What impact will BTRC’s punitive measures against mobile telcos for VoIP have on business confidence? BTRC announced today a new $25 million fine against Grameenphone (the second such fine against them in six months; as well as previous huge fines against Banglalink & Aktel) and court cases against preceding & current Grameenphone executives:
- Former GP officials: CEOs Eric Aas and Ola Ree, Technical Director Thor Randhaug, Chief Technical Officer Yogesh Sanjeev Malik, and Sales and Marketing Director Mehboob Chowdhury.
- Incumbent GP officials: Regulatory & Corporate Affairs Director Khalid Hasan, CTO Md Shafiqul Islam, Sales & Marketing Director Kafil HS Muyeed, CFO Md Aril Al Islam, Head of Revenue Assurance Espen Wiig Warendroph.
[Grameenphone+Telenor jump-started Bangladesh's mobile industry. Before Grameenphone entered, CityCell held a monopoly, each mobile phone cost a fortune, and a tiny market existed. Grameenphone entered and caused a paradigm shift. Their runaway success and double digit growth inspired the entry of other MNCs, and today there are 6 mobile operators and a total of 30 million+ mobile phones. Grameenphone has 16million+ subscribers]
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BTRC sues GP big guns for illegal VoIP links
Sun, Jan 27th, 2008 5:55 pm BdST
Liton Haider and Maruf Mallick
bdnews24.com Correspondents
Dhaka, Jan 27 (bdnews24.com) – The telecoms regulator has filed a case against Grameenphone’s (GP) two preceding chief executives and eight incumbent and former high officials of the company, charging them with involvement in illegal VoIP business.
GP, the country’s largest cell phone operator, and Malaysian mobile phone operator DiGi Telecommunications have been also accused of “conniving” with Bangladeshi internet service provider (ISP) AccessTel in the “punishable crime.”
Norwegian state-owned telecoms heavyweight Telenor owns major stakes in both GP and DiGi.
Sub-inspector Manzur Ali Khan of Gulshan Police Station has confirmed that Zian Shah Kabir, assistant director of Legal and Licensing Division of Bangladesh Telecommunication Regulatory Commission (BTRC), filed the case (No. 46) on Jan 16.
The former GP officials accused in the case are CEOs Eric Aas and Ola Ree, Technical Director Thor Randhaug, Chief Technical Officer Yogesh Sanjeev Malik, and Sales and Marketing Director Mehboob Chowdhury.
The accused incumbent GP officials are Regulatory and Corporate Affairs Director Khalid Hasan, Chief Technical Officer Md Shafiqul Islam, Sales and Marketing Director Kafil HS Muyeed, Chief Financial Officer Md Aril Al Islam and Head of Revenue Assurance Espen Wiig Warendroph.
The regulator is carrying out further investigation to start prosecution, another Gulshan police officer told bdnews24.com Sunday on condition of anonymity.
BTRC’s written complaint says that a taskforce composed of regulatory and law-enforcing officials along with technical experts raided GP’s headquarters in Gulshan on Dec 6, 2007.
It examined GP’s call records and found its network was connected with AccessTel through four E1 links. It alerted the investigators and they hunted GP’s internal records and emails from Dec 7-Dec 14 last year.
The probe revealed that GP’s expatriate and local high officials were involved in unscrupulous VoIP operations. It also found that Malaysian mobile phone provider DiGi had been GP’s overseas partner in the unlawful VoIP venture.
“The majority shareholder’s consent to such illegal international VoIP operations has become apparent to the probe committee,” the BTRC said in its written complaint to the police.
The regulator also spoke of GP’s deliberate non-cooperation with the Rapid Action Battalion (RAB).
GP’s Head of Revenue Assurance Espen Wiig Warendroph had verbally instructed his staff not to reveal the call records of a specific phone number to the elite crime buster. The number was found to have been used by AccessTel in VoIP call termination, BTRC said.
The investigators then retrieved emails of suspected foreign and local officials of GP. “It proves Grameenphone’s high ranking officials’ involvement in the illegal call termination business,” the regulator said.
