In the past, the Bangladesh Telegraph and Telephone Board (BTTB), which entered the market last week with a soft-launch of its service, has strongly suggested that it was going to offer cheaper cellular phone service.

Telecommunications Minister Aminul Haque had several times publicly announced that the state-operated cellphone service would be popular for its cheaper call tariff.

Even the prime minister while inaugurating the service on December 28 directed the BTTB officials to offer an affordable rate.

It is widely believed that fearing a drastic loss of business if the tariff was set too low, the private companies have played 'a role' in changing the minds of the government policymakers who finally approved the call rate and subscription fee.

Although the BTTB mobile call rate is between 25 percent and 35 percent lower than the private operators charge for zonal calls in the post-paid segment, BTTB's others charges are higher -- for instance, its monthly subscription charge is Tk 350, which is 29 percent higher than private operators'. At least one private operator now offers monthly subscription fee of Tk 250.

As the BTTB is yet to offer special packages that could include special rates for calling particular numbers of friends and family members, the customers of its pre-paid segment will also find the call charges higher, according to Bangladesh Telecommunications Regulatory Commission (BTRC), the telecom watchdog.

One local operator offers a rate of as low as Tk 0.75 per minute during off-peak hours for calling a customer-chosen phone of the same company.

The BTTB has offered a one-time subscription fee of Tk 4,500 for a SIM card without a phone, while at least two private operators offer connections with handset at Tk 4,000.

When asked about the high call tariff, senior officials of the telecoms ministry said the BTTB has been given the mandate to run the mobile phone project only as a 'commercially viable enterprise' and the government would not allocate more funds to run the company. The BTTB would not be commercially viable if it offered a lower rate, they believe.

The ministry has already established Teletalk Bangladesh Limited, a fully government owned company, to run the cellphone service.

Talking to The Daily Star, senior officials of the private operators said the cost of business especially in telecommunications service sector is higher in Bangladesh because of what they consider to be 'exorbitant' taxes on telecoms equipment. But telecoms experts believe the private operators are doing brisk business despite the high cost of business.

Private operators usually refrain from disclosing their financial statements to the press as those are not listed with the stock exchanges. But sources told The Daily Star that one private operator's net profit jumped more than 52 percent during 2003 while another company contributes 35 percent to the total revenue of its parent company abroad.

Inspired by the booming cellphone market, global telecommunication companies are considering buying stakes in Bangladesh companies because of the potential huge profitability. Egyptian Orascom has acquired Sheba Telecom, Nowregian Telenor increased its stake in GrameenPhone while SingTel is looking for stake in a company.

The parliamentary standing committee on the telecommunications ministry had recommended a lower call tariff for BTTB's mobile phone in order to create a competitive environment in the country's telecoms sector.

Many believe that lower call rates of BTTB could force the private operators to be competitive. Conversely, fixing a high call tariff for the state-owned mobile phone service would compel people to pay more in comparison to regional operators despite our low per capita income. Indian private operator Reliance, for example, offers a rate of Rs 0.40 per minute.

The World Bank, which had provided funds for the development of the country's telecommunications sector, did not favour the launching of a cellular phone by a public operator. It criticised BTTB for its non-corporate structure and substandard service and suggested restructuring.

The telecoms minister has however said that BTTB would revise the call tariff after a market study before its commercial launch in February.