Policy decisions to shape BD's trillion-dollar ambition

Bangladesh stands at a crossroads in its digital journey. The decisions it makes now -- regarding spectrum pricing, taxation, and telecoms regulation -- will determine whether it achieves its ambition of becoming a trillion-dollar economy by 2040, or continues to lag behind its peers.

This was the stark message from Julian Gorman, Head of Asia Pacific at GSMA, speaking on the sidelines of the mobile industry body's latest report launch held in Dhaka this week.

"This is not just about 5G," Gorman said in an interview with The Financial Express. "It is about building the digital nation that will reach the ambitions of a digital Bangladesh for decades to come. Spectrum pricing is a strong signal of how serious the government is about digital transformation."

High costs, low returns

According to the GSMA report, spectrum costs have risen to account for around 15 per cent of mobile operator revenues in Bangladesh -- significantly above the regional average and nearly double the global median. This is further compounded by a tax burden of about 55 per cent of revenues, one of the highest rates worldwide.

"Spectrum is part of a bundle of costs. When you combine high taxes, a complex regulatory framework, and a difficult history of compliance, you create an uncertain, suboptimal investment climate," Gorman explained.

The consequences are evident on the ground. Despite operators' efforts, mobile internet usage in Bangladesh lags regional averages, and more than half the population still uses 2G handsets.

"High spectrum prices mean less investment in infrastructure, less coverage, less quality of service, less speed," he said.

The report warns that unless reserve prices in spectrum auctions are lowered to allow the market discover a natural price, Bangladesh risks throttling long-term growth in exchange for modest short-term revenues.

The GDP trade-off

The GSMA modelled two scenarios. Halving spectrum costs as a share of operator revenues could boost GDP by US $34 billion by 2035. Reducing costs by 75 per cent in order to align with the global median would add up to US $45 billion over the same period.

"That extra growth adds taxable turnover from other parts of the economy," Gorman argued. "If you throttle the economy now by having high spectrum fees, yes, you might get small revenue today. But you're holding back the long-term potential."

Lessons from the region

Gorman cited several regional examples to illustrate how spectrum reforms can spark investments.

In Vietnam, a 5G auction in 2023 failed because of high reserve prices. The government responded by cutting the reserve by 90 per cent. "The result was a very successful auction and a fast rollout of 5G across the country. Operators even went beyond their licence obligations because incentives were aligned," he said.

India, too, shifted gears by modernising regulations and slashing spectrum reserve prices.

"If you looked at a GSMA forecast for India in 2018 or 2019, you would not have predicted it to be a 5G leader. But the government resolved legal disputes, lowered prices, and created confidence. That led to massive investment," Gorman noted.

Thailand, meanwhile, offered spectrum at affordable rates in 2020, enabling rapid 5G adoption in its industrial corridors. Even South Korea -- the world's 5G leader -- designed spectrum policies to stimulate the ecosystem rather than maximise auction revenues.

"Bangladesh now has to make the same decision. The fastest-growing economies in Asia -- Vietnam, the Philippines, and others -- are those with strong digital ecosystems and top-down visions. Government revenue is important, but the greater prize is sustainable economic transformation," he said.

More than spectrum: A basket of challenges

Still, Gorman acknowledged that spectrum reform alone will not solve Bangladesh's digital deficit. "It's part of a basket. Bangladesh faces high taxes, complex compliance requirements, restrictions on vertical integration, and uncertainties around licensing. All of these discourage investment," he said.

Infrastructure deployment also faces practical obstacles such as rights-of-way challenges and high device costs. "You want people connected to smartphones. But more than half the population still uses 2G. Device affordability is a critical barrier," Gorman said, pointing to sector-specific taxes and import duties as further disincentives.

Digital literacy and meaningful use of smartphones also remain key challenges. "Older generations may not see the benefit. But a young demographic will change that. You never see a two-year-old use a feature phone, but you see them use a smartphone. That generational shift is coming," he said.

Government as anchor tenant

To accelerate digital adoption, Gorman suggested the government must lead by example. "Government should act as an anchor tenant in the digital economy. By digitalising services, you not only make life easier for citizens but also create reasons for people to adopt smartphones," he said.

Recalling his own experience at Dhaka airport's visa-on-arrival counter, where he waited 45 minutes just to hand over $50, he drew a comparison with Indonesia. "Five years ago, Indonesia was the same. Today, immigration is instant. That's the benefit of digitalisation."

The critical spectrum bands

Looking ahead, the GSMA has urged Bangladesh to prioritise timely allocation of the 700 MHz and 3.5 GHz bands.

"The 3.5 GHz band is the most popular globally -- about 70 per cent of the world's 5G uses it. Meanwhile, 700 MHz is critical for rural coverage and deep indoor penetration. Together, they could improve quality of service by 30 to 40 per cent," Gorman said.

Political will and the coming election

With elections approaching, Gorman expects digital policy to become a political issue. "In other countries, young voters have shown strong interest in parties' digital visions. Digital technology is not just about the economy -- it is shaping culture and society," he said.

He welcomed recent steps by the government, such as allowing spectrum fees to be paid in local currency through installments, but said broader reforms are overdue. "Twenty years ago, mobile was seen as just a sector to regulate. Now, it is the foundation of the whole economy. That requires a whole-of-government approach," he said.

From leading edge to catch-up

Reflecting on his visits to Bangladesh since 2010, Gorman said the country once stood at the forefront of innovation. "Back then, I came here to learn from Bangladesh's leading-edge innovations. Today, the challenge is about catching up," he observed.

Globally, mobile technology now accounts for 5 to 6 per cent of GDP, connecting 6.5 billion people. "On many of these metrics, Bangladesh lags. The usage gap is high, 2G penetration is high. But Bangladesh also has demographic advantages -- its large, young population -- that can turn the tide," he said.

The need for competition

Finally, Gorman stressed that healthy competition remains crucial. "Innovation in the mobile industry has always been driven by infrastructure competition. A strong, competitive market is essential, especially as Bangladesh moves into 5G," he said.

Bangladesh's industries, from ports to textiles, also risk losing competitiveness if they lag in digital adoption. "Indonesia is already building 5G factories. Pegatron just launched one. As global supply chains digitalise, Bangladesh must integrate 5G to maintain its edge," Gorman suggested.

A choice for the future

At its heart, the GSMA's message is about philosophy. "If spectrum is treated as a sovereign asset to sell at the highest price, you get short-term cash but long-term stagnation. If you treat it as a co-investment in the digital economy, you build resilience, competitiveness, and growth," Gorman said.

"The question is not whether Bangladesh can afford to reduce spectrum costs. The question is whether it can afford not to."

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