Question

Justify that the telecom industry has a natural tendency of monopoly. What are the major segments of the telecom industry of Bangladesh? How are they connected? How many operators are there in each segment? How has it evolved over the last 40 years? How a dominant operator like GP can attain price-setting capability? Why is there a possibility that an operator could be caught in an inescapable loss trap? Why do you think that private monopoly is undermining the very purpose of market-led reform of the Telecom industry?

Answer 1

Ans.

In a monopoly market, there are no other good substitutes for the given product or service. There is a single or few sellers, which, are allowed to operate without constraint, exercises considerable power over pricing and output decisions. The telecom industry in Bangladesh have similar characteristics.
It’s a only four player market covering across country such as Banglalink, Teletalk, GP and Robi (Airtel).
Grameenphone (GP) has the largest share of 45% , followed by Robi 23% and Banglalink 23%. All three of them are private players. State government owner Teletalk has just 3% market share.
The market is very investment intentise and asset heavy. Players have to invest a lot in interms of building infrasturuceture and continue investment because of the fast changing technologies like 2G, 3G, 4 G and now 5 G. This industry has not been very profitable because on one side it demands investments on other side due to government restructions operators have pricing constraints. Also in Bangaldesh the use of the value added service has not improved . Many subscribers use only the basic calling and sms services therefore it has very poor ARPU (Average Revenue Per User) in the world.  
Because of the regulatory restrictions even after having the monopoly power operators are not allowed to earn super lative profits that’s why many players even in the neighbouring countries have been caught in loss trap because of the heavy investment in new generation technologies and low recovery due to not keeping up with growing trends in value added services and goveremnt regulation on pricing .