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BTRC fines Grameenphone Tk 168.4 crore
Mon, Oct 8th, 2007 3:37 am BdST
Abu Saeed Khan
bdnews24.com Technology Editor
Dhaka, Oct 7 (bdnews24.com) — Bangladesh Telecommunication Regulatory Commission (BTRC) has penalised Grameenphone Tk 168.4 crore (about $25 million) for its “involvement in illegal (international) call termination activities”.
This is the first time the government has punished a mobile phone operator for violating the telecoms law. Earlier, RanksTel had paid Tk 14 crore to BTRC for the same offence.
“We won’t spare anybody regardless of his capacity if found involved in illegal call termination business,” BTRC chairman retired Major General Manzurul Alam told bdnews24.com Sunday.
“Grameenphone has already made partial payment of the aforesaid amount and the balance will be deposited to the exchequer shortly,” said the retired major general without disclosing the amount GP has paid by far.
But Grameenphone claimed it has paid “Compensation for revenues lost due to the use of Grameenphone subscriptions by some customers to illegally transfer international calls”.
“In this case, measures for monitoring general usage by certain customer groups could have prevented customers’ wrongful use of our products and thus loss of revenue for the government. Such measures are now being developed,” GP’s new CEO Anders Jensen said in a statement Sunday.
The government began a witch-hunt against the illegal overseas call terminators in early 2007. Leading fixed and mobile phone providers were found involved in the scam.
The RAB intelligence wing filed a case against Grameenphone with Ramna Police Station on Feb 13 alleging its involvement in illegal call termination business. Subsequently on May 31, BTRC sought an explanation from GP.
In reply on June 17, the operator pleaded not guilty but agreed to pay Tk 168.40 crore as fixed by BTRC for “the staggering loss suffered by the Government.”
In return, the regulator has also agreed to drop the charges against GP, officials said.
Sources said Grameenphone has struggled to convince its parent company Telenor about the payment of penalty. But BTRC remained unmoved and the Norwegian telecoms major finally gave up to the regulatory measure.
“We have settled it in only seven months and it has been possible as the matter has been settled out of the court,” Manzurul Alam told bdnews24.com.
The BTRC chairman said the legal process would have dragged the case for years and the government could never realise such a huge amount of cash from Grameenphone.
Alam said other mobile operators will be similarly penalised for their connection with illegal international call termination business.
“Our committee is talking to Aktel, Banglalink and CityCell about the amount each of them will pay to the government.”
Officials said Aktel and Banglalink had already agreed to the payable amount. But former foreign minister M Morshed Khan’s family-owned CityCell is yet to accept the amount that BTRC demands.
The regulatory crackdown coincided with a move by the government to issue international telecoms gateway licences where the fixed and mobile phone operators are not qualified to bid.
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Cutthroat competition forces GP overhaul
Sun, Jan 27th, 2008 3:04 pm BdST Maruf Mallick
bdnews24.com Telecoms Correspondent
Dhaka, Jan 27 (bdnews24.com) –The country’s largest cell phone operator Grameenphone (GP) has overhauled its operations ostensibly in an effort to improve efficiency as competition intensifies from rivals, especially from Orascom Telecom’s Banglalink which is growing at a faster pace.
The overhaul is meant to remove, according to GP, existing “organisational overlaps and to streamline functional activities” ahead of GP’s initial public offering, expected by June.
“We need to remove these overlaps in order to become more efficient, creating more focus and assigning clear responsibilities,” chief executive officer Anders Jensen said in a recent internal announcement.
“All our activities in the company will be targeted towards supporting sales and delivering a superior customer experience,” he said.
Jensen, previously an executive at the Swedish unit of Fornebu, Norway-based Telenor, apparently is feeling the pinch of fierce competition in the country’s burgeoning telecoms industry.
“We will make sure that we stay in the leading position. To do so we need to get fit to fight!” he said.
GP realigned the marketing division, now headed by Rubaba Dowla, who had earlier been pushed into the back office of customer services—away from the media limelight.
As part of what GP said was the interim divisional adjustment, the new business development unit has been placed under Dowla.
Laszlo Barta remains the director of sales and will also oversee “trade marketing” and “sales development”.
