He broke a monopoly and made the cell phone a device for everyone

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March 27, 2022, 4:00 p.m.

Last modification: March 27, 2022, 7:43 PM

At the end of September, the number of mobile phone subscribers reached 16.71 crores, up one million from the previous month. Photo: Mumit M

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At the end of September, the number of mobile phone subscribers reached 16.71 crores, up one million from the previous month. Photo: Mumit M

The mobile phone first appeared in Dhaka in 1993 as a luxury device for the urban elite.

The service provided by Citycell cost over a thousand dollars and users had to pay a hefty bill for the privilege of talking to each other while riding in their SUVs.

Bangladesh’s mobile phone market in the mid-1990s was nothing more than a club of several thousand early adopters and a monopoly of Citycell, the first mobile telecommunications operator in Bangladesh.

Iqbal Z. Quadir, a Bangladeshi-born American investment banker, envisioned something revolutionary in the telecommunications industry and returned home from his usual job.

At a time when people could only talk with landlines from urban areas and postal communication was the only option for the rural masses, Quadir realized that cell phones in remote areas could change the life with enormous impact.

Keeping in mind the then low purchasing power of the rural population, its business model did not focus on individual phone buyers. Instead, he partnered with the Grameen Bank to use enterprising marginalized women in the telecommunications revolution.

Mahfuz Ullah Babu

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Mahfuz Ullah Babu

Mahfuz Ullah Babu

He envisioned thousands of female entrepreneurs owning pay cell phones and making these income-generating devices for themselves, enabling the remote population to connect to the world.

Quadir has engaged local non-profit organization Grameen Telecom Corporation and Norwegian company Telenor as investors and facilitators in his dream business.

Meanwhile, the newly elected Awami League government in 1996 had decided to increase mobile phone coverage while breaking Citycell’s monopoly.

Grameenphone, alongside two other companies – Sheba and Aktel – obtained nationwide mobile operator licenses and began operations in 1997.

Now, Grameenphone has become the leader of the pack over time and it has created a history of going far ahead of its competitors.

Polli Phone: the game changer

Before the average Bangladeshi started owning mobile phones, Grameenphone’s local parent company, Grameen Telecom, in collaboration with Grameen Bank and the International Finance Corporation (IFC), launched its unique “Polli Phone” (village phone) program ).

Grameen Bank offered a loan of Tk 12,000 to each of its members, marginal women entrepreneurs, to buy a Polli Phone connection and a handset from Grameenphone.

Rural women were trained in the use of telephones and let their customers talk on public mobile phones for a fee giving them a decent profit margin enough to repay Grameen Bank loans and earn a living. It has helped millions of workers living abroad to talk to their families back home, an extraordinary privilege for them.

Along with the expansion of the urban network, Grameenphone continued to penetrate very remote villages in Bangladesh until the mid-2000s, where its competitors lagged behind due to their focus on particular regions and urban areas.

In September 2006, Polli Phone reached 55,000 villages with over 2.55,000 mobile-to-mobile payphone centers having hundreds of families dependent on payphones.

The business model of Polli Phone, as a great tool for local entrepreneurship, a means of mass telecommunications inclusion that has dramatically narrowed the urban-rural digital divide, won prestigious awards and been replicated in African and Asian countries including Uganda, Nigeria, Rwanda, Haiti, Cambodia, Indonesia and the Philippines.

Banglalink and Citycell: the flirts of the market

When Grameenphone focused on growing its network and services, its competitors – Aktel, Citycell and Sheba – did not sit idle.

They were also expanding their network and services for customer acquisition and a fair share of the lucrative market.

Of the two technologies used in mobile phones at that time – CDMA (Code Division Multiple Access) and GSM (Global System for Mobile Communications) – Grameenphone chose the latter. It was a smart move that put him ahead of the rest.

After breaking its monopoly, Citycell, the only CDMA-based mobile phone operator, trying to catch up, embarked on its price war amid heightened competition in the mid-2000s.

Citycell made a CDMA handset with connection and some airtime for the first month available at less than 5,000 Tk in 2004-05, up from 8,000 Tk or more two years ago, attracting additional competition in the race to acquire new subscribers.

Egypt’s Orascom Telecom’s acquisition of struggling GSM operator Sheba in late 2004, renaming Sheba to Banglalink in 2005, extending its network to many still deprived rural areas and aggressive pricing added to pressure from the Marlet.

Banglalink was offering GSM handset, connection with six months airtime plan worth from Tk 1,800 to less than Tk 3,500 in 2005.

Banglalink in TV commercials presented itself as a synonym for all things incredibly affordable.

The two carriers also played a key role in drastically reducing the cost of voice calls in the mid-2000s. Within three or four years, outgoing call charges dropped drastically to 0.25 Tk per minute on the network and at 0.65 Tk off-grid from nearly 7 Tk.

Pressure from new entrants to gain market share has greatly expanded the base of cell phone subscribers. As owning and using a cell phone became cheaper, average consumers started getting a phone for themselves in 2004.

Market penetration, which represents the share of the population subscribed to mobile telephone connections, increased to 6% at the end of 2005, compared to 0.2% in 2000.

Banglalink did not take long to overtake second player Aktel, a Malaysia-Bangladesh joint venture.

Meanwhile, in 2005, the market got two new operators – UAE investors venture Warid and Teletalk by Bangladesh Telegraph and Telephone Board (BTTB) which later became a public entity – Bangladesh Telecommunications Company Limited (BTCL ).

They all added competition to benefit consumers and expand the cell phone subscriber base.

Since then, the industry has gone through many significant events including ownership changes to Banglalink, Warid, Aktel, the merger of new form Aktel Robi and new form Warid Airtel Bangladesh to once again become the second largest operator, the death of Citycell and of course the rise of mobile internet in the context of the rise of smartphones and a total number of subscribers exceeding the population in the context of multiple connection uses.

One thing remained constant; the entire industry is fighting together against Grameenphone, the number one driver and champion of mass penetration, network coverage, financial efficiency and management.

Beginning as one of the most impactful companies in the nation’s history that broke the old monopoly in the cell phone service market and paved the way for bringing the device to consumers, Grameenphone or GP , emerged as a de facto monopoly with almost half of the market share until the telecommunications regulator BTRC (Bangladesh Telecommunication Regulatory Commission) combined it with Significant Market Power (SMP) regulation at mid-2020.

As an SMP, Grameenphone faces more hurdles than its competitors while marching for more business expansion and profit.

Yet, it is the only telecom operator that makes significant profits every year in Bangladesh.

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