High-speed internet to become unaffordable for many

Broadband connections in the country will become costlier as the new budget imposed advanced-income tax for internet service providers (ISPs) and supplementary duty on fibre-optic cable imports , business insiders fear.

The additional tax would make high-speed internet unaffordable to low-income residents of outlying villages and would pose a challenge to the government’s “one country, one rate” initiative, they added.

In the budget for FY23, a 10 per cent advanced-income tax for ISPs and a 10 per cent supplementary duty on the import of fibre-optic cables were imposed.

According to the Bangladesh Telecommunication Regulatory Commission (BTRC), out of a total of 12.38 crore internet users in the country, 1 crore use broadband connections.

The telecom regulator in June last year set “one country, one rate” with a uniform monthly tariff of 5 Mbps for Tk 500, 10 Mbps for Tk 800, and 20 Mbps for Tk 1,200 in both urban and rural areas.

“It won’t be possible to implement the uniform tariff rate because the cost of providing the services would increase by 10 to 15 per cent at the retail level due to the budgetary measures,” said Emdadul Hoque, president of the Internet Service Providers Association of Bangladesh (ISPAB).

“We currently pay a 30 per cent corporate tax on our annual net profit, but now on top of that we have to pay 10 per cent advance income tax on our monthly revenue. We calculate our profit annually; if we pay this 10 per cent advance, we won’t be able to continue operating because most ISP companies today don’t make enough from their monthly operations,” he added.

“The ISP business relies heavily on the import of fibre-optic cables. More than 60 per cent of fibre-optic cables are imported as the quality of our locally manufactured alternatives is not up to the mark,” he also added. “The 10 per cent supplementary duty would make importing fibre-optic cables much costlier, on top of the rise in freight charges and dollar prices,” he said.

“Internet services have not been included in the list of IT-enabled Services (ITeS) despite being the primary ingredient of Digital Bangladesh, which would have exempted ISPs of the 10 per cent advanced-income tax making broadband services much cheaper,” he said with frustration.

Asked if mobile phone operators could meet the local demand for internet, he said, ISPs offer 20 Mbps bandwidth to 1.3 crore users, while mobile operators provide the same to 12 crore. Therefore, it is impossible for mobile phone operators to provide unlimited packages at such low prices and in such large volumes.

Echoing the ISPs, Fahim Mashroor, CEO of Bdjobs.com, said, “The fresh taxes and duties imposed on the broadband internet sector will ultimately result in an increase in retail internet prices. The hardest hit will be those who live in villages and intend to use broadband internet. The new policy might undermine the ‘one country, one rate’ plan.”

“Although mobile data is relatively less expensive, the speed is usually much slower than promised. Although BTRC has set a minimum speed of 7 Mbps, mobile phone operators cannot provide it. In the meantime, broadband ISPs are performing significantly better in this regard,” said Mahiuddin Ahmed, president of the Bangladesh Mobile Phone Consumers Association (BMPCA).

“Internet packages should be divided into three categories, commercial, industrial, and household, to ensure structured need-based rates,” he suggested.

Md Solaiman, a freelancer from Manikganj, said, “I recently got a broadband internet connection at home; my local ISP charged me about Tk 3,000 for the connection and one month’s advance. I used to be able to get a comparable package in Dhaka for Tk 1,500.”

“I got broadband as I need a high-speed internet connection for my work, which cell networks cannot offer. Freelancers generally use broadband internet as it gives unlimited bandwidth with no validity barriers,” he added.

Solaiman went on to say that in his village, many of his friends want to do freelance work online but are hesitant to start due to the high internet costs. “If the price of broadband internet in the country goes up further, these potential remittance earners will never get the chance to realise their dream.”

Speaking on the issue, Posts and Telecommunications Minister Mustafa Jabbar said, “Most local ISPs always had a tendency to pass the tax burden on to consumers. ISPs must nevertheless pay taxes, just like any other legally operating business. It’s just that they will now pay an additional 10 per cent advanced-income tax every month.”

Meanwhile, BTRC does not have any plans for reviewing or reconsidering the “one country, one rate” plan, Mustafa Jabbar added.