The customer service division, now headed by Arnfim Groven, includes inbound and outbound call centres, channel support, direct communication and knowledge and development.
In addition to his responsibilities as director of public relations, Syed Yamin Bakht will lead the corporate social responsibility department as CSR has been placed under the public relations division.
GP said the next level of adjustments will be outlined and completed by Feb 10.
In a Jan 16 announcement, Bangladesh Telecommunication Regulatory Commission said GP would go for a public offering on the capital market by June—a plan that came after a meeting between GP shareholders and the telecoms regulator.
GP—62 percent owned by Telenor, the largest phone company in the Nordic region and the remaining 38 percent by Grameen Telecom—was not specific on the percentage of shares meant for the capital market.
In an early statement, it said the percentage of shares could be 10 percent or even much less than that.
In an interview with Bloomberg, however, Jensen said the proposed stock offering would be the biggest ever in Bangladesh.
“There is strong interest from the owners for the IPO,” said Jensen. “There are practical things such as whether the Dhaka Stock Exchange can handle a deal of this size.”
GP’s business image was largely tainted by its alleged involvement in illegal VoIP business. Last year, the telecoms regulator fined GP Tk 168.4 crore for reportedly running the illegal VoIP business.
Only last month, that is in December, the Rapid Action Battalion raided GP headquarters and seized some corporate files after it was accused of supplying VoIP switches to AccessTel, which was running the outside-the-law business using the equipment.
GP’s chief executive vowed to deal with the rogue staffers with links to VoIP operations, but in spite of that assertion there has not been any clear statement yet from his company on this issue.
Reached by phone, Syed Yamin Bakht told bdnews24.com Saturday that the CEO would not comment on the issue.
“We will speak (to the media at the) right time,” Bakht said.
Apparently that “right time” has yet not arrived.
January 28th, 2008 at 12:32 am
If the accusations are true, I think this is a good move by the government to hold GP accountable for its deeds!
January 28th, 2008 at 3:54 am
Nobody is above law. Hats off to BTRC for taking such a bold step. There was a perception that these operators are too powerful and no one would touch them. Media is also shy in criticizing them. Now that BTRC is taking stocks, we might find out more about these companies.
January 28th, 2008 at 7:42 pm
gp takes the 1000 crore they earn every year out of the country and invest it elsewhere. With such high returns there should be more fines and more companies in the same market, the same way we have 60 banks in the same market.
January 29th, 2008 at 12:14 am
We have so many problems. Many of these are much more significant than VoIP business.
We are unable to keep rice price within peoples’ buying capacity. We are even unable to produce enough power. Nation’s export have plunged during the last year. Foreign investment is on hold. Political reform is stuck in the mud. So called anticorruption drive is going nowhere.
I do not understand, why, since day 1, this government is so over enthusiastic about VoIP? Why VoIP? What about coruption in health care sector? How many people have been fined so far for energy sector corruption?
Private telecommunication sector is vital for national economy. Our media/entertainment industry is totally dependent on them. Do anyone know that if Grameen stops its support, a whole TV channel, e.g. Channel I, will have to stop broadcasting from tomorrow? These telecommunication industry is the biggest white class job provider in Bangladesh.
Why so much undue focus to make everything right in VoIP business?
Is it because someone wants non government electronic media in Bangladesh to crumble?
Is it becasue someone won’t let an industry run with any retired Major Generals at the top positions?
Or is it because Sena Kalyan Sangstha, Bngladesh armed forces business wing do not want to have any competition in VoIP business?
January 29th, 2008 at 5:03 am
The analysis of E Bangladesh is worth reading.
http://www.e-bangladesh.org/2008/01/29/voip-scapegoats-and-protection-of-grey-operators/#more-408
January 29th, 2008 at 1:18 pm
Over 50 crores taka worth of VoIP equipment was confiscated, based on official news reports alone; the actual amount could be higher. Where did they all go?
And then suddenly there are businesses popping up offering international calls at incredibly low rates against all odds (lower dollar values, higher cost in international market etc).
There could be a connection between the two.
