PSTN operators opting for new business to survive
Saturday, 20 March 2010
Fazlur Rahman
The country's struggling land-phone operators have embarked on a new business model after their voice call services were dwarfed by the growing expansion of mobile phone users in the local telecom market.
The shift from voice call services to data and internet services came after the country's 13 Public Switched Telephone Network (PSTN) operators found their existence under tremendous threat as six mobile phone operators have long ago eclipsed the land-phone service providers.
Industry people said the PSTN operators could not compete with the mobile operators in meeting the demand of the ever-growing customers because of lack of professionalism and aggressive market policy from their part and adverse policies on the part of the government which did not allow them to make a sound take-off.
They said PSTN was the brainchild of local entrepreneurs with limited financial capacities while foreign direct investment has armed the mobile phone sector with millions of dollars in cash, which, many think, was enough to unsettle the once promising land-phone operators.
The PSTN operators said the mobile phone operators in the beginning were given licences with all the spectrum resources at throwaway prices presumably in the interest of a fast take-off. But local entrepreneurs and operators, who run PSTN, did not enjoy such facilities.
They allege the regulators issued too many operator licences without dedicating a clearly defined market segment to the PSTN operators. No business analysis was conducted to determine the economic viability of the operators, the market size and the optimum number of operators.
Currently, there are 13 PSTN operators in Bangladesh with 1.69 million (16.90 lakh) users, whereas the total number of active mobile phone subscribers of six operators has reached 53.83 million at the end of January 2010.
"In the past, PSTN operators had to take separate licences for operating in different zones of the country. Telecom laws in the country were not flexible even a few years ago," said a top official of Peoples Telecom, the third largest PSTN operator.
The PSTN operators have been barred from acquiring new licences for such services as International Gateway (IGW) or Interconnection Exchange (ICX) even though these are fixed services and they are the natural contenders. These licences would have made them financially viable, the official said.
Industry people did not however fall short of blaming the PSTN operators for their lack of dynamic entrepreneurship, visionary leadership and professionalism.
Analysts said the PSTN operators are now focusing on corporate marketing, data services and internet facilities as they have already realised that they would not be able to survive in the highly competitive market by providing services to only general customers.
"They have changed their strategy. They are now diversifying their products with the advancement of the latest technology. Their data services are growing fast," said the Peoples Telecom official.
He said: "We have so far relied on voice service as our premium service. Now we are moving to data services and internet to sustain business."
Industry people said the PSTN operators now face one of the toughest tests in terms of business. Only a couple of top companies are actually successfully running their business.
Most of the PSTN operators are in trouble both financially and operationally. Some zone-based operators have even been thinking about possible merger with bigger ones. Talks on merger however did not proceed.
"The PSTN operators can still capture the market as they expect if they can market their diversified products aggressively," said the Peoples Telecom official.
Operators have pointed at government policies which have partly stood in the way of growth of the PSTN business in the country.
The telecom regulator, Bangladesh Telecommunication Regulatory Commission (BTRC), has also said they are actively pursuing to get the International Long Distance Telecommunication Services Policy 2009 finally approved, which, they think, will give the land-phone operators a much-needed lifeline and enough scope to revive their business.
The new policy, which has already been approved by the cabinet, permits individuals and companies to obtain new IGW/ICX/IIG licences in more than one category, which was not possible under the 2007 policy, said Rezaul Quader, a BTRC director. "Their business will peak once they get licence under the new policy."
S M Khabiruzzaman, managing director of the state-owned Bangladesh Telecommunication Company Ltd (BTCL), hopes the future will belong to the PSTN operators.
"People use mobile phones just because of comfort. In the coming days, they will turn to PSTN phones as we are diversifying services instead of limiting ourselves to only voice calls."
Mr Khabiruzzaman said the PSTN operators would be centre of the government's vision to implement Digital Bangladesh.
"A single PSTN connection will meet all demands of a house or office, which may not be possible for mobile phones as their bandwidth is limited."
"As we are incorporating technological changes, PSTN phones will meet 80 per cent of our purposes," said the BTCL chief.
The subscriber's base of PSTN operators grew more than 23.31 per cent in 2009. Last year, PSTN operators added 313,427 new subscribers to their customer base to take the total number of land-phone users to 1.69 million, according to BTRC.
The BTCL leads the sector with 872,409 users, followed by Ranks Telecom with 274,895 users and Peoples Telecom with 141,690 clients.
