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BTRC readies draft MFS pricing guideline

It suggests session-based charging for USSD

Mehdi Musharraf Bhuiyan | October 11, 2017 00:00:00

The telecom regulator has recently formulated a draft guideline for pricing of the mobile financial services (MFS), recommending introduction of session-based pricing for the unstructured supplementary service data (USSD) facilities on MFS platforms.

The proposed ceiling under this session-based pricing is Tk 0.85 per session, whereas the span of each session will be 90 seconds, according to sources.

The Bangladesh Telecommunication Regulatory Commission (BTRC) has already sent the draft guideline for approval of the Post and Telecommunications Division, BTRC officials said.

If approved, the new guideline will replace the revenue sharing model that currently exists for MFS in the country.

Sector insiders have opined that this would also be an apparent victory for the mobile operators, who have long been demanding introduction of session-based pricing for MFS.

However, MFS operators have cautioned that the new pricing model might increase the cost of services.

USSD is a global system for mobile (GSM) communication technology that is used to send texts between a mobile phone and an application in the network. The system is now extensively used for various MFS-related services.

The pricing of USSD has, however, long been a thorny issue between the mobile operators and the MFS providers.

Recently, the issue has gained more attention due to the growing popularity of MFS and subsequent increasing use of USSD on MFS platforms.

According to the current revenue sharing model, the MFS providers charge 1.85 per cent for cash out and Tk 5.0 for cash transfer. Out of this revenue, mobile operators get 7.0 per cent, while the rest is received by the MFS providers along with their distributors and agents.

The mobile operators, however, have long been mentioning that they are not getting fair return on their investment in this sector. Due to the current pricing they are facing cumulative losses of Tk 8.47 billion, they also said.

The telecom operators also alleged that the quality of their services gets affected due to excessive use of USSD channels in peak hours.

Earlier, the government had formed a committee under the leadership of the Posts and Telecommunications Division to fix the USSD pricing.

"We have taken opinions of all the relevant stakeholders, including the central bank, MFS providers and mobile operators, to come up with the guideline," a BTRC official, who prefers to be unnamed, told the FE.

"We have also studied and analysed the experiences of various other developing countries in formulating the proposed ceiling."

"Most of the countries with successful MFS experience have moved towards session-based pricing. So, we feel that the same should be introduced in Bangladesh as well," he added.

However, some industry insiders were skeptic about the suitability of such pricing in the context of Bangladesh.

"Any change in the current pricing model may increase the cost of MFS. It would also create additional pressure on the customers," an official of a major MFS provider told the FE.

"USSD is an inbuilt service, which does not require much investment and should not create any major financial pressure for the mobile operators," he added.

When contacted, the BTRC officials, however, said the draft guideline already stipulated that the introduction of new pricing system should not have any impact at the customer end.

MFS were launched in Bangladesh back in mid-2011. Since then, the platform has seen exponential growth among the large unbanked segment of the population. More than 170 million transactions were made in the country through MFS platforms in August.

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