Restructuring of BTTB, a debate to be triggered in year 2003

A.H.M. Shafiqul Islam

Director, Planning, BTTB.

1. Introduction.

Restructuring of Bangladesh Telegraph & Telephone Board (BTTB) is now a burning issue in the telecom sector of Bangladesh. Government of the Bangladesh (GOB) has set up a high power committee to work on restructuring of BTTB with no representative from BTTB. It appears that, the expertise of BTTB officials has not been given due importance in the recent process of restructuring. Any process or study on restructuring of BTTB without involving BTTB employees may jeopardize the merit of such process. This may lead to an uncomfortable situation among policy makers and employees of BTTB, which is undesirable in a transparent democratic environment. Because that may prevent to achieve defined goal. In the process of formulating a consensus restructuring option, participation of representatives from BTTB may be ensured and carefully evaluated opinions there in, other wise the process may create opportunity for vicious circle to reap their vested interest out of it.

 2. Benefit of government from state-owned telecom operators.

The state owned telecom operators can provide following benefits to the government:

  1. (i)                Government can retain control of the infrastructure for political, social, economic, and defense purposes.
  2. (ii)             Government owned telecom operators can extend telecommunications infrastructure throughout the country giving full coverage to vast rural areas where private operators are reluctant to invest due to less profitability.
  3. (iii)           Government can use profits from telecommunications to subsidies other government services.

3. Causes of inefficiency of state-owned telecom operators.

Generally the state owned telecom operators are often unable to operate efficiently. Because they lack the following:

  1. (i)    Financial and administrative autonomy.
  2. (ii)             Incentives for efficient operation and planning.
  3. (iii)           Management authority to attract and retain employee personnel.
  4. (iv)            Flexibility in competitive pricing and marketing.
  5. (v)               Access to capital market for resource mobilization.

4. Benefit of restructuring of government owned telecom operators.

World trend is to gradually restructure the government run telecom-operating agencies to enable it to run in competition with private telecom operators and to obtain a range of benefits. These benefits include.

  1. (i)               Ensuring adequate financial and administrative autonomy.
  2. (ii)             Enhancing capability of fund mobilization to meet need for development.
  3. (iii)          Increasing operating and overall efficiencies through application of more liberal personnel policies and more market-oriented procedures.
  4. (iv)            Enabling to pick up service flexibility in efficient way to keep in track with evolution of technology and changes of customers demand.

5.            Varieties of approaches to restructure government owned telecom operators.

Depending on socio-economic situations, nations take a variety of approaches in restructuring their government owned telecommunication operators. Some approaches include:

  1. (i)     Formation of a state enterprise (or a corporate body) that has a greater degree of autonomy than a government department.
  2. (ii)    Formation of a government-owned company with operational autonomy, but is still subject to some government restrictions.
  3. (iii)           Formation of a mixed-ownership enterprise that begins as a wholly state-owned entity but is gradually sold to private interests.
  4. (iv)            Collaboration between a public entity and a foreign company or consortium, often with the consortium assuming management control.
  5. (v)        Formation of a joint venture with a foreign company or consortium.
  6. (vi)            Use of a management contract with a suitable foreign company giving operational control over the enterprise.

            Any country can achieve restructuring in other ways as well.

6. Restructuring of government owned telecom operators in neighboring countries.

Telecommunication department in Bangladesh, Pakistan and India are inherited from the same department established in 1853 and were governed under the same Telegraph Act, 1885 and Wireless Telegraphy Act, 1933. The state-owned telecommunication department of Pakistan was reformed to a corporate body namely PTC (Pakistan Telecom Corporation) and afterward it has been reformed into a Government-owned company namely PTCL (Pakistan Telecommunications Company Ltd). The state-owned telecommunications department of India has been splitted into a number of government-owned companies namely BSNL (Bharatiya Shanchar Nigam Limited), VSNL (Videsh Shanchar Nigam Limited) and a number of MTNL (Mohanagar Telecom Nigam Limited). The state owned telecom department in Nepal and Srilanka were also converted to company structure.

