated by investors from North America.
Tyco Submarine Systems Limited of the US
has signed an MOU with the GOB to lay an
Years: 2000-2010
underwater fibre optic cable between
Bangladesh and Singapore, which would allow
Bangladesh access to the global underwater
telecommunications cable network that passes
through Singapore. This will then give
Bangladesh world-wide connectivity into the 0 20 40 60
data superhighway. The underwater fibre optic US$ Million
cable that would cover some 3200 kilometres
Inf low Outf low
between Bangladesh and Singapore, is
expected to cost about US$150 million and to Source: The World Bank
(Very Small Aperture Terminals). However, The Bangladesh Telegraph and Telephone
those data circuits using such uplinks Board BTTB, both controls and acts not only
experience inherent time delays of more than as the local VSAT operator but as the sole
500 milliseconds, which are not experienced provider of land line telephones as well.
by ISPs, that connect via optical fibre links for However, processing any request for VSAT
internet connectivity. Optical fibres, which use data circuits or telephone lines through BTTB
the frequency of light, offer availability of a can often take unacceptable amounts of time
much higher bandwidth than is currently and effort.
available from a single linkage via VSATs.
Finally, European SME investors must
recognize the following global trends in
Due to the high cost of the satellite telecom, in evaluating any investment options.
linkages, most of the ISPs in
Bangladesh are only using single Sooner or later, Bangladesh and other
VSATs, which connect to international developing countries will also have to take
providers either in Hong Kong or
Singapore. Currently only two ISPs in note of these trends, and do their best to set the
Bangladesh have two VSAT circuits. stage accordingly, so that they do not fall
Since all VSAT circuits require periods
of down-time, it would be impossible behind others in the global information
for any ISPs with only a single VSAT, to highway.
be able to ensure an uninterrupted
service.
APPENDICES
Information on Telecommunications
Bangladesh branch of the GSM World association can be found on their Web site at:
www.gsmworld.com/gsminfo/cou_bd.htm , which lists the GSM operators in Bangladesh and provides
an increasing number of hyper linkages to relevant sites.
Internet in Bangladesh: State of Art and Changes Needed to Prosper. Paper presented by S.M. Iqbal
of Information Services Network Ltd at the Workshop on Internet:
South Asian Realities and Opportunities Dhaka, April 5-8, 1999
World Bank: FDI in Bangladesh: Issues of Long-run Sustainability. A policy note. October 1999.
South East Asia Software & Services Financial Times Survey 2 June 1999