Central bank pushes BTRC for rational pricing

Dhaka,  Fri,  18 August 2017
Published : 01 Aug 2017, 22:32:35
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Central bank pushes BTRC for rational pricing

Unstructured supplementary service data
FE Report


Bangladesh Bank has asked the telecom regulator to set a rational pricing for unstructured supplementary service data (USSD) when it comes to mobile financial services.

The central bank's recommendation came at a coordination meeting held at the BB headquarters on Tuesday, attended by representatives of Bangladesh Telecom Regulatory Commission and other relevant regulators.

USSD is a global system for mobile (GSM) communication technology that is used to send texts between a mobile phone and an application in the network. The system is now extensively used for various MFS-related services.

The pricing of USSD, however, has been a thorny issue between the mobile operators and mobile financial service providers.

Recently, the topic has gained more attention due to the growing popularity of MFS and subsequent increasing use of USSD in MFS platforms.  

According to the current revenue sharing model, mobile financial service providers charge 1.85 per cent for cash out and Tk. 5.0 for cash transfer.

Out of this revenue, mobile operators get 7.0 per cent while the rest is received by MFS providers and their distributors and agents.

Mobile operators, however, have long maintained that they are not getting the fair return on their investment and due to the current pricing; they are facing cumulative losses of Tk. 8.47 billion.

They also alleged that the quality of service of the telecom operators get affected due to excessive use of USSD channels in peak hours.

On the other hand, some banks had recently complained to the central bank that the usage cost of USSD and SMS set by mobile operators was high considering their earnings through operating the MFS.

Earlier, the government had formed a committee under the leadership of the Posts and Telecommunications Division to fix the USSD pricing.

"BTRC has informed us that they are reviewing the current pricing model for USSD", BB Executive Director Subhankar Saha told FE after the meeting on Tuesday.     

"We really hope that they would fix a rational pricing for USSD keeping in mind the growing demand and usage of MFS platforms", he added.  

Earlier, the mobile operators had proposed discarding the current revenue sharing model and adopt the 'session-based pricing' for the usage of USSD.

"The proposed ceiling under this session based modeling is Tk. 1.50 per session whereas the ideal span of each session will be two minutes", said the General Secretary of AMTOB TIM Nurul Kabir.

"This will slightly increase the share of the mobile operators in revenue from 7.0 per cent to 8.5 to 9.0 per cent," he added.

Citing the examples of other countries, telecom operators informed that the rate of such session-based pricing is Tk. 1.56 in Nigeria, Tk. 2.20 in Thailand, Tk. 4.68 in Nigeria, Tk. 6.61 in South Africa and Tk. 7.75 in Kenya.   

Mobile financial service providers, however, said that out of the total USSD revenue, 76 per cent is provided to the agents and distributors while the MFS providers receive only 14 per cent.

"USSD is an inbuilt service, which does not require much investment and should not create any major financial pressure for the mobile operators", an official of a major MFS provider told FE.

"Any change in the current pricing model may increase the cost of MFS services which would create additional pressure on the customers," he added.

Mobile financial services were launched in Bangladesh back in mid-2011 and since then, the platform has seen exponential growth among the large unbanked segment of the population.

More than Tk. 10 billion was transacted through MFS platforms on average per day back in June this year, Bangladesh Bank figures showed.    

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