The country's struggling land-phone operators have embarked on a new business model after their voice call services were dwarfed by the growing expansion of mobile phone users in the local telecom market.
The shift from voice call services to data and internet services came after the country's 13 Public Switched Telephone Network (PSTN) operators found their existence under tremendous threat as six mobile phone operators have long ago eclipsed the land-phone service providers.
Industry people said the PSTN operators could not compete with the mobile operators in meeting the demand of the ever-growing customers because of lack of professionalism and aggressive market policy from their part and adverse policies on the part of the government which did not allow them to make a sound take-off.
They said PSTN was the brainchild of local entrepreneurs with limited financial capacities while foreign direct investment has armed the mobile phone sector with millions of dollars in cash, which, many think, was enough to unsettle the once promising land-phone operators.
The PSTN operators said the mobile phone operators in the beginning were given licences with all the spectrum resources at throwaway prices presumably in the interest of a fast take-off. But local entrepreneurs and operators, who run PSTN, did not enjoy such facilities.
They allege the regulators issued too many operator licences without dedicating a clearly defined market segment to the PSTN operators. No business analysis was conducted to determine the economic viability of the operators, the market size and the optimum number of operators.
Currently, there are 13 PSTN operators in Bangladesh with 1.69 million (16.90 lakh) users, whereas the total number of active mobile phone subscribers of six operators has reached 53.83 million at the end of January 2010.
"In the past, PSTN operators had to take separate licences for operating in different zones of the country. Telecom laws in the country were not flexible even a few years ago," said a top official of Peoples Telecom, the third largest PSTN operator.
The PSTN operators have been barred from acquiring new licences for such services as International Gateway (IGW) or Interconnection Exchange (ICX) even though these are fixed services and they are the natural contenders. These licences would have made them financially viable, the official said.
Industry people did not however fall short of blaming the PSTN operators for their lack of dynamic entrepreneurship, visionary leadership and professionalism.
Analysts said the PSTN operators are now focusing on corporate marketing, data services and internet facilities as they have already realised that they would not be able to survive in the highly competitive market by providing services to only general customers.
"They have changed their strategy. They are now diversifying their products with the advancement of the latest technology. Their data services are growing fast," said the Peoples Telecom official.
He said: "We have so far relied on voice service as our premium service. Now we are moving to data services and internet to sustain business."
Industry people said the PSTN operators now face one of the toughest tests in terms of business. Only a couple of top companies are actually successfully running their business.
Most of the PSTN operators are in trouble both financially and operationally. Some zone-based operators have even been thinking about possible merger with bigger ones. Talks on merger however did not proceed.
"The PSTN operators can still capture the market as they expect if they can market their diversified products aggressively," said the Peoples Telecom official.
Operators have pointed at government policies which have partly stood in the way of growth of the PSTN business in the country.
The telecom regulator, Bangladesh Telecommunication Regulatory Commission (BTRC), has also said they are actively pursuing to get the International Long Distance Telecommunication Services Policy 2009 finally approved, which, they think, will give the land-phone operators a much-needed lifeline and enough scope to revive their business.
The new policy, which has already been approved by the cabinet, permits individuals and companies to obtain new IGW/ICX/IIG licences in more than one category, which was not possible under the 2007 policy, said Rezaul Quader, a BTRC director. "Their business will peak once they get licence under the new policy."
S M Khabiruzzaman, managing director of the state-owned Bangladesh Telecommunication Company Ltd (BTCL), hopes the future will belong to the PSTN operators.
"People use mobile phones just because of comfort. In the coming days, they will turn to PSTN phones as we are diversifying services instead of limiting ourselves to only voice calls."
Mr Khabiruzzaman said the PSTN operators would be centre of the government's vision to implement Digital Bangladesh.
"A single PSTN connection will meet all demands of a house or office, which may not be possible for mobile phones as their bandwidth is limited."
"As we are incorporating technological changes, PSTN phones will meet 80 per cent of our purposes," said the BTCL chief.
The subscriber's base of PSTN operators grew more than 23.31 per cent in 2009. Last year, PSTN operators added 313,427 new subscribers to their customer base to take the total number of land-phone users to 1.69 million, according to BTRC.
The BTCL leads the sector with 872,409 users, followed by Ranks Telecom with 274,895 users and Peoples Telecom with 141,690 clients.