Cost factor drags down industry
With budget in mind, Nokia boss shares his take on telecom
Photo: SK ENAMUL HAQ
Nokia Emerging Asia General Manager Prem Chand's office provides a panoramic view of Dhaka city. One can see the city breathing from there, which is instantly relaxing. On a hot summer's day, the Nokia boss sits there and shares his experiences from the Bangladesh telecom market. When Chand first came to Bangladesh in 2006, there were approximately 10 million phone subscribers. Over the next three-years, he saw growth accelerate and now, there are over 50 million subscribers. "We had fairly high expectations for this market and we have met some of those, but the reality is that the growth we were expecting in Bangladesh has slowed down significantly," says Chand. He said one can expect that to happen, when affordability is big a challenge in the market. Bangladesh is still in the bottom five countries for mobile penetration. Now to take mobile phone penetration to the next level and to the masses and to reach the next 10-20 million, it is all about affordability, he adds. The average income in Bangladesh is $1 a day, so to buy a SIM card and a mobile phone -- it is quite a significant investment, he says. "The SIM tax, customs duty on handsets and other taxes has slowed down penetration. The government has a vision of digitising Bangladesh and mobile internet will be the best solution to that, as in this country, fixed line internet is not going to be available to the masses." Considering infrastructure and affordability, the mobile device is the logical option for Bangladeshis to access the internet as it is affordable and provides convenience and immediate accessibility. It provides more benefits than a desk top computer or laptop, he says. "As affordability is a big issue, duties and taxes need to be reviewed. If we use other countries like China and India as a benchmark, their internet and mobile penetration are increasing because they have embraced the industry and acknowledged the benefits the industry brings and therefore, reduced taxes and duties," he informs. Chand thinks there is a change in consumer behavior. "There is more recognition here now that the device is no longer a voice centric device and that it is not a device that can be used for making phone calls only. This is definitely a move in the right direction and it fits in with Nokia's objective of providing internet services. This is a reason why we are focusing more on mobile applications and internet services." "We see the next phase of growth and consumers' needs coming from mobile services and applications and therefore Nokia services like Ovi Mail and Ovi Chat have been launched to meet this demand." Ovi Mail was launched in July last year and according to research done by Nokia, there were 750,000 consumer email accounts such as Yahoo, Gmail and Hotmail, in Bangladesh at that time. "After the launch, we have just under 300,000 Ovi Mail users in six months, which is about 25-30 percent of the market share." Ovi Share was the other service that Nokia launched, keeping in mind that there are many consumers who do not have a computer in Bangladesh, but they want to store images and content and share with their friends, he adds. Talking about the operators, the Nokia boss says the market is maturing. In the first phase, price competition was really driving these operators and now, they are recognising the need to differentiate themselves, he says. "So, branding and customer services as well as value added services have become more important". "Acquiring new subscribers is important but the focus has moved towards retaining existing subscribers. Along with changing mindsets, the operators are now talking about mobile broadband and internet. So the industry is maturing and is becoming more professional and these are all positive." On his expectations on the upcoming budget, Chand says: "The government needs to recognise the importance of the industry. This is a sector that provides significant revenue to the government. Government needs to undertake development works such as infrastructure, health and education. Where do funds for these come from? The telecom sector ends up subsidising and funding a lot of these activities as government has limited means to raise the revenue." "This industry helps to develop the country. But the sector needs support to keep going. Secondly, if penetration needs to be taken to the next level, it has to come from rural Bangladesh. For that, affordability is an issue." According to Chand, the government or regulator should think about a telecom advisory body, representing both the private and public sector. The telecom companies working here have international experience and we can share our experiences to develop the industry working with the government, he says. "I do not think that there is enough dialogue between the government and the private sector in that respect. We always seem to go to the government asking for things, so they feel it is for our own benefit. An advisory committee could look into the scope of development of the sector and its contributions to the economy, and come up with a five-year plan. Then we can move in the right direction." On the present tax structure and its impacts, the Nokia boss says it has increased the entry of unauthorised handsets. "The government is deprived of the revenue and the percentage of grey handsets has increased over the past year. Nokia brought down the grey market level from 80 percent to 20 percent." On whether Bangladesh is ready to embrace the 3G network, Chand says the timing is right, as there are over 50 million subscribers and the government wants to digitise the country. "3G is certainly the way to go and I feel the government should act on it immediately and get those licences out. The country is ready for 3G." He says there is a misconception that 3G is unaffordable and the devices are expensive, but Nokia can offer 3G devices within Tk 6,000-7000. "The government should not view 3G licensing as a revenue earner and over price it, because an operator can pay that price, but at the end of the day, they have to get returns and the consumer ends up paying for that," Chand adds. He suggests the government also looks into interoperability, so that consumers can send MMS to subscribers with different operators, and number-portability, where a consumer can move from one operator to another by keeping their same number. Future growth of the industry will come from mobile applications and services, which is why Nokia moved into services. He mentions that Nokia plans to roll out services like Nokia Money and Nokia Life Tools soon.
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