Battle on Bandwidth Prices: Status of Bangladesh

A. K. M. Habibur Rahman
Divisional Engineer

1. Introduction

The connectivity with South East Asia-Middle East-Western Europe 4 (SEA-ME-WE 4) Submarine Cable System has officially been launched in Bangladesh on May 21, 2006. After that bandwidth prices of BTTB have been being criticised in different media as well as in different forums. Since, the perception of the developing countries on the bandwidth price issue is entirely different from that of the developed ones, the issue has sometimes created confusion among the industry people as well as among the users.

In the submarine cable systems, implemented under consortium, the unit designated for the capacity in relation to investment of the consortium members is Minimum Investment Unit (MIU). This MIU may be E1 or STM-1 depending on the cable system. In case of SEA-ME-WE 3 the MIU is E1 whereas in SEA-ME-WE 4 MIU is equivalent to one whole STM-1, 155 Mbps bearer.

The consortium members of SEA-ME-WE 4 acquire allocated capacity in the form of MIU*kilometer on an ownership basis. MIU*Km is a unit of capacity in SEA-ME-WE 4, which consists of a MIU multiplied by one (1) kilometer of the Discounted Network Distance between two landing stations. The Discounted Network Distance table has been included in the Construction and Maintenance Agreement of SEA-ME-WE 4.

In this article, bandwidth will be meant for “the size of the communications pipe.” Bandwidth can be organized in many different ways. Bandwidth defined between two points is known as private leased lines, or dedicated transport whereas bandwidth associated with voice service is usually called bearer service. However, this will be referred to as International Private Leased Circuit (IPLC), which is used for voice service as well as connectivity with upstream provider for Internet service.

IPLC is a dedicated secure digital point to point private connection between two nodes of a telecommunication network located in two different countries that allows transmission of data, large internet packets, real-time video applications like video conferencing and such other information communication service. A wide variety of applications are supported by IPLC including Internet access, LAN-to-LAN connectivity, telemedicine, video and teleconferencing and call center.

IPLC makes possible global connectivity through submarine cable or Satellite and is the prime media for provisioning Broadband and Internet services, International Long Distance Voice Telephony. This is also a critical media for a number of key industries like Information Technology Enabled Services (ITES). A considerable component of the total cost of the user industries is the charges of IPLC. The competitiveness of these industries in the global market largely depends on the prices they pay for IPLC. International Internet Gateway (IIG) also uses IPLC for their upstream connectivity with overseas IP transit providers and the cost of IPLCs has a significant impact on the growth of broadband in the country.

2. Present Bandwidth Consumption Scenario in Bangladesh

The SEA-ME-WE 4 submarine cable bandwidth acquired by BTTB on ownership basis is for leasing out in the form of IPLC. These IPLCs are being used for providing mainly three services: Voice, Point-to-Point Data Communication and Internet.

2.1 Voice Communication

Till April 2008, BTTB has 21,965
voice circuits with about 52 bilateral overseas voice operators through SEA-ME-WE 4 for international long distance voice communication. The international long distance voice service is being provided through six International Trunk Exchanges. It is expected that the bandwidth consumption for international voice communication will be increased significantly after three new International Gateway (IGW) operators come into operation this year.


2.2 Point-to-Point Data Communication

A considerable amount of bandwidth is being used for overseas data communication services through International Private Leased Circuit (IPLC). Before installation of submarine cable, there were a few IPLCs having total capacity not exceeding 512 Kbps via BTTB’s Satellite Earth Stations. But within last two years,
BTTB has leased out about 48 Mbps bandwidth for 35 IPLC connections. These are being used for corporate data communication. Bangladesh Telecommunication Regulatory Commission (BTRC) has recently started awarding licenses for Call Center service. It has been made mandatory to establish overseas connectivity with call center clients through IPLC. This decision also shall greatly contribute to increasing bandwidth consumption.