January 29th, 2008 at 11:45 pm
We are unable to keep rice price within peoples’ buying capacity.
Repeat after me: this is NOT the government’s fault. This is the fault of the craptacular grain harvests around the world this year, as well as the disasters that have struck the country over and over again in the last year.
You may shout conspiracy, incompetence and whatever else makes you seem populist, but in the end, there is no dodging the fundamental market economics. It sucks, and we must deal with it the best we can. To use these peoples’ suffering to further virtual handwringing is misguided and reprehensible.
January 30th, 2008 at 2:45 am
In that case, shouldn’t we have seen a steady increase in rice prices all year only, instead of the steady increase in rice prices, plus 25% raise in rice prices over a course of single week?
And what explains the even more incredible surge in vegetable oil prices?
January 30th, 2008 at 6:50 am
Lazarus89, the root causes of food price inflation are macroeconomic and global. I’ve argued as much in these places:
http://www.drishtipat.org/blog/2007/12/26/our-food-or-their-fuel/
http://dpwriters.wordpress.com/2007/11/05/on-agflation/
But this doesn’t mean the government is absolved of all responsibility.
1. The government is directly responsible for a set of spikes in the first few month after the coup. The so-called demolition of illegal establishment was a monumentally stupid policy decision in an already inflationary environment.
2. In addition to the impact on inflation, this disruption of the supply chain created other major problems. Let me give you a small example. There is no fixed produce bazaar in Uttara. Growers used to sell vegetable in the footpaths on Jasimuddin Road and Rabindra Sarani. On 17th Jan last year all the streetside vendors were shut down by the joint forces - I actually got to see it first hand. As it happens, many if not most Uttara inhabitants can afford to go to other areas for their vegetable. This is not the case for most people outside the bubble zone. We can shout evil politicians all we want, but we should really count ourselves lucky that there hasn’t been more violent outbreaks like August riots.
3. The macroeconomic causes of inflation were not even on the radar until the 2nd half of the year, something downright puzzling for a government supposedly headed by a Princeton trained central banker.
4. After the flood and definitely after Sidr, when it was obvious that the country is at risk of a major food shortfall, the government should have made use of all its ‘international development partner connections’ and arranged for food aid. Not food import, because that will just mean we’ll import inflation. We need food aid. What has happened so far? Nothing of substance it seems.
5. In the medium term, we need to raise agriculture productivity, and fertiliser has a role to play. As this post points out, there may be trouble on that front too:
http://www.drishtipat.org/blog/2007/12/03/recent-fertiliser-issues-whats-going-on/
6. If you cannot do anything in a crisis, one thing you absolutely never do is to announce publicly that ‘policymakers have nothing to do’.
And finally, to point this out is does not make one a populist. Not understanding these, however, does raise questions about one’s grasp of fundamental market economics.
January 30th, 2008 at 7:08 am
tacit please see this article from the New York Times. it talks specifically about rising vegetable oil prices globally.
there have been isolated riots over food prices in several countries so far - india, mexico, morocco, senegal and yemen. more coming, in all likelihood.
January 30th, 2008 at 7:25 am
Zubaer, yes ‘more coming, in all likelihood’. You and I get it, NYTimes gets it, and I have way too much respect for Princeton PhD programme to even think that the formal head of government doesn’t get it. So, what gives?
As I said, we should count ourselves lucky that there hasn’t been more violent outbreaks. But relying on luck is no policy.
January 30th, 2008 at 10:47 am
Well if you suggest that soaring of food prices should be the reason for violent outbreaks then in all poor countries people who can not afford to buy food should go for riots. But they don’t do it as it is not the solution to reduce the food price. In the present context of shortfall of food production all over the world, price is something which our government won’t be able to control unless there is enough production in our own country. Food aid has already been asked for by the present CTG but did not get good responses. To stop future soaring of prices all the government can do now is concentrating on increasing food production in our won country by subsidizing in the agricultural sectors.
January 30th, 2008 at 11:32 am
Rush
No one “should” go for riots for food prices. But desperate people don’t do rational acts either. Question is how not to push them off to that point where they are desperate enough to riot for food.