7. Telecommunication Act of Bangladesh, 2001, a new era for BTTB.

Under the Telecommunication Act of Bangladesh 2001, the Bangladesh Telecommunication Regulatory Commission (BTRC) entered into operation on 31 January 2002. The role of regulator was shifted to the BTRC by the MOPT. Therefore since, 1st February 2002, BTTB totally lost its duopoly role and has become only a telecom service operator, like all other private-owned telecom operators. That is, BTTB, with its hands and feet tied very tightly by various GOB agencies and regulations, swim in the competitive pool of multi-operator scenario.

8. Restructuring of BTTB as mentioned in NTP 1998.

The government has adopted a National Telecom Policy (NTP) 1998. Clause 4.5 of the policy gives following guideline for the government regarding restructuring of BTTB.

  1. (i)                In order to make BTTB function effectively and commercially in competition with other private sector operators in the liberalised environment, the requisite administrative and adequate financial and commercial authorities shall be delegated to BTTB.
  2. (ii)             The Government anticipates a two-phase restructuring of BTTB.
    1. (a)  Phase-1 would be a corporatisation process in which it becomes limited company instead of being a department of the government.
    2. (b)   Phase-2 would be the full privatisation of BTTB at which point the government will have sold all of its outstanding shares to the private sector.
  3. (iii)           The possibility of engaging an internationally reputed foreign telephone company as strategic/management partner of BTTB will also be explored.  
  4. (iv)            BTTB will plan and prepare the staff standard, and administer its own staff structure.

9. Whether BTTB has to be restructured now?

The private telecommunication operators are functioning in Bangladesh for more than a decade. Hence, in order to survive in the competitive environment, there is no other option for BTTB but to restructure it. Main reason for restructuring BTTB is to improve its efficiency by overcoming lack of authorities of BTTB. It may be mentioned that BTTB ordinance of 1979 and regulations there of provide some authorities which BTTB could never exercised. Sufferings due to lack in exercising authority are as follows:

    1. i)      BTTB earns revenue, but all revenue goes to government exchequer.
    2. ii)    BTTB makes revenue surplus, but it cannot make budget with surplus revenue.
    3. iii) BTTB has to operate in competitive environment, but BTTB does not have authority to face competition.
    4. iv)   Expansion with new technology requires additional O&M and management manpower of suitable quality, but BTTB has no authority to create employment opportunity without                 inter ministerial decision.
    5. v)     Incentive for human resource is a prerequisite for modern telecommunications, but BTTB cannot provide incentive to its human resource as comparable to other private operators.
    6. vi)   BTTB works as captive under bureaucracy.

Under above circumstances, BTTB has to be restructured in a proper way and phases at the soonest possible time.

10. How to restructure BTTB?

Few options about restructuring steps are stated in the National Telecommunication Policy-1998 of GOB. Choice of the steps of restructuring process is dependent on political, social, institutional, commercial & economic situation prevailing in a country. Emphasis should also be given to consider general sentiment and working environment practiced by BTTB employees before choosing the course of restructuring steps. Tele-density and tele-access in Bangladesh is almost lowest in the world. There is a strong argument in favour of not privatizing BTTB until development of telecommunication infrastructure to cover entire Bangladesh, at least to ensure provision of access to telecommunication facility to common people at a comfortable distance over the entire rural area. In this respect, BTTB will allow private owned telecom operators and service providers to utilize BTTB infrastructure. BTTB has worst experience in the past during the period of 1975-1979 while status of this organization was converted from government department to a autonomous board without really having autonomy. Hence, this time any restructuring model to be chosen for BTTB must ensure full authority. Considering restructured BTTB as an apex body, a number of service category wise entities under BTTB may be organised as commercially independent to each other. Such service category-wise entities under the apex body would provide telecom facilities concerning metropolitan telephones, national telephones, national transmission network, overseas services, mobile phones and broadband data network etc. After restructuring of BTTB, empowering it with full authority, an internationally reputed foreign telephone operator company may be engaged by BTTB as strategic/management advisor of BTTB in order to strengthen of management quality. 

11. Actions required before restructuring of BTTB.

Whatsever form of restructuring will be achieved, few additional efforts are necessary before restructuring of BTTB. Some actions relating to establishment of updated MIS, to develop awareness about restructuring, and to prepare related TAPP are necessary.