2.3 Internet Service

Most significant improvement in the consumption of bandwidth has so far been experienced in the Internet services. BTTB started with one STM-1 IPLC connectivity as Internet backbone link with Business Verizon (MCI) from the inception of the SEA-ME-WE 4 cable launching. The Internet backbone links have been increased to 12 STM-1 (1866 Mbps download+1866 Mbps upload) equivalent capacities with various tier-1 ISPs in the eastern and western sides of the cable in April, 2008. As on April 2008, 105 Leased Line Internet connections are in service. These connections (using Fast/Gigabit Ethernet) have been given from Gulshan (Dhaka), Moghbazar (Dhaka) and Nandan Kanon (Chittagong) PoPs through optical fiber arranged by the customers. Among those, 87 connections are in Dhaka and 17 in Chittagong. It is notable that 5 corporate organisations and 6 universities have optical connectivity. The connections to different PoP are shown in Table-1. BTRC has also recently awarded an International Internet Gateway (IIG) operator license to private sector. It is expected that Internet bandwidth consumption will be boost up significantly this year after the new IIG comes into operation.

Table-1: Leased Line Internet connections through optical fiber

Dhaka PoPs Chittagong PoP Total
ISP> 77 17 94
Corporate Org> 5 0 5
Educational Institutions> 5 1 6
Total> 87 18 105



3. BTTB’s Bandwidth Price

It is no doubt that price is a vital factor to the consumption of the SEA-ME-WE 4 capacity. Prices of services through SEA-ME-WE 4 had been fixed up just before launching the cable taking into consideration of the prices prevailing in neighbouring countries. The prices have been revised once and some terms and conditions have been simplified which were effected from 1 February 2008.

3.1 IPLC Price

BTTB’s IPLC price through SEA-ME-WE 4 has been set for three zones based on geographical segment of the cable. Zone-1 consists of Singapore, Malaysia, Thailand, India, Sri Lanka, Zone-2 consists of Pakistan, UAE, KSA, Egypt and Zone-3 includes Italy, France, Tunisia, Algeria. The present half circuit charges for these three zones are given in Table-2.

Table-2: BTTB’s Half-circuit IPLC Monthly Recurring Charges (MRC) for E1 capacity

Zones
Countries
Standard MRC (USD)
MRC for BPO, Call Center (USD)
Zone-1
Singapore, Malaysia, Thailand, India, SriLanka
2,400
1,800
Zone-2
Pakistan, UAE, KSA, Egypt
2,750
2,063
Zone-3
Italy, France, Tunisia, Algeria
2,900
2,175

BTTB’s price structure uses multiplication factors for calculating charges of higher bandwidth. Presently, charges for 34 Mbps, 45 Mbps (DS3) and 155 Mbps (STM1) are available. The price multiples are shown in Table-3.

Table-3: Multiplication factor for higher bandwidth

Bandwidth
2Mbps
34 Mbps
45Mbps
155 Mbps
Multiplication Factor
1
10
12
30

BTTB offers IPLC to Software Exporters, BPO, call centre and Medical Transcription Service providers at 25% discount on standard price. In a recent bid for new International Internet Gateway (IIG), BTRC has awarded one IIG license in private sector. To enable it to provide Internet bandwidth at a competitive price, BTTB offers 60% discount on standard IPLC price. One important issue to be noted that BTTB does not charge for domestic backhaul link from Coxs Bazar landing station to Chittagong or Dhaka.

3.2 Leased Line Internet Price

Leased Line Internet service is one kind of broadband Internet service where bandwidth is ensured at all time what has been subscribed by the customers. The service is being delivered through FE/GE port over optical fiber in case the bandwidth is 3 Mbps and above and through twisted pair using DSL technology in case below 2 Mbps. The current price for higher Leased Internet bandwidth is shown below in Table-4.

Table-4: BTTB’s Leased Line Internet Price

Bandwidth Slab (Duplex)
Rent/Month/Mbps (duplex)
3-18 Mbps
Tk. 40,000
20-45 Mbps
Tk. 38,000
50-90 Mbps
Tk. 36,000
100 Mbps & above
Tk. 32,000

BTTB offers 50% discount on total rental charge for connections to Public Universities, Colleges, Schools, Madrasas, Training & Research Institutes, 25% discount to Government, Semi-government, Autonomous Organizations/Commissions, 100% Govt. owned companies, and non-profit research organizations. BTTB also offers 25% discount to Software incubators & parks under govt. control, software development companies/IT Enabled Services (ITES) companies earning at least US$ 100,000 or equivalent amount per annum in foreign currency . Other software development companies/IT Enabled Services (ITES) companies, upon recommendation of Bangladesh Association of Software and Information Services (BASIS) gets 25% discount on rental charges up to 128 Kbps.

