High mobile data price - result of monopoly or inefficiency? 

Till date, the benefits of digital Bangladesh have been truly reaped only by the city people. We have a serious digital divide at play. The city people get access to broadband internet, but for people in villages, it is non-existent. To access the internet, they solely depend on mobile data. 

The data charge has indeed been reducing in recent years. But if we compare our data charge with India, the price here is two to three times higher. 

If we consider the rates in consideration of the people's purchasing power, it is very high. For example, if a commoner wants to use the internet for his day to day purposes like surfing social media sites, it takes around Tk600 for him to purchase data that will last a month. Since the contents today are rich with videos and highly data-consuming content, it is difficult to manage access to the internet at a lesser price in terms of mobile data. 

Since monthly income, usually, amounts to less than Tk8,000 for people in marginalised communities, by the end of the month, they end up spending nearly 5 to 10 percent of their income on just internet access. In comparison, high data use costs less than 1 percent of average income in other countries like China, India or Indonesia. 

This is why most people living outside cities do not want to purchase data, despite the fact that many currently own smartphones that can be purchased at less than Tk 5,000. In the last 10 years, the price of smartphones has fallen in Bangladesh. As a result, smartphone penetration has increased. But usage of data has not. Mobile phone penetration refers to the number of SIM cards or mobile phone numbers in a certain country.

Many say that smartphone penetration is not enough. But on the contrary, recent research found that only 30 percent of smartphone users purchase data. The reason for data not reaching rural areas is the price of data. It is much higher than people's purchasing power.

Now, how come the price of data does not decrease? 

The mobile companies often say that they spend a lot in the spectrum, VAT, SD, revenue sharing with BTRC etc. Consequently, they pass on these costs to the customers. For every Tk100 that mobile phone companies get from customers by selling data, Tk25 to Tk30 goes to the government. The expenditure is indeed high. But the main losers here are not the telecom companies but rather the customers. So, if the charges from the government level are reduced, the benefits can be reaped at the customer level. 

However, the telecom sector is too monopolised to bring the cost down. This market is controlled by only three companies. When only a few such companies dominate an entire market, the chances of competitive prices get lower. So, more mobile telecom licences should be allowed to operate here. 

For example, when Jio entered the Indian market, they broke the monopoly enjoyed by few telecom companies in the country by offering attractive packages which resulted in more data usage that penetrated the market eventually. Mainly driven by cheap data, mobile data usage increased over 10 times in the last three years in India. That also contributed in other sectors like e-Commerce, digital education, e-health and a lot of other digital services offered for mass people. 

Mobile operators in Bangladesh are much more interested in promoting their brands without focusing on services and price. They spend too much money on promotional activities and fancy advertisements to attract customers. Their spending on promotion is over 10 percent of their yearly expenditure. But there are other sustainable ways of winning customers. They could just reduce their promotional budget and offer the consumers more affordable data! This could win them more customers. 

The companies also have very short term vision in their market potential. They feel that their main sources of their data revenue are the big metro cities. But the telecom companies must also realise that city people these days are more reliant on broadband internet. In reality, the biggest potential market today, in terms of data, are the villages where broadband connections will take a lot more time to reach. 

However, the companies seem to think that villages do not have adequate demand. They often fail to realise that the lack of demand is mainly because of high mobile prices, not that the village people don't want to use data! There is significant data demand even in villages where people want to use data for talking to their relatives using imo, viber, whatsapp etc. 

Data hungry Youtube and other video streaming apps are already putting pressure on TV viewership even in remote village areas. Cheap mobile data can generate demand exponentially in the next few years. It seems our telecom companies are yet to realise the potential of this huge untapped market.

Mobile telecom companies have also failed to invest in efficient manner for improving their network quality. Bangladesh is still far behind in terms of internet speed according to recent global reports. 

The companies are generating a good amount of profits from their high data price. But, they don't invest properly in infrastructure. It is not only outside the metro area that they are under-investing, but also in different pockets in metro areas. None of the mobile operators have an adequate number of towers in congested areas like Old Dhaka where businesses worth millions of dollars happen every day. 

Traditional business people in those commercial hubs want to go digital, but low mobile data speed doesn't allow them to do so. There should be more infrastructure investment in these areas, and the companies need to carry out better analysis on the service level.  While policy makers and the top officials are excited about introducing 5G in the country soon, most users in the country can't even get proper 4G service. 

In summary, I think the current protected market structure in the telecom industry is creating inefficiency in the sector. Companies are not being forced to become creative and aggressive in exploring new untapped markets beyond their comfort zones. Because of low competition, data prices are not coming down like in other countries.  

Ultimate sufferers are the mass people who are deprived of their digital lifestyle.

Fahim Mashroor is the CEO and co-founder of Bdjobs.com.