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Wednesday, January 17, 2007
What unites SAARC countries? Culture, socio-economic background, language, or religion? It's all these and more. Technology has made the world smaller undoubtedly, but it's the telecommunications platform that has caused it to shrink further. In the SAARC region, telecom boom has played a significant role in boosting economic growth and empowering people besides connecting them.
There is a natural proximity among the SAARC countries - Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka, in terms of trade promotion and other economic activities. However, the absence of a common thread of a telecom network throughout the SAARC region is a stark contrast; something that is being worked upon on the lines of European Union's telecom proposal that aims to introduce special schemes for mobile users within the region.
LET'S KEEP TALKING
It was the first SAARC Communications Minister's Conference, held in Colombo, in May 1998 that brought attention to the need for a robust telecommunications sector to boost close trade cooperation in the region. For the first time the ball was set rolling on a number of issues including introduction of a special tariff for SAARC region, better utilization of resources within member states, inter-regional communication for travelers and entrepreneurs, evolution of a common position in international fora and cooperation in equipment standardization.
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The SAARC Wish List
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Intra-regional communications for the traveler and entrepreneur should be facilitated by promoting country direct services, calling cards, cellular roaming and liberalized leased lines
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Telecom tariffs within the SAARC region should be reduced to the lowest extent feasible
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Direct links or hubbing/transit facility within the region for intra-regional traffic within SAARC countries
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Special rates for transiting/hubbing regional traffic
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Member states should be able to utilize the facilities of other members for their overflow traffic
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Licensed ILD operators should be encouraged to frequently negotiate agreements for offering lowest possible tariffs
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Increased capacity of submarine cables between SAARC nations
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A common network infrastructure on the lines of NIXI, to serve as a carrier for inter-regional communication
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Thereafter, the SAARC Technical Committee on Communications and Transport and other such associations have been active in further strengthening the commitment to promote telecommunication links and use of information and communication technologies within the SAARC region.
However, we have a long way to go. The need to liberalize tariff regime and reduction of taxes is a priority for every member country. Although international calls tariff is the lowest amongst member countries, it has not yet created the required level of intra-regional communication so as to stimulate development and attract business opportunities. One reason to cheer now is the possibility of roaming charges in SAARC region to come down heavily. TRAI informs that the SAARC countries have already signed a resolution for this.
This resonated at the 5th CEO Conclave held in Colombo where CEOs of top telecom companies (both private and public) from all the seven SAARC nations, met for the first time. Shuhei Anan, CEO, Sri Lanka Telecom feels that SAARC countries are connected to each other better today, something that was only a dream in earlier times.
Former member of TRAI, DPS Seth says, "Talk of regional cooperation is fine, but regulators need to sit with the operators for a national debate in all respective countries. They should also keep in mind the trend in the international community in order to ensure uniformity." Chairman of Instaphone (mobile operator from Pakistan), Sultan Arfeen suggests, "deregulation means more, not less regulation, as in the current telecom scenario in SAARC, a regulator needs to regulate many more players than they had to deal with earlier."
Telecom is undoubtedly the success story of the SAARC region and success story of each member country is highly noteworthy.
EMPOWERMENT IN BANGLADESH
Bangladesh maybe one of the poorest nations in the world, but the booming mobile phone industry has emerged as a key driver of economic growth. A study by the international consultancy firm Ovum commissioned by the GSM Association (GSMA), a global industry body of 690 operators, found that the mobile services industry contributed $650 mn to Bangladesh's GDP annually. The total mobile subscriber stood at a modest figure of 17.57 mn in Q3 of 2006 and it is estimated to reach 50 mn by 2009.
LESSONS FROM BANGLADESH
Despite its small size, other nations like India can take a lesson from Bangladesh's telecom success in rural sector. Rather than focus on ARPU, state-owned Grameen Phone has focused on extending service and profits. For Grameen Phone's subscribers, a prepaid mobile solution from Bharti Telesoft, translated into an affordable way to use mobile phone services. As a result, Grameen Phone achieved a 55% growth in customer acquisition over 12 months. It managed to drastically cut down the cost of prepaid services by eliminating costs incurred for items such as printing, packaging, transportation, warehousing, insurance, inventory and sales tracking.
Compare this with India where operators have frequently focused on raising ARPU and it is generally assumed that only with government intervention operators can serve such rural markets.
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Roaming within SAARC maybe cheaper
-TRAI
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GAINING MOMENTUM
For the momentum to continue, the government in Bangladesh needs to remove specific taxes and import duties that hinder the uptake of mobile phones and services. A study by Frontier Economics suggests that within three years of removing taxes on new handsets and connections the number of mobile users in Bangladesh could rise by an additional 2.5 mn, producing a net overall increase in tax revenues.
BHUTAN RINGS IN A CHANGE
A country in isolation earlier, Bhutan has very recently started to improve its telecommunications capability. Regardless of the mountainous terrain, in late 2003, the country's first mobile service was launched by Bhutan Telecom (b-mobile) and by early 2006 was claiming almost 40,000 subscribers, giving a mobile penetration of less than 2%.
The tiny country proceeded to invest relatively heavily - to the tune of around $27 mn in telecommunications infrastructure between 1996 and 2002 to provide the country with a modern fixed line network.
To end the monopoly of Bhutan Telecom, in November 2006, in an open auction, the Tashi Group clinched the deal to operate the first private mobile service in the country with a $17.32 mn offer.
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