January 30th, 2008 at 11:41 am
Re. Post 12, how about soaring food prices AND a lack of opportunities to make a decent living AND corruption that makes the rich richer AND a complete disregard for the well-being of the have-nots…
I could go on and on. How many reasons do you think people who cannot afford even food need to start resorting to violence?
And Jyoti Bhai, hats off to your sunny outlook…you still have respect for the Princeton PhD programme even after it crapped out George W.!
January 30th, 2008 at 2:25 pm
Also see the early analysis and warning signs from our in house economist Amer from back in June.
http://www.himalmag.com/2007/june/cover_feature_bangladesh_government_down.htm
January 30th, 2008 at 3:17 pm
Eating Dirt in Haiti. Quite literally. You wish this kind of story weren’t true, but it is. Quote: Rising prices and food shortages threaten the nation’s fragile stability, and the mud cookies are one of very few options the poorest people have to stave off hunger.
January 30th, 2008 at 5:02 pm
Hate to go back to the original issue and the question raised by Rumi (#4): Why after VoIP from Day 1?
Yes, your third explanation sounds quite on the mark. Another example of our army’s corruptions. As in every other practice, our army is following a Pakistani model for their own economy as well.
January 30th, 2008 at 10:17 pm
So (14),
Dubya got an MBA I think. Most top schools have some executive MBA programs with much more lenient academic standards. PhD programs are extremely competitive, and Princeton has one of the best macroeconomics programs in the world.
January 31st, 2008 at 1:05 pm
Ah, yes, Jyoti Bhai! W. doesn’t have a PhD. My bad. Uh, you don’t go to Princeton, by any chance, do you?
January 31st, 2008 at 1:37 pm
Bush went to Yale where he was a straight C student (never got an A in 4 years). Then got an MBA from Harvard. Not a Princetonian and definitely not PhD material.
January 31st, 2008 at 3:01 pm
My apologies to Princeton then. That was quite an awful thing I accused it of having done.
January 31st, 2008 at 3:05 pm
Ummm….mobile or BTRC anyone?
Somehow the discussion took a very diff turn.
So (#14), you thought Bush had a PhD? ROFL
I know it was an honest mistake on your part, but knowing W’s level of aptitude…it’s just too funny for some of us.
Thanks for this one. I’ll be cracking up rest of the day thinking about it.
Since the thread had digressed already, here’s a link on ‘W’ and some of his quotes:
http://www.slate.com/id/76886/
Enjoy…
January 31st, 2008 at 8:52 pm
Don’t worry So, I don’t go to Princeton.
January 31st, 2008 at 10:59 pm
I wonder about how these fines (one hundred fifty crores, one hundred sixty-five crores etc.) are calculated. Are they a certain percentage of an estimate of how much loss the treasure has incurred because of illegal VOIP operations? Are they some number multiplied by the number of total VOIP call made in a year by that company?
I ask because it’s worthwhile to note that so far, I think, the cellphone companies have gotten off by just paying the monetary fine; they have not had to face any legal action (until BTRC sent the notice to GP). So are the fines meant to be so large that they also substitute for any legal sentencing?
February 1st, 2008 at 3:26 pm
No, ZaFa, I didn’t really think Dubya had a PhD (based on academic merit anyway). I just forgot. As far as his level of aptitude goes though, he managed to make it to the Oval Office, so there’s no telling what a dumba** can achieve. America really IS the land of opportunity (expression of wide-eyed realisation)!
OK, we can go back to the VoIP stuff now.
March 8th, 2008 at 7:35 pm
I just thought it was shoking to find that Rumi thinks that it is ok for GP to use VoIP illegally and not pay tax. Just because they are one of the biggest employers doesn’t mean that they are above the law.
The were fined $25 million so what? If this issue was overlooked the country could have lost may be billions in tax in a few years time. And this is what is been happening to our country since independence. The country has lost billions in tax not being paid by the corrupt.
Yes there is a issue there where the money paid in tax is not being used properly. But that is a different scenario all together.
We should implement strict laws to fight such tax avoidance and may be if we can get our acts right, this money can go towards the development of our country and not in the pockets of the “patriot” politicians.