Move to allow FDI in internet not welcomed

The government plans on opening the Internet gateway and international call termination sectors to foreign investors at a time when the sector is already crowded with many local players. 

As part of the initiative, the Bangladesh Telecommunication Regulatory Commission (BTRC) has decided to amend the existing policy that bars foreign investment in these sectors. 

The initiative has made local investors apprehensive that their businesses would be in jeopardy if foreign investments are allowed in the Internet gateway and international call termination sectors.

The telecommunication regulatory authority, however, does not see any problems. Instead, it hopes to see positive results such as more jobs and growth of the sectors.   

As per conditions set in the International Long Distance Telecommunication Services (ILDTS) Policy-2007, foreign nationals and investors are not allowed to invest in International Internet Gateway (IIG), International Gateway (IGW), National Internet Exchange (NIX), Interconnection Exchange (ICX) and International Terrestrial Cable (ITC) in Bangladesh.

Last October, the BTRC proposed the Posts and Telecommunication Division to amend the policy by withdrawing the bar on foreign investment in the sector. 

The proposal is now under process after getting the primary node from the ministry concerned.  

But local investors see gathering clouds with this initiative. They say they have already invested heavily into the sectors but are yet to get expected returns. 

International Internet Gateway (IIG) – one of the stakeholders in the telecommunication sector – is responsible for effective management of the international Internet bandwidth received from Bangladesh Submarine Cables Company Ltd (BSCCL) and international terrestrial cable (ITC) operators.

The BTRC has issued IIG licences to 37 organisations since 2008. Out of those, 34 are running IIG operations at present. 

All IIG operators use the bandwidth received from the Bangladesh Submarine Cables Company and international terrestrial cable operators.

At the end of 2020, these operators were provided with the highest 1,800 Gbps bandwidth, even though the IIGs have more capacity to carry the Internet to many remote areas that remain out of Internet connectivity. 

Ahmed Junayed, managing director of Level3 Carrier Limited – one of the leading IIG operators, said the existing operators will be in trouble if foreign investors are given licences in the sector. 

"Most of the IIG operators are not getting expected returns on their investment due to measured licences. Most of the companies are now in a struggle to survive," he said. 

Instead of issuing licences in the IIG sector, the authorities may attract foreign investments in submarine cables, he suggested. 

"Currently, we have only two submarine cables. The Internet system in the country faces a big disruption, if one of the submarine cables fails for any reason," he added.   

The BTRC also intends to clear the way for foreign investments in the International Gateway (IGW) sector that deals with international incoming and outgoing calls. 

Currently, there are 23 IGW operators, including the incumbent BTCL, even though the regulatory commission has thus far issued 29 licences in this sector.

The market size of the IGW is around Tk2,000 crore. 

Of the operators, only four – BTCL, Bangla Trac Communications Ltd, Novotel Ltd and Mirtel Limited – are dominating the market. 

Hasibur Rashid, head of International Carrier Relations at Novotel Ltd, told The Business Standard that there is no prospect of expansion of the sector as it has been termed a sunset business due to unregulated usage and growth of application-based communication platforms. 

Every investment has to have a return prospect. But the IGW sector is already in its death throes due to the fast spread of messaging and calling apps like Messenger, IMO, Whatsapp and Viber.

In July 2019, the number of total international income calls was 84.8crore minutes, which dropped to 71crore minutes in June 2020, according to BTRC data. 

Meanwhile, the number of international outgoing calls was 0.94 crore minutes in July 2019, which also fell to 0.65 crore minutes in June 2020. 

Apart from these, the business of the 26 ICXs operators that work to ease the management of international and domestic calls also reportedly fell. 

Posts and Telecommunications Minister Mustafa Jabbar, however, said the initiative has been taken following the national investment policy that encourages foreign investment.

"Our responsibilities are to formulate a guideline in light of the National Investment Policy. Meanwhile, the existing guideline for foreign investment in the telecom sector was contradictory with the national policy so we've taken an initiative to amend it," said Mustafa Jabbar. 

"There is no logical ground behind not allowing foreign investment in these sectors. The world is a place of competition. Companies have to exist by winning the competition. Protectionism has not worked anywhere in the world," he added. 

He further added that every country in the world thinks about how to get more foreign investment. 

Speaking about the positive impact of foreign investments, he said, "Most of the world-renowned mobile brands are now manufacturing mobile sets in Bangladesh. Foreign investment in this sector has created huge employment opportunities and contributed to our GDP growth."