Building on the previous blog post, I wrote up an op-ed on the latest developments of the Bangladesh license renewal drama that has been published in the Sunday Daily Star. What mistakes are made when incentives are not properly analyzed. More proof that the Bangladesh Ministry of Post and Telecom has a serious problem of capacity.
The “market competition factor,” as presented, penalises operators with more customers. It creates a disincentive to add low-revenue customers and, indeed, an incentive to shed marginal customers. This is harmful to the poor, those currently connected as well as those wishing to be connected.
Market shares change over time, especially in intensely competitive markets. The above analysis indicated that the announced formula will cause big operators to drop marginal customers and reduce market share (not revenue share). In addition, the cost advantages now offered to small operators should cause them to increase their shares. Will the “market competition factor” be recalculated periodically in light of the enhanced fluidity of market shares?
These problems can be solved and a tragic denouement avoided. Eliminate the “market competition factor.” Market competition, and thereby the consumer, are best served by ending this drama now, freeing the players to commence a new and more productive drama: Digital Bangladesh.