Govt hints at 5%-10% cut in 700MHz spectrum price

The spectrum price in the 700MHz band for the upcoming auction this year may be reduced by 5%-10%, the government hinted in a letter on Tuesday to the parent companies of telecom operators.

For this to happen, mobile operators, however, must commit to infrastructure enhancement to ensure high-quality services and competitive pricing, said Chief Adviser's Special Assistant for Posts, Telecommunications, and ICT Faiz Ahmad Taiyeb.

Earlier, on 16 March, top executives of Grameenphone, Robi, and Banglalink's parent companies expressed concerns over the high spectrum price in Bangladesh, which stands at Tk283 crore per MHz for 15 years, including value-added tax.

Taiyeb said the Bangladeshi taka has undergone a 35%-40% devaluation over the past three years, making the current spectrum price in local currency terms consistent with market conditions.

Furthermore, as the telecommunications sector features substantial foreign ownership with profit repatriation occurring in dollars, pricing spectrum based on dollar benchmarks is a prudent approach to mitigate currency risks and aligns with international standards, he added in the reply letter.

The investors, who oppose the regulatory plan not to auction the entire spectrum in the said band this year, said, "Distributing only a small amount of spectrum per mobile network operator is neither technically viable nor commercially sustainable."

They urged the ministry to consider delaying the auction until preparations for the full release of the spectrum are completed.

"We assure you that we are actively working on resolving this matter and exploring options for the timely release of the remaining spectrum to ensure both technical viability and commercial sustainability," Taiyeb stated in his letter.

The 700MHz band is a premium frequency requiring compatible mobile or IoT devices, which currently account for only 40% of all 4G handsets in the country, he noted.

"The BTRC has taken an initiative to prohibit local manufacturers and importers from introducing new mobile devices that do not support the 700MHz band. This measure will significantly improve device penetration in the coming quarters."

In Bangladesh, mobile operators' spectrum utilisation varies across different frequency bands. Lower bands have utilisation rates ranging from 84%-98%, whereas higher bands are significantly underutilised – remaining below 18%.

This imbalance suggests that the anticipated deployment of higher bands for capacity enhancement in dense areas has not been effectively realised.

One potential reason for this underutilisation of a national asset is the inadequate deployment of resources, which results in degraded service quality, including poor accessibility, slow internet speeds, and significant call drops.

Additionally, the high price of internet packages appears to be a barrier to increased utilisation. Despite having unused capacity, mobile operators have not shown a genuine willingness to adjust consumer pricing accordingly, said the special assistant.

"Moreover, the very short validity periods of national internet packages are widely criticised in society. This appears to be a coordinated vicious cycle that mobile operators have artificially engineered, stalling the growth of internet services," his letter reads.