4. Comparative Analysis of BTTB’s Price with other Regional Operators’ Price

4.1 IPLC Price Comparison

Global trend in the IPLC bandwidth price is to offer charges up to landing station by the landing station owner although there are some exceptions. It is very difficult to collect IPLC charges, as the service providers do not publish the price in their web sites. By browsing the leading operator’s web site, no price information was found in the web sites of Sri Lanka Telecom, Pakistan Telecommunication Company Limited, Telecom Malaysia, Singapore Telecommunication etc. On the other hand, price information has been found in Indian operators’ web sites. BTTB has also published all price information in its web site. A table (Table-5) is presented below which has been extracted from “Consultation Paper on International Bandwidth Tariffs” by Pakistan Telecommunication Authority. The Table shows half-circuit IPLC prices of some selected countries.

Table-5: Half-circuit IPLC MRC of some Asian countries (in USD).

Country E1 DS3 STM1 Price multiple
Bangladesh 2,750 33,000 82,500 1:12:30
India, 2,462, 20,000, 56,666, 1:8:23
Pakistan, 2,300, 18,400, 52,900, 1:8:23
Japan, 1,916, 8,333, 16,666, 1:4:8
China, 2,300, 11,500, 27,416, 1:5:12
Malaysia, 1,408, 16,469, 40,737, 1:12:29
Singapore, 2,750, 14,166, 25,000, 1:5:11
South Korea, 1,196, 8,333, 16,666, 1:4:8

All the prices above are quoted up to landing station; whereas BTTB’s price includes charges for inland portion, which is up to Chittagong or Dhaka. Thus for BTTB it is not an apple-to-apple comparison. In Pakistan, PTCL previously included backhaul charge in the IPLC price. But recently they have segregated the domestic backhaul and now offer IPLC charge up to landing station. If BTTB sets price up to Cox’s Bazar landing station, the price will be lower than that of some countries. Although, this will make BTTB’s price comparable at E1 level but not for higher bandwidth. If we look at the price multiple for higher bandwidth, BTTB’s price multiplication factors are higher than neighbouring countries. BTTB’s price multiplication factors have been fixed at 1:12:30 (E1:DS3:STM1). USA based bandwidth research organisation Telegeography Research studied the bandwidth prices in 2004 and showed that the multiplication factors of price for E1 to DS3 in the competitive countries ranged from 4 to 7 and for E1 to STM1 ranged from 8 to 17. In this regard, BTTB’s price multiplication factors are higher than global average.

Another comparison has been done among four operators of the south Asian region. These are: BTTB (Bangladesh), Reliance (India), Tata Communications/VSNL (India) and PTCL (Pakistan). The price information has been collected from the web sites of the operators except PTCL. PTCL’s price information has been collected from Pakistan Telecommunication Authority’s web site.

It can be seen from Table-6 and Figure-1 that BTTB’s IPLC prices are higher than those of all other regional operators at all level of bandwidth. The gap in price is higher for the higher bandwidth

Table-6: Comparison of Half circuit IPLC MRC in USD of selected operators

Bandwidth
BTTB1
Reliance2
VSNL2
PTCL3
E1
2,750
2,675
2,407
2,300
DS3
33,000
21,399
19,260
18,400
STM1
82,500
61,523
55,370
52,900
1 Price for Middle East Zone, 2 1 USD=40.5 INR
3Price for voice carriers

Figure-1: Half circuit IPLC Monthly Recurring Cost in USD of selected operators


















4.2 Leased Line Internet Price Comparison

In BTTB’s leased line Internet tariff schedule, price is available for almost all amount of bandwidth as the bandwidth is being delivered through Ethernet port. Other regional operators do not have such flexibility what BTTB has. Hence comparison has been confined to three types of bandwidth- 2 Mbps, 45 Mbps and 155 Mbps. Table-7 and Figure-2 clearly depict the status of leased line Internet bandwidth charges of BTTB which is very attractive.

