Lately the mobile phone market began expanding downwards targeting the potential among the lower income people. Explosion is the keyword to characterise the way it happened since competition was introduced in the market during 1996-97.

GrameenPhone had a 2.4 million clientele until December 2004. Therefore, its seven years' average annual intake is 343,000 customers. GrameenPhone posted record sales of 1.10 million subscribers within just first five months of 2005. It is more than thrice of its annual average.

AKTEL's average annual intake in seven years is 143,000 and it had one million subscribers until December 2004. AKTEL added more than 800,000 new clients during the first five months of this year. This is nearly six times higher than its average annual intake.

Banglalink took over Sheba's operations, with 25,000 clients, in December 2004. The new entrant bagged more than 400,000 customers from January to May 2005. It is needless to assess the Egyptian conglomerate's success.

CityCell had 345,000 customers until last year. It had to restrain the network expansion due to the share transfer negotiation with SingTel. CityCell sold 25,000 connections between January and May of this year.

Therefore, our cellular mobile industry's total intake is 3.77 million subscribers between March 1997 and December 2004. It represents an average monthly intake of 40,600 customers over the period of 93 months.

The industry has also acquired 2.325 million customers between January and May 2005. It represents an average monthly intake of 465,000 customers during the first five months of this year only. It is nearly 12 times more than the monthly average intake of the preceding years. Such exponential growth is attributed to the belated competition among the operators.

Call charges were reduced up to 35 percent (Tk 2.37 per minute for mobile-to-mobile call). Handset prices were slashed up to 40 percent (Tk 4,100 for a new and Tk 1,200 for a used handset). Connection charges nosedived by an unprecedented 80 percent (Tk 200 for a mobile-to-mobile connection)!

No regulatory initiative but the market itself has caused this beginning of the end. The operators unbundled their packages and started selling SIM cards (connections) only. It liberated the consumers from the historical compulsion of subscribing connections along with handsets, stipulated by the operators.

Our government, which has no clue to the dynamics of mobile phone market, has decided to end the subscribers' liberty. Slashing Tk 1,200 tax from the handsets and loading the same amount on connection fees was proposed in the national budget. The argument is shifting of tax from handset to connection will not affect the total price.

It immediately raised a million-dollar question-- total price of what? The fumbled answer was total price of connection bundled with handset. What a joke! Long gone are the days of selling the artificially bundled packages of handset and connection.

Handset and connection are totally different from each other by any standard. Handset is an off-the-shelf gadget having specific technical and financial lifecycle. The older the version, the cheaper is the price and there is a market of used handsets too. Handset is a transferable asset.

On the contrary, connection is entirely an operator-specific service provision. It determines the levels of services to be provided. Unlike handsets, end-users never possess the connections. Ill-fated users may lose handsets but never lose connections.

Value of a connection never gets amortised regardless of its age. A connection, however, becomes valueless if the provider disconnects it for specific reasons. Connection is a non-transferable asset.

Therefore, the government's plausible tax-waiving from mobile handsets has instantaneously lost its appeal due to transforming that concession into a penalty for new subscription. Who gets punished? Certainly the millions of lower-income segment of population who are yet to be connected.

The government's insignificant reduction (from Tk 1,200 to Tk 900) of this impractical tax is a practical joke. Because each new customer will have to pay, at least, Tk 900 even if an operator offers the subscriptions free!

The government pretends it is desperate to build a healthy internal revenue base. According to a press report, there are 235 multimillionaire officials in the National Board of Revenue (NBR). This department is, incidentally, under the finance ministry. The finance minister has provisioned a magical money whitening detergent in this budget. Housekeeping comes first. The rest can wait.

The writer is a telecoms analyst.