A.12 Excerpt from Bayes et.al. (1999) Report

The recently launched Fifth Five Year Plan (1997-2002) document duly appreciates the role of the sector and posits the following objectives and strategies regarding the development of the telecom sector of the country. Its objectives are:

• to provide for universal telephone services;
• to expand the telecom infrastructure in both urban and rural areas so as to enable providers to install one telephone per 100 people by the year 2002, compared with the present ratio of 0. 3 9 telephones per 100 people;
• to add international telephone circuits and ancillary facilities for smooth international telecom operations both in urban and rural areas;
• to ensure telephone connections to all industries, particularly those located in Export Processing Zones (EPZs) and industrial estates;
• to improve the quality of services;
• to attract foreign direct investment;
• to increase the role of the private sector in telecom and
• to strengthen the telecom regulatory board for the task of establishing appropriate legal and institutional frameworks for introducing and sustaining fair competition among operators in order to protect consumers' interests.

The strategies for achieving these objectives include:

• creation of an environment friendly to telecom-related infrastructural development programmes so as to enable providers to install enough telephone lines to meet the increasing demand in both rural and urban areas;
• encouraging the private sector to compete with the public sector;
• encouraging the private sector to participate more in rural areas and to offer cellular mobile services throughout the country;
• developing incentive packages needed to convince private-sector investors to expand national and international telephone capacity and transmission links;
• meeting the increased investment requirements of the BTTB, primarily by selling bonds and debentures and
• initiating reform measures to make the BM more efficient and cost-effective.

At present, Bangladesh has 500,000 telephone lines - just one-third of the number it will need by the end of this century. This assessment is based on the assumption that the annual rate of GDP growth will average 6% (World Bank and BCAS, 1998). According to a variety of sources, the BTTB's current target was to have about 600,000 lines installed by 1998, and about 900,000 lines by the year 2000. "Even with private sector providing another 100,000 line units in 2000, an achievement that will depend heavily on BTTB's ability to provide interconnectivity, supply will fall nearly 500,000 short of demand and the number of lines will still be less than 10 per 1000 population - among the lowest in the world" (World Bank and BCAS 1998).

Table 2.1: Projection of ALIS*/1000 Population

*ALIS stands for 'Access Lines in Service' Source: World Bank and BCAS (1998)

Table 2.1 shows projections for telephone penetration per 1000 population. The high-growth scenario requires the installation of over eight million lines by 2020. Even the conservative projection foresees a requirement of more than four million lines. Either way, supporting infrastructure - adequate numbers of circuits and long-distance channels - must be provided to ensure the effective operation of access lines. These challenges far exceed the demonstrated capacity of the BTTB. Only privatization can give rise to a telecom sub-sector strong and modern enough to support 7-8% annual growth in GDP.

SOURCE: Bayes, A., von Braun, J. & Akhter, R. (1999) Village pay phones and poverty reduction: Insights from a Grameen Bank initiative in Bangladesh. Information and Communication Technologies and Economic Development. vol.8 ZEF- Discussion Papers on Development Policy No. 8. Bonn: Center for Development Research, ZEF. Bonn, 31 May-1 June. Full report is available online in PDF format.

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