Bangladesh's mobile services are highly affordable but face regulatory challenges, with spectrum and operational costs straining operators' revenues. The country's spectrum pricing, currently high and denominated in USD, has led to a 38% decline in real terms per connection revenue since 2014, while spectrum costs now account for 16% of operators' revenue (compared to regional averages of 10.4%). This high cost structure, coupled with other taxes, risks deterring investment in network upgrades and 5G adoption.
Key data highlights:
- Mobile internet penetration is 46%, with average monthly data usage at 5 GB.
- 4G coverage reaches 99% of the population.
- Operators use just over 500 MHz of spectrum, below regional norms.
- Spectrum cost has risen disproportionately, with prices historically set high in USD.
Global trends show a decline in spectrum prices (69% drop in revenue per MHz from 2014 to 2023), reflecting a shift toward economic value-based pricing. GSMA Intelligence outlines three pricing scenarios:
- Status quo: Spectrum cost rises to 23% of operators' revenue by 2027, limiting 4G and 5G improvements.
- 50% price reduction: Aligns spectrum cost with APAC median (~12%), boosting 4G speeds by 17% and enabling 12 Mn 5G connections by 2030.
- 75% price reduction: Aligns with global median (~8%), improving 4G speeds by 22% and supporting 13 Mn 5G connections by 2030.
Economic modeling projects:
- Scenario 1: Cumulative GDP boost of $34 bn by 2035 ($20 bn from 4G, $15 bn from 5G).
- Scenario 2: Cumulative GDP boost of $45 bn by 2035 ($26 bn from 4G, $19 bn from 5G).
Recommendations for reform:
- Align spectrum pricing with current economic fundamentals.
- Reduce reserve prices and annual fees, especially for low and mid-band frequencies.
- Ensure predictability and transparency in licence renewal frameworks.
- Provide flexible payment options and longer licence durations.
- Eliminate VAT on spectrum fees.
Adopting a forward-looking spectrum strategy will stimulate investment, improve network quality, and accelerate 5G adoption, driving economic growth and societal wellbeing.
