The mobile industry in Bangladesh has become the fifth largest in the Asia Pacific, with 85 million unique subscribers and 145 million connections as of 2017.
The telecommunications has boomed over the last decade, revealed a global report on the sector recently.
The GSMA released the study report styled 'Spectrum Pricing in Developing Countries'.
By helping to promote digital inclusion and support essential service delivery, mobile industry contributes largely to Bangladesh's economy, said Nitin Sapra, senior manager, spectrum and policy, GSMA South Asia.
Mobile operators play a crucial role in supporting 'Digital Bangladesh and Vision 2021' initiatives and achieving sustainable development goals, he added.
"In 2015, the mobile ecosystem generated 6.2 per cent of GDP [gross domestic product], amounting to around $13 billion of economic value added," the study said.
It said rationalisation of spectrum prices is necessary for expansion of the country's telecom market which would ultimately be an economic growth catalyst.
The study highlighted that better spectrum pricing policies are needed to improve the economic and social welfare of billions of people that remain unconnected to mobile broadband services.
Bangladesh has an opportunity to drive more rapid adoption of next-generation network services than would otherwise be the case.
This would lead to an even greater impact on the country's economy in the long term than the revenue collected through mobile licences, it said.
"As digital economy becomes increasingly important to Bangladesh's future prosperity, we're committed to work with the policymakers to focus on the long-term benefits of connecting to affordable mobile broadband."
Average reserve prices in spectrum auctions are more than five times higher in developing countries than in developed…, the study showed.
"In some developing markets, operators have often paid similar prices for spectrum as those in developed countries, even though consumer incomes and expected mobile service profits are substantially lower."
It said, "With the February 2018 spectrum auction, policymakers made important steps towards introducing 4G/LTE services in support of Digital Bangladesh."
"However, high auction reserve prices and associated licence fees remained."
The reserve prices of $30 million per MHz in 900 and 1800 MHz bands and $27 million per MHz in 2100 MHz band were extremely high, reads the study.
"According to the new spectrum pricing report, these prices were almost three times the Asia Pacific average final price over the period 2000-2017, when adjusted for GDP per capita in Bangladesh."
It also has some of the world's lowest ARPU (average revenue per user) levels, the GSMA report said.
Even when compared to the average for developing countries in the region, ARPU in Bangladesh was, on average, 56 per cent lower over the period studied.
Both of these contribute to longer periods for returns on investments, it added.
Considering the above factors and limited revenue streams from data services, the biggest challenge facing the operators is the need to recover the high costs of access to spectrum.
It will be extremely difficult in this price-sensitive market, the report added.
"There is increasing evidence that establishes the correlation between high spectrum costs with more expensive, lower quality mobile broadband services."
"It will also impact the long-term viability of mobile operators' business model" it said.
It observes that the most efficient way to assign spectrum is by allowing the market to set the price.
"This is the fundamental purpose of an auction, but is only possible if reserve price is set well below any prediction of market value, to allow price discovery."
"High reserve prices discourage participation and create the risk that spectrum will go unsold. Unused spectrum provides no value to consumers or the greater economy," concluded the study.
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