In an increasingly wired world, the importance of Information Technology (IT) Cannot be overemphasized as a major component in the economic development of all nations - rich or poor. The internet industry in our country has over the last three years since it's inception grown in significance to become a major determinant of the future of our IT Sector. Initiated and nurtured by the private sector, in recent times the progress achieved in this sector has come into peril as the government machineries have increasingly attempted to regulate the industry to maintain the technological stronghold they have had on communication technology through the years. Whereas all over the world, this market begins under the close scrutiny of the Government and is slowly deregulated to private sector domination, in our country the opposite has happened. In the midst of all this, the Bangladesh Telephone and Telegraph Board (BTTB) - who had till now been responsible for regulation the industry, have now entered the market as a competitor - with all the unfair advantages that they have jurisdiction over. This week the Star Weekend Magazine takes a closer look into the problems and prospects of the internet market and how it will influence our future.

T HEN internet services were first launched in Bangladesh in 1996, it was a handful or firms from the private sector who took the initiative to venture with large investments into an industry that had, till then, been uncharted territory in Bangladesh, Everyone knew of the internet, but unfortunately that was also all that they knew about it. Acronyms like FTP and VSAT were as alien to our knowledge as was our power to perceive the productive potential of the internet. Today, only three years later, the market has grown in size and value so that an estimated 30,000 users in Bangladesh are accessing the worldwide-web everyday and experts existing market to be as much as 24000,000 takas per month. Add to this the fact that the market seems to be growing at an exponential rate, the inevitable future of business is in e-commerce and software exports, and the results are set to be unimaginably lucrative.

But the promise of this industry may fall short of a lot of expectation as far as Bangladesh is concerned. The industry is beset with some very complex problems that demand a solution without compromising either the interest of the Government i.e. the public, or the businesses that survive within the industry. Being as ISP (Internet Service Provider) in Bangladesh has never been quite as profitable as it may seem. On the one hand, the market is characterized by fierce competition with as many as 20 firms competing for the handful of new clients that are signing up everyday. On the other hand, the costs involved are so high that many firms are staying only barely afloat when they invest in new technological developments to keep abreast with the rest of the world. Whereas competing countries even in South Asia, are quick to embrace new technology which reduce costs and provides better services, our policy-makers have not been very sensitive to the needs of this industry - when it has needed cooperation.

Having refused the fibre-optic link with the information super-highway that was laid through the Bay of Bengal in the 80's, Bangladesh has to use a satellite technology called VSATs (Very Small Aperture Terminals) as its link to the worldwide-web. This means, each individual ISP has the install a small satellite dish, which is capable of sending and receiving data, which has to be leased from BTTB (Bangladesh Telephone and Telegraph Board) - the sole lessor of VSATs in Bangladesh. It is BTTB who negotiates with foreign owners of the satellites to which the local VSATs are Linked and for this BTTB charges each local |ISP $8000 per month, of which it keeps $ 1000, the remaining $ 7000 being paid to the foreign owners of the satellite. The costs of providing internet services in Bangladesh remain relatively high compared to other countries because VSATs are expensive technology. Satellites go out of commission after a certain number of years and the VSAT provider has to recover his costs as well as make a profit before the battery on his satellite runs out. Now consider that this is made even more expensive by the fact that BTTB's deal with their foreign counterparts could be renegotiated on much better terms, if the private sector were allowed to participate in the negotiations. In fact opening up satellite services may result in a net benefit for all parties concerned since the ISPs have even suggested that they will commit themselves to a fixed monthly payment of the $ 1000 that the government now receives for VSAT services and still be able to reduce their rates dramatically. "If we were allowed to negotiate directly with the VSAT providers abroad, we would be able to pay the government its share of $ 1000 upfront, and still be able to cut costs by as much as 60% "says A.R. Azimul Hoque - the Director, technical at Information Services Network (ISN) - one of the major players in Bangladesh's internet industry. "The surprising thing however" says Md. Abdus Salaam, the Managing Director of Agni Systems, an ISP based in Dhaka, "is that high-level oficials in BTTB and the Ministry of Post and Telecommunications have agreed in principle to this arrangement, and yet it has already been two months and their views have not been translated into action" In recent times there has been news of a recommendation sent from the Ministry of Post and Telecommunications to the Finance Ministry-requesting that the private sector ISPs be allowed to negotiate for contracts directly with the providers abroad but this in minimum headway in a process that looks likely to be a long drawn out and costly one.

