Bangladesh Mobile Phone Market

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Journal of Asian and African Studies http://jas.sagepub.com/

The Mobile Phone Market in Bangladesh: Competition Matters
Mohammad Abu Yusuf, Quamrul Alam and Ken Coghill Journal of Asian and African Studies 2010 45: 610 DOI: 10.1177/0021909610373905 The online version of this article can be found at: http://jas.sagepub.com/content/45/6/610

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Article

The Mobile Phone Market in Bangladesh: Competition Matters
Mohammad Abu Yusuf, Quamrul Alam and Ken Coghill
Monash University, Australia

Journal of Asian and African Studies 45(6) 610–627 © The Author(s) 2010 Reprints and permissions: sagepub. co.uk/journalsPermissions.nav DOI: 10.1177/0021909610373905 jas.sagepub.com

Abstract
This article examines the role of regulation, competition and market structure on the success of mobile phone sector liberalization. The findings of the study suggest that deregulation of the telecommunications sector has generated competition and changed the market structure which has had a significant influence on mobile phone service pricing. However, limited liberalization, a concentrated market and a weak regulatory regime during 1997–2004 allowed mobile phone firms to keep mobile tariffs high. Since 2005, full liberalization of the mobile phone sector including the launching of a mobile phone service by a state-owned mobile firm and a strong rival as well as the emergence of an effective regulator brought stiff competition in the sector.

Keywords
competition, GrameenPhone (GP), liberalization, number portability, tacit collusion,Teletalk Bangladesh Ltd (TBL)

Introduction
Consistent with the global trend of exposing the telecommunications sector to competition during the last two decades and in an effort to improve service accessibility and affordability by adopting new technologies, Bangladesh opened up its telecommunications sector for mobile phone services during 1990s. The first mobile phone licence was issued in 1989 and five more licences were issued subsequently during 1996–2006. Before the opening up of the sector for private and foreign investment, the telecommunication sector was served, like most other countries by the state-owned Bangladesh Telegraph and Telephone Board (BTTB), the sole provider of telecommunications services. During this period of state-owned monopoly, the sector was characterized by a very low level of penetration, a low level of investment, long waiting lists, limited capacity to meet growing demand, poor service quality and a high tariff (Khan, 2003). After the liberalization of the mobile phone sector and launching of mobile services by four operators, consumers were deprived of the favourable consequences of liberalization. Tariffs for mobile phones ranged between US$0.22 and US$0.25 per minute until 2002–2003. It was even higher (US$0.30 per minute) in the case of the GrameenPhone (GP) Nationwide call charge (Hossain, 2003).1

Corresponding author: Mohammad Abu Yusuf, Department of Management, Monash University, Caulfield East,VIC 3145, Australia Email: mohammad.yusuf@buseco.monash.edu.au; ma_yusuf@hotmail.com

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Yusuf et al.

611

Tariffs remained mostly stable with insignificant reductions. The price pattern of different operators indicates that probably the operators were engaged in some form of anti-competitive behaviour such as tacit collusion (a form of cartel) not to compete in price...
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