Grameenphone: It broke a monopoly and made mobile phone a device for all

The cell phone first made its appearance in Dhaka in 1993 as a luxury device of the urban elite.

The service provided by Citycell used to cost more than a thousand dollars, and the users had to pay a hefty bill for the privilege to talk among themselves while riding in their SUVs.

The mobile phone market of Bangladesh in the mid-1990s was nothing but a club of several thousand early adopters and a monopoly of Citycell, the first mobile telecom operator in Bangladesh.

Bangladesh-origin US investment banker Iqbal Z. Quadir envisioned something revolutionary in the telecommunication sector and came back home leaving his regular job.

At a time when people could talk over land phones from urban areas only and postal communication was the only option for the rural masses, Quadir realised keenly that cellphones in remote areas could change life with a huge impact.

Keeping in mind the then low purchasing power of the rural population, his business model did not focus on individual phone buyers. He instead partnered with Grameen Bank to use the enterprising marginal women in the telecommunication revolution.

Mahfuz Ullah Babu

He envisioned thousands of women entrepreneurs owning mobile payphones and making those income generating devices for themselves, enabling the remote population to connect to the world.

Quadir engaged local not-for-profit Grameen Telecom Corporation and Norwegian enterprise Telenor as the investors and the enablers of his dream venture.

Meanwhile, the then newly elected Awami League government in 1996 had decided to boost mobile phone coverage while also breaking the monopoly of Citycell.

Grameenphone, alongside two other companies—Sheba and Aktel-- got nationwide cellphone operator licences and they began operation in 1997.

Now Grameenphone has emerged as the leader of the pack over time and it created a story of going far and far ahead of its competitors.

Polli Phone: the game changer

Before the average Bangladeshi began owning mobile phones, Grameenphone's local parent Grameen Telecom collaborating with Grameen Bank and the International Finance Corporation (IFC) launched its unique programme "Polli Phone" (village phone).   

Grameen Bank offered a loan of Tk12,000 to each of its members, the marginal women entrepreneurs, to buy a Polli Phone connection and a handset from Grameenphone.

The rural women were trained to use the phones and let their customers talk over the mobile payphones for a charge offering them a decent profit margin that was enough to pay back the Grameen Bank loans and make a living. This helped millions of workers living abroad talk to their families at home, a privilege that was extraordinary for them. 

Alongside urban network expansion, Grameenphone kept penetrating into very remote villages across Bangladesh up to the mid-2000s, where its competitors were lagging behind due to their focus on particular regions and urban areas.

By September 2006, Polli Phone reached 55,000 villages with over 2,55,000 mobile-to-mobile payphone centres having hundreds of families depending on the payphones.

The Polli Phone business model, as a wonderful tool for grassroots entrepreneurship, a means of mass telecommunication inclusion that significantly narrowed the urban-rural digital gap, won prestigious awards and was replicated in African and Asian countries including Uganda, Nigeria, Rwanda, Haiti, Cambodia, Indonesia and the Philippines.

Banglalink and Citycell: the market draggers

When Grameenphone was focusing on growing its network and service, its competitors– Aktel, Citycell and Sheba–were not sitting idle.

They were also expanding their network and services for customer acquisition and a fair share of the lucrative market.

Of the two technologies used in mobile phones in those days-- CDMA (Code Division Multiple Access) and GSM (Global System for Mobile Communications)-- Grameenphone chose the latter. It was a smart decision that put it ahead of others. 

After its monopoly was broken, Citycell, the only CDMA technology cellphone operator, trying to catch up, began competing through its price war amid an intensifying competition in the mid-2000s.

Citycell made a CDMA handset with connection and some airtime for the first month available at less than Tk5,000 in 2004-05, down from Tk8,000 or more two years back, attracting further competition in the race for new subscriber acquisition.

Egyptian Orascom telecom's acquisition of the struggling GSM operator Sheba in late 2004, rebranding Sheba as Banglalink in 2005, extending its network to many still-deprived rural areas, and aggressive pricing added to the market drag.

Banglalink was offering a GSM handset, a connection along with six-month airtime plan worth Tk1,800 at less than Tk3,500 in 2005.

Banglalink in TV commercials portrayed itself as synonymous to anything unbelievably affordable.

Both the operators played a key role also to significantly bring down the cost of voice calls in the mid-2000s. In three-four years, outgoing call charges drastically dropped to Tk0.25 per minute on net and Tk0.65 off net from near Tk7.

New entrants' push for market share widened the cell phone subscriber base dramatically. As owning and using a cellphone became cheaper, average consumers began getting a phone for themselves in 2004.

Market penetration, which represents the portion of the population that subscribed to cellphone connections, rose to 6% by the end of 2005, from 0.2% in 2000.

Banglalink did not take much time to overtake the then second largest player Aktel, a Malaysia-Bangladesh joint venture.

Meanwhile, by 2005, the market got two new operators— UAE investors' venture Warid and Teletalk by the Bangladesh Telegraph and Telephone Board (BTTB) that later became state-owned entity--Bangladesh Telecommunications Company Limited (BTCL).

They all added to the competition to benefit consumers and broaden the cell phone subscriber base.

Since then the industry has come through lots of big events that include ownership changes in Banglalink, Warid, Aktel, the merger of Aktel's new form Robi and Warid's new form Airtel Bangladesh to become the second largest operator again, the death of Citycell and of course the rise of mobile internet amid a smartphone boom and total subscriber number surpassing the population amid usages of multiple connections.

One thing remained constant; the entire industry together contends Grameenphone, the first mover and champion of mass penetration, network coverage, financial and management efficiency.

Beginning as one of the most impactful ventures in the country's history that broke the erstwhile monopoly in the cellular phone service market and led the way to bring the device within reach of the consumers, Grameenphone or GP, emerged as a de facto monopoly with nearly half of the market share until the telecom regulator BTRC (Bangladesh Telecommunication Regulatory Commission) tied it up with the Significant Market Power (SMP) regulations in the mid-2020.

As an SMP, Grameenphone faces more hurdles than its contenders while marching for more business expansion and profits.

Still, it is the only telecom operator company that makes hefty profits every year in Bangladesh.