WiMax providers to invest up to Tk 10b each in short term

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Mehdi Musharraf Bhuiyan
As state-of the-art WiMax is set to make its debut in the country's stagnant cyber arena by the end of June, beginning with its metropolises; both optimism and scepticism encircle the business potentials of the country's giant leap forward to the high speed wireless Internet.
Providers of the service, namely Banglalion and Augure, are planning to invest up to Tk 10 billion each in their grand venture over the next three years which would see the country join the club of 130 countries having this hi-tech infrastructure in place.
This signals a highflying debut to a risky and costly affair, which has already been dogged by a combination of financing trouble, legal procedures and a delayed start. In the months ahead, WiMax providers have to cope with the daunting task of bringing the wireless Internet home to a nation with one of the lowest online penetration rate in the world.
"We are going for trial operation by the end of May," said Syed Farhad Ahmed, Managing Director of Aamra Networks, which is the local partner of Augure. 'Hopefully we would become fully operational by the month of July", he told the FE recently.
Earlier, the foreign-owned Augure became the only company to pay the WiMax licence fee; a healthy sum of Tk 2.15 billion, settled by an auction arranged by Bangladesh Telecom Regulatory Commission (BTRC) last year, in due time.
Now it is targeting a subscriber base of three million in the country within three years of commencing its operation while planning to reach the breakeven point in five years time.
Despite their failure to meet the same deadline, similar optimism was echoed by Banglalion, which is now set to become the first operator in the country to offer WiMax services by formally starting its operation in June.
"We are now aiming to roll out our network nationwide within one year, beginning with the capital city in June," Parvez Ahmed Shamim, Banglalion's WiMax project consultant told the FE.
This hints at a remarkable turnaround for the local venture after the local WiMax licensees were found struggling to arrange the required funds from banks to pay the licence fees after financial institutions adopted a conservative lending approach amid the global economic meltdown.
Things actually ended up in court where it has been ruled that the deadline must be extended. Accordingly, Banglalion, the highest bidder in the WiMax auction, managed to pay the licence fee in two phases, the later one of which came on March 31, after a consortium of banks headed by AB Bank agreed to finance the project.
Now a similar approach has been adopted by Mango Communications, the third player on the WiMax scene, which arrived on the stage after BRAC's Bdmail declined to take the licence. But Mango is yet to pay the licence fee.
Mango has now resorted to a consortium headed by Prime Bank to finance them in paying the hefty amount of licence fee which would see the local company form the expected trio in the country's nascent WiMax arena, a senior offical of the company said.
"We are still affected by the cautious lending strategy of the banks amid the ongoing global crisis," the official said.
Apart from high speed, the state-of-the-art WiMax is also expected to bring down the cost of broadband Internet by a significant margin.
"The monthly fee for the 128 mbps connection would be Tk 600; and although the modem would cost initially Tk 3000, it would go down to Tk. 1000 within a year or so with the increasing demand and the arrival of third world manufacturers in the local market," Parvez Ahmed Shamim of BanglaLion said.
WiMax is going to be introduced in the country at a time when wide-scale arguments continue among the industry insuders regarding the cost effectiveness of the latest technogy in the Bangladesh context; where less than two percent people have household access to internet.
It has also been argued that 3G- another wireless Internet service, for which the telecom watchdog is scheduled to arrange an auction later this year, is more suitable for the local market as the mobile operators have already got the infrastructure ready for offering such service in the country.
Rejecting such notions; the WiMax providers have asserted that Bangladesh has got the market and infrastructure capable of adapting to such technology.
"3G which is a third generation technolgy; is outdated compared to WiMax," said Shamim Ahmed Parvez. "Moreover, WiMax is capable of offering multidimensional services, which 3G cannot offer," he added.
"A decade ago, there were speculations over how much profitable the mobile phone service would be in Bangladesh. Now six giant operators are sharing a booming market here," Syed Farhad Ahmed of Aamra Network said. "The same case would be with WiMax within a few years," he added.
Three companies; namely BanglaLion, Augure and BRAC Bdmail were awarded WiMax licences at the BTRC auction last year while the state-run BTCL was also later offered a licence at the same fee. But BRAC Bdmail later withdrew from the race whereas BTCL is looking for a strategic partner for the expensive venture.