Vanishing riches in spectrum black hole

The government decided last Monday to levy 1.0 per cent surcharge on the use of mobile phones. The new tax measure, the government expects, would help it fetch Tk. 1.4 billion in additional revenue annually.
But the amount, if the figure quoted in a report of a Bangla-language daily on the money the mobile subscribers spend on voice calls every day was correct, should have been at least 100 per cent more than the government's projection on revenue earning through the new tax on SIM/RIM use.
The Bangladeshi cell phone subscribers, on an average, spend Tk. 600 million a day on their mobile phones, said the last Monday's issue of the Bangla-language daily.  The annual revenue on that account, thus, stands around Tk. 219 billion.
The amount, surely, would sound quite big to most people, given the per capita income of the population. But the daily spending, in terms of average revenue per user (ARPU), on mobile phone in Bangladesh is one of the lowest in the world.
In fact, despite greater mobile penetration, the ARPU has gone down in recent years. In 2001, the APRU was $30. In 2013 it came down to $ 0.3.
The big drop in ARPU might appear disconcerting. This was mainly because of the substantial cut in call rates by the Bangladesh Telecommunication Regulatory Commission (BTRC) and the cutthroat competition among the mobile operators.
However, the cell phone companies have survived the fall in ARPU well due to the phenomenal growth in the number of their subscribers, which now stands at around 122 million. The loss on account of ARPU has been compensated largely by the additional revenue earned due to the growth in the number of subscribers.
But most part of the revenue growth on account of the increase in the number of subscribers has been shared mainly by three of the six cell phone companies. The three others are still limping.
Interestingly, the voice services dominate -- in the case of the country's largest mobile company the money earned from voice calls constitutes 94 per cent of its recurring revenue -- the revenue earnings of the mobile companies. The operators have not been able to make any headway as far as the marketing of the value-added service (VAS) is concerned. The VAS now accounts for only 3.0 per cent of revenue earned by these companies.
It is not that the mobile phone companies alone are milking their subscribers. The government is also not falling far behind.
There is no denying that the government, by default or design, had not been able to fully exploit the revenue potential while granting licences to mobile phone operators. It was found particularly generous to one or two companies.
However, the government is now trying to squeeze out the maximum possible amount of revenue from the mobile phone companies through the auctions of spectrums.
In September, 2013, it had earned $735 million from 3G spectrum auction. Now it is about to hold yet another auction with a target of earning $690 million more. It has fixed the price of each megahertz (MHz) of 1800 spectrum (band) at $30 million and that of 2100 spectrum at $22 million.
An auction was due at the fag end of this month. But reluctance on the part of cell phone companies to take part in the auction for a couple of reasons -- high spectrum price and lack of progress in the resolution of the dispute over SIM tax -- has forced the BTRC to defer the spectrum auction until May next.
Bangladesh is thought to be much ahead of the time in terms of mobile access. The mobile phone, in spite of their a few negatives, has revolutionised communications both at the individual and institutional levels. But its use has remained mainly confined to voice calls. Its use for the purpose of having access to internet and other value-added services is still very limited. Poor literacy rate and very limited availability of smart-phones -- only 6.0 per cent subscribers have smart-phones -- remain to be the major reasons for it.
The mobile revenue, and along with it the government's earning from various taxes and fees on the telecom sector, would go up substantially if these two obstacles, among others, are removed.
The daily spending on mobile phones by individuals is likely to increase threefold then. Such spending, in all probability, would also not be consistent with the per capita income of the people at that time also.
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