Withdrawing 20% SD, 2% surcharge on internet recommended: Task Force on re-strategising economy 

The Task Force on Re-strategising the Economy and Mobilising Resources for Equitable and Sustainable Development has recommended the immediate withdrawal of the 20% supplementary duty (SD) and 2% surcharge on internet services.

The task force in its report to Chief Adviser Prof Muhammad Yunus also recommended the Bangladesh Telecommunication Regulatory Commission (BTRC) waive the 5.5% revenue sharing and 1% social obligation fund (SOF) for internet revenue.

"Considering the significant impact of internet-driven technologies in the lives of common people, particularly artificial intelligence [AI] applications in education and healthcare, governments must recognise the internet as a 'social good' to guarantee equitable access for all citizens, especially marginalised communities," read the report.

It says the current high taxation and fiscal policies that impose charges exceeding 50% on internet users t to the chief adviser at the"directly contradict the country's commitment to equitable development."

One of the primary factors driving up mobile data costs is the high level of taxation and government revenue requirements, said the report.

It estimated that for every Tk100 data pack purchased by a mobile user, more than Tk50 is allocated to the government in various forms, including supplementary duty (20%), VAT (15%), revenue sharing (5.5%), surcharges (2%), social obligation funds (1%), and spectrum related fees (around 9%).

This significant financial burden contributes substantially to the overall price of mobile internet services, it added.

Education and Planning Adviser Prof Wahiduddin Mahmud handed over the task force's report to the chief adviser at the Chief Adviser's Office in Tejgaon on Thursday.

The planning ministry formed the 12-member task force on 10 September to reframe the development strategies, find leakages in the financial system and restore discipline in project implementation.

 Regulatory bottlenecks inflate mobile data costs

The report says the data transmission value chain comprises multiple layers due to the existence of 29 licencing categories, including International Gateway (ITC), Internet Gateway (IIG), and Nationwide Transmission Network (NTTN), which has created a complex telecom ecosystem, leading to inefficiencies and non-value-added entities. 

According to the report, this creates layered intricacies that ultimately impact the quality of service and cost of service to subscribers. 

It says the presence of several exclusive licenses within this framework often serves to promote rent-seeking behaviour without adding any real value to the service. These multiple layers contribute to unnecessary costs, raising the price of mobile data for consumers, reads the report.

Moreover, current licensing regulations prevent the sharing of infrastructure among service providers. 

The task force report says this restriction hinders opportunities for more cost-effective investments in the overall data infrastructure, further exacerbating the high costs associated with mobile data. "Without regulatory reforms to streamline these processes and reduce taxation, the financial barriers to mobile internet adoption are likely to persist," read the report.

Same bandwidth, different price

The report suggests any ISP or telecom company purchases 1 GB of data at less than Tk1 (Tk0.5). The broadband service providers in the urban areas spend very little on top of that to deliver to the end users. 

Hence the price the broadband users pay to the service providers is very low, less than Tk2 per GB.

However, for any telecom operators who are the main service providers in rural areas, the transmission cost of the bandwidth is six times higher than the bandwidth cost. 

As per the report, telecom operators need to pay Tk1.2 to the only two Nationwide Transmission Network (NTTN) operators and also Tk2.6 to tower companies for each 1 GB of bandwidth.

 Policy barriers restricting fibre and network expansion

The task force report says the current NTTN policy creates barriers for mobile and other internet operators, hindering optimal service delivery. 

"It restricts MNOs [mobile network operators], ISPs [internet service providers] to lay fibre creating full dependencies for transmission across the country on them. Such policy restricting MNOs, ISPs to lay fibre is nowhere practised in the world," reads the report.

Moreover, the current regulatory practices do not allow any telecom operators to import and install necessary equipment such as DWDM (Dense wavelength-division multiplexing), which is an optical fibre multiplexing technology that increases the bandwidth of fibre networks. 

NTTNs are the only entities authorised to import and use DWDM. The report says this artificial restriction is restricting cost optimisation in the ecosystem.

Another reason for low utilisation and high-cost networks of telecommunication infrastructure is restriction of sharing, says the report. 

"Telecom companies are not allowed to share their unused infrastructure equipment and spectrum. Though tower sharing is allowed, attempts in the past have been unsuccessful due to non-cooperation between operators," it reads.

 5 recommendations to embrace digital economy

The task force has put forward five recommendations for embracing the digital economy. The recommendations include enhancing efficiency and accountability in delivering citizen services and promoting good governance and institutional transparency across different types of organisations.

The other recommendations are harnessing technology to address the scarcity of skilled manpower, achieve and sustain global competitiveness in different export sectors and generate quality employment opportunities.

In the report, three essential pillars have been introduced to embrace the digital economy, which are the reduction of the digital divide, establishing a reliable and resilient digital public infrastructure and supporting a strong digital service industry.

The report presented some facts from the Bangladesh Bureau of Statistics (BBS), which showed the digital divide that exists in the country.

It said 98.7% of households in the country have mobile phones while 70% of households have smartphones.

Among these households, 9.2% have computers, while only 50.4% have internet connections, BBS data showed.

At the individual level, 64.1% have mobile phones, 8.9% have computers and 45.7% have internet connections, according to BBS data presented in the report by the task force.

The same data showed that people do not use the internet more due to rising costs.

In urban areas, 17% of people do not use internet due to costs, while in rural areas the rate is 21%.

The report also compared the reasons for using the internet by Bangladeshi people with India, which showed that while 45% of Bangladeshi individuals use internet for educational purposes, the rate is 63% for India.

In the report, the United States topped the list of export destinations for digital services by Bangladeshis, while Japan came out second.