World Dialogue on Regulation for Network Economies

Regulation and Investment: Case study of Bangladesh

Harsha de Silva[1] and Abu Saeed Khan[2]
August 2004

Abstract

The paper considers the available evidence in determining a relationship, if any, in the Telecom Regulatory Environment [TRE] of Bangladesh and investments in to its telecommunications industry over the last decade. TRE is segmented in to market entry, access to scarce resources, interconnection, tariff regulation and regulation of anti-competitive practices while investments are all non-divestiture foreign and domestic private and public investment. The TRE in Bangladesh is found to be wanting in all defined aspects. Interconnection is the worst of the five components, where a mobile only parallel network is being created due to regulatory ineffectiveness where almost ninety percent of mobile users do not have access to a fixed phone.

Investments in to the fixed sector in Bangladesh dominated by the state owned virtual monopoly have been sorely inadequate and continue to be dictated by the funds availability [or lack thereof] of the Government. The mobile sector on the other hand has seen some amount of investments flowing in led by the widely acclaimed GrameenPhone. However, once standardized to compare across the region, it is found, even though using imperfect data to compare, that the reason for this flow could be the rub off of the attractiveness of the region and not necessarily the internal appeal of Bangladesh. In fact, there is circumstantial evidence to suggest that if the TRE in Bangladesh was better than what it is now the country would be able to benefit much more from the regional investment flows in to the sector.

Table of Contents

1. Introduction 03 1.