In the backdrop of a strictly regulated IT sector with structural bottlenecks at every imaginable bend, it is no surprise that there has been a considerable amount of apprehension since the middle of this year, when BTTB officials declared they were going to enter the internet market as an ISP. The initial reaction this move elicited from the private sector was a sign of things to come.

"The obvious reaction on my part as a private sector ISP, was to welcome the move" comes the surprising answer from Ahmed Hasan-the Executive Director of the Chittagong -based ISP Doplhi. net, Voicing the common sentiment of the private sector, he adds "as long as BTTB wants to operate in the market as a fair competitor, we believe the end-user will be the ultimate beneficiary. But when their intentions are to take advantage of their regulatory role in the industry to reap commercial profits, the move in as unethical as it is detrimental for the industry."

Unfortunately, this in exactly what BTTB has attempted. When industry-standard rates were refusing to budge from the relatively high rate of Tk. 2.50 per minute - determined to a great extent by the high-costs of VSAT rentals, BTTB entered the market offering the flat-rate of Tk 0.50 per minute, during off - peak hours, leaving it's private sector competitors with no choice but to lower their rates-if only to compete in the market. For BTTB however, the accounting was quite simple. They are the sole authority on the lease rentals of VSATs in Bangladesh and not only do they rake in large amounts in rental charges every month, they themselves don't have to pay the monthly charge of $8000. "If we take a look at their cost figures, I can guarantee that there in no way BTTB are commercially viable at rates of Tk. 0.50 per minute, if they are following the rules they themselves have set for the industry" says Golam Mohiuddin- a prominent member of Dhaka's digerati and one of the founders of the Internet Service Providers Association (ISPA) an independent body constituting the major ISPs in Dhaka. But what in most relevant in all this, is that BTTB as a public corporation is under no pressure to stay commercially viable and profitable. When it offers internet services at a rate that is clearly a 'loss-leader', they are in effect subsidizing a service provided to the public with "public funds."

The problem of telephone landlines also becomes simple when BTTB needs to expand its network to suit an expanding customer base. "Where we, the private sector ISPs, have to go through months of bureaucratic red-tape to add another thirty telephone lines to our network or expand our bandwidth with as additional VSAT, the task is relatively simple for BTTB when they themselves are responsible for allotting an extra VSAT for their internet services" says S.M. Iqbal, the Managing Director of ISN and the Convenor of the proposed ISPA.

The impact of BTTB's presence in the market, at least in the short run however, seems to have been quite limited. "BTTB as an ISP is no threat to us" says Ahmed Hasan, "if only because there is still enough space in the market for a few more competitors." And this seems to be the general viewpoint of all the private sector ISPs. But there seems to be another reason why few are willing to shift from a relatively expensive private ISP to a service rendered by a public corporation. By now the public have wisened to the fact that it is a private firm's profit motive that is it's biggest incentive to provide efficient services. And conversely, for a public corporation-the lack of a profit motive results in inefficient operations and poor customer services. This is one of the main reasons that large ISPs like Citechco, ISN and BD Mail are able to dominate the market despite their high rates.

But there is little doubt that even in the foreseeable future, this new development is most likely to drive the smaller ISPs out of business if only because they will not have the necessary resources to compete with firms so large and powerful, Apparently, the cheaper services and a downward trend in the rates add up to a net benefit for the end-user but as S.M.Kamal-Managing Director of Bol-Online and the President of BASIS (Bangladesh Association of Software and Information Services) points out, "the spin-off effect of ISP's going out of business will be a burden to the consumers as they will now have to pay new connection fees to avail themselves of the services of a new ISP."

The long run effects on the market however will not be quite so negligible. "If this regulatory role is allowed to continue," warns Mohiuddin, "considering the edge they have over us, in the long run, none of the private sector ISPs will be able to compete with BTTB who may ultimately emerge as a monopoly."

