Bangladesh is worse than Nepal in disbursing universal-service funds

Posted on January 3, 2018  /  0 Comments

When we discovered that Nepal had only spent 2.6 percent of the universal-service funds it had collected since 1997, we were shocked. No government could do worse, we thought. But we were wrong. The Bangladesh government’s disbursement rate is much easier to calculate. However one counts it, the answer is 0 percent.

Bangladesh Telecommunication Regulatory Commission (BTRC) formed the fund to expand the reach of telecom services to the underprivileged population and boost economic growth.
The operators have been contributing 1 percent of their gross revenue to the fund on a quarterly basis from the last quarter of 2011. The amount reached Tk 1,070.47 crore as of September 2017.
The commission kept the money as a bank deposit and so far earned Tk 186.85 crore as interest.
In a recent meeting, the BTRC once again decided to keep the latest quarterly contribution as a bank deposit for six months because of the absence of any initiative from the government to use it.

LIRNEasia Senior Policy Fellow Abu Saeed Khan is quoted in the Daily Star report. His point about shutting down collections beyond a certain threshold is an important one. We discuss this in greater detail in an article currently under review:

Even in a sub-optimal solution, there is little justification for a universal-service program that is flooded with ever-increasing funds simply as a result of industry growth. To a great extent the difficulties of disbursement experienced by all USFs could be attributed to increasing inflows. One way to control this problem would be to build in automatic step-downs in the percentage (e.g., the Indian levy could be stepped down from the current five percent by half a percentage point every year). Another solution would be to automatically activate reductions when the TDR goes below a defined threshold. A third solution would be to build in emergency brakes, so that collections cease at specified levels of TDR. The advantage in the first solution is that it can be factored into the business plans of the operators and would thus be helpful in terms of the budget telecom network business model explicated by Samarajiva (2010). Unpredictable windfalls that would result from emergency brakes are likely to benefit the shareholders of the operators rather than customers or the policy objectives of greater connectivity.

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