Harsha de Silva, LIRNEasia’s Consultant Lead Economist, has made a submission in response to BTRC’s Call for Comments on a draft regulatory and licensing guidelines on renewal of mobile telecommunication services in Bangladesh. The submission focuses on a few important issues, relating to economic efficiency, transparency and good governance.
The guidelines propose a license renewal fee of BDT 10 crore from each operator. An additional fee of BDT 150 crore per MHz of GSM 1800MHz band and CDMA frequency; and/or BDT 300 crore per MHz of GSM 900MHz band from each operator for the initial assignment of spectrum, and a subsequent annual fee is also proposed.
LIRNEasia questions the seemingly arbitrary justification used to set the upfront lump-sum license renewal fees. Furthermore, given the substantial sums involved, the basis on which the additional annual spectrum fees has been proposed (currently based on subscriber numbers) has also been questioned.
The proposed method for issuing licenses and spectrum is contrary to emerging best practices in that the amount charged should reflect the correct economic value of the spectrum and its efficient use via the license. The ‘right price’ is always a convergence of competing interests of demand and supply and to administratively establish the same is extremely difficult. If somehow the amount is ‘wrong’ then it can have long-term negative consequences to all stakeholders; consumers, government and operators leading to sub-optimal use of resources causing high opportunity costs in economic development.
LIRNEasia urges BTRC reconsider their position and opt for a market determined or at the very least, a market-based mechanism. The need to lay the basis for secondary trading is also highlighted.
Click here to view the full document submitted by Dr de Silva.