"The potential that the internet has in our country in terms of the benefits they can offer to businesses and individuals is being seriously inhibited by the regulations that have been placed on the IT sector" says Ahmed Hasan of Dolphi.net, Software exporters have torethink their cost schedule and businessmen are not able to fully utilize of the resources they have access to because the costs of providing Internet services are kept artificially high by the regulatory authority. What all the participants in the market are absolutely clear about is that BTTB can only assert its presence in the market as a regulator or as a competitor - not as both. One of the primary recommendations of the ISPA has long been the phasing out of VSAT usage from the country, opting for the much faster, and cheaper option of fibre-optics. "there has recently been some news that the fibre-optic cable laid through the Bay of Bengal will be relaid and Bangladesh and Burma have been offered to join the line" says Ahmed Hassan. "If that is the case" retorts Gholam Mohiuddin of Grameen Cybernet, "let me give a personal assurance that the private sector will be willing to put up the 40 million dollars required for a fibre-optic connection with the rest of the world."

"If we have to opt for a cheaper option," says S.M. Iqbal the convenor of the ISPA, "we can build an internet ground-station as they gave done in Pakistan. Even that will bring down the costs of operating in the industry by about a quarter."

But the government machineries are slow to react. There is a statusquo of hypocrisy going on in the relevant bureaucratic circles who on the one hand identify the nascent Software Industry as a thrust sector and then refuse to allow the infrastructure on which the industry is based, to develop. As S.M. Iqbal points out, "time is a crucial element in the fast-paced IT sector, where technology changes everyday. If by the time we have resolved the issue of VSATs. a new technology has replace it, we will once again be in limbo. "If Information Technology is all the infra-structural sectors need to develop simultaneously. With all the rhetoric that we hear everyday about the future of IT,we finally need some of pledges translated into action.

Bangladesh 2010 : A Vision of our Future

The visionary is a man who has the power to perceive the world in a different light. He visualises his reality in the infinite set of possibilities that lie dormant or neglected, the vision unaffected by the myopic immediacy of the present. His gift lies in his ability to comprehend objects and events in relation to their place in the greater scheme of things.

Dr. Muhammad Yunus is one such man.

In a speech delivered on the 15th of October at the Asiatic Society, Dr. Yunus spoke for a nation whose hopes and aspiration for a prosperous future find on place in the rhetorical pledges of politicos, or the prize-winning economics of the First World. Titled "Bangladesh 2010," the dissertation addressed some of the greatest challenges that our nation will be faced with in the dawn of the new millennium. He talked of how we have the choice today to either move ahead with the world - in terms of technology, in terms of governance and in terms of economic development - or choose to be left behind because we lacked the courage to be bold.

Identifying the potential we have for progress in the field of Information Technology, Dr Yunus gave a detailed analysis of the structure and policy bottlenecks that are inhibiting the growth of the IT sector in our country and offered recommendations on how they may be tackled. For all the promises that we hear of the Software Industry becoming a 'thrust sector' in Bangladesh, it may do our policy makers some good to take heed of the points that Dr. Yunus discussed. These are only a few highlights of a speech that comprehensively covered the pressing realities of the IT sector in Bangladesh.

For one, all the data we exchange with the Information Super-Highway is via satellites owned by firms in Hong Kong, Singapore and some other Asian countries. Satellite technology is expensive and inefficient compared to fiber-optic connections - and despite the fact that the Bangladesh Government refused a link with the fiber-optic line that was laid through the Bay of Bengal in the 80's, there will be an opportunity to rectify the error. Dr. Yunus talked of a new line that is being laid through the Bay - to which Bangladesh and Myanmar will be able to connect. He urged the Government to recognise this opportunity and immediately start negotiations for a fibre-optic link to the Information Super-Highway. In case the Government is unwilling to pay the 40 million dollars that will be required in costs - he urged the private sector to come forward and invest in this technology.

DR. Yunus stressed the need for the Government to realise that, we have the protential to export software as much as $ 15 billion by 2010. And this will be done entirely in the private sector. All that will be needed from the Government is decisive decision-making, co-operation and infra-structure development. He reiterated the need for immediate enactment an Intellectual Property Rights Act - which is awaiting approval at the Parliament.