Ollo BWA Licensing Derailed
The High Court is challenging the decision of the Bangladesh Telecommunications Regulatory Commission (BTRC) to issue a broadband wireless access (BWA) licence to Ollo. The regulator provisionally issued the licence without recourse to a spectrum auction or demanding the same fees as were paid by two other operators in April 2013. Bangladesh is still in the process of developing its National Telecom Policy and supporting regulatory framework; BMI believes it is inevitable that such violations of due process will occur and highlights the risks to private companies when investing in markets still struggling to transform their regulatory mechanisms.
Bangladesh Internet Exchange Ltd (BIEL, which trades as Ollo) bid for a BWA licence in 2008, alongside Banglalion, Qubee and Mango Teleservices, but backed out after bids reached BDT2.15bn (US$27.5mn). Mango Teleservices also declined to purchase its licence and it seems that it is the investors behind Mango that have launched this appeal. Their argument is that, if the regulator is now willing to accept a lower price for the licences, it too should have been invited to tender or at least consulted.
|Ollo, Ollo, Ollo|
|WiMAX Subscriptions, 2012-2013|
Ollo approached the regulator with a view to taking up one of the two spare licences after it had been decided that Banglalion and Qubee could build and run mobile broadband networks based on LTE technology, complementing the WiMAX platforms they have already established. LTE is generally considered to be a more appealing mobile broadband technology than WiMAX owing to superior signal latency rates, better mobility coverage and the lower cost of end-user devices. However, Ollo insisted that it would pay no more than the base price for the spectrum.
Data from the BRTC show that the number of WiMAX subscriptions peaked at around 500,000 in Q113 before falling to around 314,469 at the end of September 2013. Meanwhile, the number of mobile broadband subscriptions (mostly served by GPRS and EDGE-enhanced 2G cellular networks) was reckoned at almost 35mn by September 2013. 3G services - utilising 2.1GHz - have only recently been licensed and launched by the country's cellular operators. Consequently, the WiMAX licensees are keen to press ahead with their LTE-based offerings as quickly as possible.
The High Court stopped short of annulling the decision to award the third BWA licence to Ollo, but it does have the power to do so if the BTRC cannot justify its position. Although BMI believes the regulator will argue that its decision was in the interests of promoting competition and protecting investments already made in WiMAX, it will find it difficult to explain why expressions of interest were not solicited from other parties. We expect the regulator will now have to advertise the two spare concessions, a move that does not guarantee Ollo's success. It will also delay the rollout of new services, which plays to Banglalion and Qubee's first-mover positions.
The news highlights BMI's long-held concern that the development of Bangladesh's telecoms sector continues to be impeded by the government's conflicting roles as policy-maker, regulator and dominant service provider. The new National Telecoms Policy - in its draft form - aims to limit its involvement, but it is far from clear just how far its role will be diluted in the future and how stringent rules regarding licence allocation procedures will be in the new competitive landscape.