Table-7: Leased Line Internet MRC in USD of some selected operators

Duplex Bandwidth
BTTB, Bangladesh*
Reliance, India**
VSNL, India**
PTCL, Pakistan
2 Mbps
1,752
3,821
3,292
1500
8 Mbps
4,672
13,633
12,037
n.a.
45 Mbps
24,964
73,486
34,539
24000
155 Mbps
72,651
156,190
94,239
46500
* 1 USD= BDT 68.5, **1 USD=INR 40.5, *** 1 USD=3.75 AED

Figure-2: Monthly Leased Line Internet Charges in USD of some selected operators

Reliance
VSNL
BTTB
PTCL














Despite the competitive tariff offered by BTTB, many people try to criticize the tariff without being conversant with different flavor of Internet services. Some of the points which are not considered during the criticism are pointed out below:

· Difference between Broadband service and Leased Line Internet service: Broadband is a broad term which indicates an ‘always on’ data/Internet connection providing faster data communication replacing conventional dial-up technologies. There is no universal standard of what speed should be termed as broadband. Different country defines different speed as broadband at different point of time. There are also variants of broadband technologies; most popular of them is ADSL. This technology ensures high-speed data transmission over twisted pair and the legacy PSTN operator grabbed the full benefit of this technology. The service providers offer the service at cheap rates because ADSL does not guarantee bandwidth availability at all time. ADSL service is always on best effort basis. But in case of Leased Line Internet, the service providers have to ensure 100% availability of bandwidth at all time for what has been paid for by the customer. So, prices of these two different quality of services are not comparable as that will not be an apple-to-apple comparison. Some regional operators/service providers offer variants of Leased Line Internet with 1:2 or 1:4 contention ratios at a comparatively cheaper prices, but for fair comparison prices of uncontended bandwidth (1:1) has been considered.

· Comparison of Internet Bandwidth tariff between Europe/America and South Asia: Price of Leased Internet cannot be compared with that of in North America and Europe, because core networks of Tier-1 ISPs are spread throughout the America and Europe where backhaul and Internet port charges are cheaper as the market is almost saturated. The significant and major component of the cost of Internet bandwidth in the South Asian region is the transportation cost (IPLC cost).

· Other Cost Components: In pricing of bandwidth, depreciation of the cable, fixed amount to be paid to the consortium for maintenance and operation of the submarine cable, fixed maintenance and operation cost for domestic distribution network, provisioning cost of redundancy of links, prices of backup bandwidth, profit etc. should be taken into account.

· Consumption of Bandwidth: Since the bandwidth capacity generated by the investment will not be wholly consumed at a time, growth of bandwidth consumption in the country is very important in fixing the bandwidth price. The more the bandwidth is consumed, the more the price will be lowered.


5. Conclusion

Although availability of infrastructural facility is a prerequisite for commendable bandwidth consumption, attractive tariff is a prime factor for best utilization of the existing infrastructural resources. It has been shown that BTTB’s IPLC bandwidth tariff is slightly higher than that of other regional operators at E1 level which may even come down below other operators’ tariff if domestic backhaul is isolated and charged separately like other operators. But tariff for larger IPLC bandwidth is much higher than that of other operators.

As far as the quality Internet bandwidth is concerned (i.e. 1:1 basis, no contention), BTTB’s leased line Internet bandwidth price is very attractive. It is higher than PTCL’s price but lower than VSNL and Reliance’s price. Somebody may find riddle in this scenario; where IPLC price of BTTB is higher than that of other regional operators how BTTB’s leased line Internet bandwidth price has become attractive. This was possible due to the policy of government for giving 60% discount on IPLC prices to the International Internet Gateway.

To be in line with the global trend, two issues should be taken into account during the next revision of IPLC tariff. Firstly, fixing IPLC bandwidth price up to Cox’s Bazar landing station and charging separately for domestic backhaul link. Secondly, lowering the price multiplication factors for higher bandwidth.
Telecommunication sector is a fast-changing sector in terms of technology and regulation. In such a sector, there is always a need for revising prices of the existing services, fixing prices for new services, modifying terms and conditions of the services etc. to respond the market demand as quickly as possible. In this respect, BTTB cannot do anything but to go through the long process of approval, which slows down the bandwidth consumption process. Hence, a dynamic and flexible pricing struc