Why Banglalion WiMax Failed in Bangladesh?

REPORT WHY FAILED

February 28, 2022
 

The journey of WiMAX in Bangladesh started in 2008 with organizations like Banglalion
and Qubee. Shortly after the launch of this new technology, it became one of the means for
surfing the Internet in Bangladesh. Among these companies, Banglalion used to serve
enterprises or businesses as well as individual consumers. According to The Daily Star, even
in June 2013, the number of Banglalion users in the country was around 4 lakh. However, in
2021, Banglalion’s license was revoked and this wireless internet connection provider was
officially shut down. But what exactly caused this popular service provider’s failure to run its
operations?

Overview of Banglalion

In 2008, Banglalion Communication LTD, a subsidiary of Sunman Group, started operating

as a wireless broadband internet connection provider using WiMax technology by obtaining a
Broadband Wireless Access (BWA) license from BTRC. In the first three years of its
journey, the company became very popular in Bangladesh with about three and a half lakh
users. Subsequently, at the end of 2012, Banglalion started working for its business expansion
in 30 major districts of the country including 7 divisional headquarters. But, these activities
of Banglalion did not last long, but however in August 2013 the number of users of the
service came down to 1 lakh 83 thousand 960 users only. By 2018, the number has dropped
to 28,619. According to BWA guidelines, WiMAX operators were instructed to expand their
coverage in 64 districts, even in upazilas and villages, within five years of obtaining a license.
Despite achieving some of the standards, the company did not reach the 5 lacs user base
milestone in its first five years of operation. Meanwhile, according to a source in Independent
BD, by 2016, the dues of Banglalion to BTRC amounted to Tk 62.62 crore. Another WiMAX
provider, Qubee, and Banglalion signed a profit-sharing agreement in 2018, which resulted in
20,000 individual users joining Banglalion’s network. From this partnership, Banglalion
retained 70% of the revenue generated from Qubee customers. However, this did not change
the situation of Banglalion, but by 2019, the company’s dues increased to 152 crore. As a
result, BTRC was forced to block 95% of the bandwidth capacity of Banglalion.

In 2019, Banglalion had a due of 152 crore BDT

Hence, BTRC blocked 95% of the total bandwidth capacity of Banglalion

On the other hand, in December 2020, BTRC owed Banglalion about BDT 205.94 crore. In
an interview with Bangla Tribune, the Minister of Posts and Telecommunications, Mr.
Mostafa Jabbar, said that at present, Banglalion cannot afford to repay this loan, and it is
unlikely that it will be able to do so in future. As a result, despite the license being valid till
2023, Banglalion’s license was revoked. According to The Business Standard, BTRC is
going to file a case against Banglalion to recover the dues. Although the Minister of Posts
and Telecommunications, Mr. Mostafa Jabbar, announced earlier that the bandwidth allotted
to Banglalion will be cancelled and 5g bandwidth will be provided. According to The
Business Standard, the total investment in setting up Banglalion’s business was around BDT
450 crore. Of these, Banglalion borrowed BDT 171 crore from syndicate finance of nine
banks led by AB Bank, and raised another BDT 130 crore by issuing bonds. With the
revocation of Banglalion’s license, banks and NBFIs are trying to recover the loan amount
from the company where AB Bank is auctioning off the mortgaged property of the company
to recover the defaulted loan of BDT 139 crore.

In December 2020, Banglalion owed BTRC about BDT 205.94 crore

AB Bank is
auctioning off the mortgaged property of Banglalion to recover the defaulted loan of BDT
139 crore

Why Failed?

Globally Declining WiMax Sector

According to Silicon, WiMax’s journey began in 2001, but its popularity grew worldwide
between 2005-2010. However, as its popularity began to wane since 2010, WiMax began to
decline commercially in the USA in 2011. On the other hand, WiMax’s journey in
Bangladesh started in 2008, when the popularity of WiMAX around the world was slowly
declining. In an interview with The Daily Star, Banglalion’s Head of Marketing and
Communication, GM Faruk Khan said that, by that time, the manufacture of WiMax-related
equipment had also ceased. When WiMax’s essential equipment supply is cut off, it becomes
very difficult for the company to maintain and operate their network system. Banglalion also
attempted to introduce new technologies to run the company at that time by generating fresh
investment by issuing bonds. However, when new technology drove high-speed mobile
internet connections and broadband networks more available to the general public,
Banglalion struggled to stay afloat with its antiquated WiMax technology.

The journey of WiMax began in 2001 and its popularity grew worldwide between 2005-2010

Failed to Network Upgrade

In 2013, the journey of 3G mobile internet technology started for the first time in Bangladesh
with the collaboration of TeleTalk. Gradually all the other mobile operators launched their
3G network and the adoption rate of mobile internet in Bangladesh started increasing very
fast. According to The Daily Star, WiMax operators such as Banglalion only offered service
in a few select regions, such as urban areas. On the other hand, mobile operators already had
extensive 2G network coverage and a huge customer base across the country, so it was
relatively easy for them to expand 3G network coverage across the country. In addition to
that, whereas WiMAX needed a separate device to connect to the Internet, 3G technology
provided faster Internet access through just a mobile device. As a result, customer retention
has become quite challenging for WiMAX operators like Banglalion. According to the Dhaka
Tribune, in 2013, BTRC granted Banglalion a Long Term Evolution or LTE license to
compete with 3G technology. LTE is basically a service similar to 4G cellular broadband
internet service which is faster than WiMax. But according to The Business Standard,
Banglalion also failed to utilize ‘LTE’ due to the required upgraded technology. After so
much investment in WiMax technology, re-investing in new technology was quite
challenging for the company. In addition, to avail the LTE service, Banglalion users had to
switch to a new modem which was somewhat inconvenient for the subscribers. Besides,
when mobile operators launched 4G technology in February 2018, users stopped using
Banglalion’s wireless broadband service completely. At the same time, when the adoption of
broadband internet in the country continues to increase, it becomes almost impossible for
Banglalion to maintain its subscriber base.

he journey of 3G mobile internet technology started with the collaboration of Teletalk in

2013

Customers began to migrate to 3G & 4G internet services as it is less expensive than WiMax

Lack of Cost Competitiveness

According to The Business Standard, while the International Spectrum Rate is BDT 80 crore,
Banglalion purchased a 35-megahertz Spectrum in BDT 215 crore from the BTRC at three
times more price. To recover these substantial investments, Banglalion charged their users far
more than mobile operators and other broadband providers. As a result, users have begun to
migrate toward 3G and 4G internet services, which are less expensive than their wireless
internet service provider. As a result, Banglalion’s user base steadily declined.

Failed Collaboration

GM Farouk Khan, Head of Marketing and Communications at Banglalion, stated in an

interview with The Daily Star in 2019 that the company’s customer base was lower at the
time, but the spectrum was much broader. On the other hand, mobile operators had a wide
customer base but insufficient spectrum. Therefore, the company wanted to continue business
through collaborations and partnerships with mobile operators. The collaboration between
Banglalion and mobile operators, however, failed due to regulatory issues. If Banglalion,
collaboration, and partnerships with mobile carriers had been successful, WiMax might easily
have maintained its position by providing a large market. Since Banglalion failed even at this
miserably, it became more difficult for the company to survive in the market with mobile
operators.