Two private submarine cables for Bangladesh

Posted on December 4, 2009 / 2 Comments

Bangladesh government will allow the private sector to plug the country with two more submarine cable systems. They will create redundancy and diversity to the lone SEA-ME-WE4 undersea cable that is state-owned. The regulator has invited response to a public consultation in this regard.

The licenses will be awarded through beauty contest. The new players will also deploy optical fibre backhaul up to Dhaka, the nation’s capital. The license will be valid for 20 years and renewable thereafter for every 5 years. There is a 40% capping on foreign ownership. License acquisition fee is $7.3 million and annual license fee is $3.7 million. Each submarine cable operator has to share minimum 10% of annual gross revenue with the regulator and this is the deciding factor to win the license. The authorities will strictly regulate the tariff in every possible way (Paragraph 8 in page 10). The word “competition” doesn’t exist in the licensing guideline.

2 Comments

John Hibbard
December 21, 2009, 10:40 am
Mr Abu Saeed Khan,

Firstly I agree that is very positive news for Bangladesh.

I have quickly reviewed the 51 page document. While there is a good case for the Commission to have a role in ensuring even-handed availability of capacity, the strong role proposed for the commission is a risk, particularly in regards the commercial elements. The Commission will control the price of capacity which will influence the viability of the project. This introduces a high level of risk which could distort the process.

The document also states that the Commission want full details of the type that would be provided by a supplier 30 days after the issue of a licence. This is too short a period to call tenders so it means that aspiring entities must have chosen their supplier beforehand. This precludes calling tenders from suppliers to evaluate who will provide the cable to a bidder. So you have to choose your supply partner and build the package jointly. It could well lead to much higher prices for the system. Also it could preclude an aid funding such as World Bank or ADB.

The timeframe of 18 months is very prescriptive and not just a target. In the current climate, 18 months is quite short.

Also as players develop their plans, how does one know that you are not planning to land at the same spot as your competitor. It states that you must land at different spots.

These are my immediate reactions. In summary, great news but there are areas which need clarification to ensure Bangladesh gets the optimum outcome.

John Hibbard
Submarine Cable Consultant and former Chairman of Australia Japan Cable

John
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December 23, 2009, 9:06 am
The Daily Star allows comments. There already is one.The timeframe of 18 months is very prescriptive and not just a target. In the current climate, 18 months is quite short.