July 30, 2009

BTRC Moves to Break Monopoly

The telecoms watchdog is set to make 'competition regulations' by September this year to restrict monopolization, aiming to ensure a level-playing field in the rapidly growing Bangladesh telecoms market. The telecoms regulator has followed the recommendations made by International Telecommunication Union (ITU), the United Nations agency for information and communication technology, which recently reported on Significant Market Power (SMP) of Bangladesh's telecoms sector.

ITU also suggested identifying the operators, who hold SMP, before finalizing the regulations. An operator enjoys market power when it can unilaterally set and maintain prices and other commercial terms. ITU recommended setting upper and lower limits of market dominance for a telecoms operator, to be judged on holding SMP.

In its report, ITU said in the context of Bangladesh, it favors a market share threshold of 45 percent based on a range of factors,
including revenue, subscriber percentage, and if available, traffic statistics consistent with global precedents. "If the Bangladesh Telecommunication Regulatory Commission (BTRC) considers a lower threshold of 35-40 percent to be set as the presumption threshold because of a lack of detailed industry statistics, then it would be supported," said ITU, suggesting a second option.

Ever since debut in Bangladesh, a few operators have dominated the telecoms industry. Considering this, BTRC sought ITU advice on significant market power issues. Later ITU undertook a project on SMP and recently submitted its report to BTRC. Competition regulations are common to markets around the world. "When a few operators have grabbed significant market share, regulating competition is a must for all," Competition regulations would apply to all, both private and state-run operators," said a BTRC official.

As per telecommunication laws, BTRC is compelled to break monopolization and anti-competitive behavior by operators.

Competition policies may be implemented through general competition laws or through competition enhancing rules in specific sectors. The laws aim to promote efficient competition by penalizing or undoing conduct that reduces competition in a market. BTRC would finalize the regulations after consulting all telecoms stakeholders.
Under regulations, operators are prohibited from entering into agreements that provide for market sharing, rate fixing, boycott of another competitor or supplier of the telecommunications system or equipment, said the ITU.

ITU said the regulator may direct operators in a dominant position to cease a conduct, which has or may have the effect of substantially lessening competition in the market.
The UN agency also suggested an independent commission to maintain and promote fair competition, to prevent, control or eliminate restrictive agreements among enterprises or abuse of a dominant position.

It said although the telecommunications market in Bangladesh is characterized by a large number of operators (particularly in the mobile sector), it remains highly concentrated.

BTRC sources said big operators are reluctant to adopt such regulations in the market.

"The big operator does pose a predatory nature and it is already becoming imminent that the very existence of small operators is in question because of this issue," said Ashraful H Chowdhury, general manager of Warid Telecom. He said the regulator must enforce a level-playing field for the sake of fair competition and existence in the long run. "Big operators in the market enjoy advantages because of size and potential anti-competitive nature," he said.

However, GrameenPhone, the market's biggest operator, refused to comment in this regard at the moment.


Post a Comment