11.1 Development of MIS database.

MIS data base which are pertinent for restructuring BTTB are necessary to develop beforehand. Some are listed below:

  1. (i)               Audited balance sheet containing yearly business profile.
  2. (ii)             List and cost of land, building etc.
  3. (iii)          List and cost of equipment and ancillary including information on procurement time and life time.
  4. (iv)            Updating numbering plan, network plan, signaling plan, transmission plan and frequency plan.

11.2     Restructuring BTTB staff standard to work in competitive pool.

BTTB staff standard does not commensurate to serve in a competitive environment. Following actions are necessary on this regard:

  1. (i)               Consultants have to be engaged to determine the number and requirement of new categories of staff to meet demand for new services and competitiveness.
  2. (ii)             Consultant will propose a draft staff standard containing number, type, responsibility and remuneration etc.

11.3    To Develop awareness about restructuring of BTTB.

It is necessary to raise awareness of BTTB employees about necessity of  restructuring and benefits would be available from restructuring of BTTB. Some steps to be taken are:

  1. (i)               To organise training, seminars and workshop etc.
  2. (ii)             To organise study tour for BTTB executives and representatives from different service category groups of BTTB.

11.4 Preparation of Technical Assistance Project Paper (TAPP)

At least two Technical Assistance Project Papers (TAPP) should be prepared for implementation before BTTB restructuring will be activated.

  1. (i)               A TAPP on using expertise to streamline and strengthen the HRD and MIS processes of BTTB, in order to enable it to run more efficiently in the competitive multi-operator environment
  2. (ii)             A TAPP on using expertise for making detail study on restructuring of BTTB and proposing solutions after consultations with all concerned.

12.            Triggering debate on restructuring of BTTB.

Debate, to some extent has been triggered recently by a number of BTTB employees union through launching programs to resist government initiative to restructure BTTB. Considering world trend on restructuring of government owned telecom operators and in view of the policy stated in the NTP 1998 about restructuring of BTTB it may easily be understood that restructuring by any means of BTTB is inevitable. Many BTTB employees in mass are afraid of loosing their jobs, if BTTB is restructured. Officers are afraid of loosing their status, specially those who are member of BCS Telecom Cadre. Similar situation was prevailed in India, Malaysia, Nepal, Pakistan and Srilanka during the juncture of restructuring of government owned incumbent telecom operators in those countries. It is necessary to learn about them by studying the reformation steps they have followed and by visiting those countries to conceive their experiences in depth. Such pragmatic study and direct exchange of views would be feasible through implementation of some related Technical Assistance Projects. Under present circumstances BCS Telecom Samity, and BTTB employees under different trade unions must give thoughts and arrange open discussion and debate to ensure survival of BTTB in a suitable and acceptable restructured form. Otherwise, some undesirable solutions, dictated by powerful lobbies, even from outside the country, may be pushed down our unwilling throat. In general, the issue of restructuring of BTTB should be attended by the representatives from BTTB, MOPT and a panel of knowledgeable consultants. But, overall, if BTTB wants to survive, it must restructure itself. 

  1. 13.             Conclusion.
  1. (i)                 Extensive study, in depth discussion and debate should be arranged in BTTB to reach in a suitable and amicable solution for restructuring of BTTB.
  2. (ii)               BTTB must be restructured in phases with adequate authority to function effectively in competition with other private operators.
  3. (iii)            BTTB must play an important role in the process of restructuring itself. For this purpose BTTB will implement some Technical Assistance Projects..
  4. (iv)              In first phase of restructuring, BTTB should be allowed to run as government owned telecom operator in all disciplines of telecom services to extend telecommunication infrastructure throughout the entire Bangladesh to ensure government policy to reach tele-access facility to every where.
  5. (v)                BTTB will function as a telecom operator and also will function as a facility provider to other telecom operators and service providers.
  6. (vi)              In restructured BTTB the presently offered telecom services may be grouped into different categories, each categories being made to operate as a commercially independent entity.
  7. (vii)           BTTB, after restructuring may engage an internationally reputed foreign telecom operator company as strategic/management advisor to improve its efficiency,effectiveness and management quality.