No reprieve for Summit over Tk 3cr bandwidth pricing fine

The telecom regulator has upheld a Tk 3 crore administrative fine on Summit Communications Ltd, the country’s largest telecom infrastructure operator, after concluding it engaged in discriminatory bandwidth pricing.

At a recent meeting, the Bangladesh Telecommunication Regulatory Commission (BTRC) has decided to issue a formal notice instructing Summit to deposit the penalty with the regulator’s Finance, Accounts and Revenue Division within 10 working days.

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The decisions were taken after reviewing a hearing report, following Summit’s challenge to the fine originally imposed last year, according to minutes of the meeting.

An investigation found that Summit charged its own International Internet Gateway (IIG) business an average of Tk 8 per Mbps for bandwidth, while charging other IIG operators an average of Tk 196.65 per Mbps, a gap officials described as “clearly discriminatory”.

The commission’s decision follows months of regulatory proceedings after inspections at Summit’s Dhaka headquarters and its Terrestrial Cable Landing Station (TCLS) in Benapole, Jashore.

As an International Terrestrial Cable (ITC) operator, Summit imports internet bandwidth from India and sells it to its affiliated IIG at prices significantly lower than competitors. As BTRC collects revenue sharing based on operators’ earnings, a lower transfer price reduces the government’s revenue.

Bangladesh’s international bandwidth flows from submarine cables or ITCs to IIGs, then through Nationwide Telecommunication Transmission Network (NTTN) operators to mobile operators and ISPs before reaching consumers. BTRC collects revenue sharing at multiple stages of this value chain.

Based on its inspection findings, the commission imposed the Tk 3 crore fine in early May last year. Summit, in response, sought a waiver and requested meetings with the regulator, prompting a series of review proceedings.

The commission first appointed a deputy director to review the appeal. After examining the case, the officer recommended upholding the penalty. Summit appealed again without paying, after which the commission appointed Commissioner (Engineering and Operations) Brig Gen (Retd) Iqbal Ahmed to conduct a fresh hearing involving both the inspection team and the company.

According to the commission’s meeting documents, the hearing officer found that Summit acknowledged the government was entitled to revenue sharing from bandwidth its ITC business supplied to its own IIG operation.

The company claimed it had been sharing such revenue based on verbal instructions from BTRC, but it could not produce any written directive or regulatory decision supporting the claim.

The hearing officer rejected Summit’s argument that no approved tariff existed for ITC operators at the time, finding the pricing violated Sections 29(Ga) and 50(1) of the Bangladesh Telecommunication Regulation Act, 2001, as well as relevant provisions of the Competition Act, 2012.

The report also noted that ITC licensing guidelines do not permit operators to provide services without commission-approved tariffs.

The report further found that although Summit operates both its ITC and IIG businesses under the same Tax Identification Number and Business Identification Number, it was still required to maintain separate revenue accounts, since the two licences carry different revenue-sharing obligations.

The hearing officer found no violations of the Infrastructure Sharing Guidelines during the inspection.

In his recommendations, Brig Gen (Retd) Iqbal endorsed the findings that Summit had breached telecommunications law, but noted the company had apologised for the violations and suggested the penalty could be reconsidered. After reviewing the report, however, the commission decided to reinstate the fine in full.

The commissioner confirmed to The Daily Star that the commission had decided to uphold the fine.

Summit Communications told this newspaper that as of yesterday, it has not yet received any official communication from BTRC regarding the reinstatement of the fine.

The company said it had clearly stated its grounds during the BTRC hearing -- that the penalty does not correctly reflect the applicable laws or factual circumstances.

“If BTRC nevertheless decides to uphold the penalty, we will pursue legal recourse available to us under the Bangladesh Telecommunication Act, 2001 and/or any applicable laws,” it said.

Noting that its ITC and IIG licences are held by the same legal entity, Summit argued that the provisioning of bandwidth between the two businesses is an internal allocation, not a commercial sale between independent entities.

“Till date BTRC has never approved any tariff or pricing methodology for bandwidth sale or allocation from ITC to IIG. In the absence of such regulatory guidance, Summit adopted the prevailing industry practice following the discussion and decision taken at the BTRC meeting held on 5 May 2021,” the company said.

The company also stated that it had reported the relevant information through the DIS Portal and paid applicable revenue sharing throughout.

“Summit acted on full transparency and after due consultation with BTRC,” it said, adding that when BTRC later took the position that such internal allocation should be based on market rate, the company complied immediately “to demonstrate our continued commitment to regulatory compliance.”

“In the absence of any BTRC approved tariff or prescribed pricing methodology for ITC to IIG bandwidth provisioning, we follow the prevailing industry practice,” it further said.

BTRC officials, speaking on condition of anonymity, said that although the ITC and IIG businesses are part of the same legal entity, they are required to hold separate licences for different services, each operating under a different regulatory framework.

“The so-called industry practice was improper. It has now been uncovered, and those involved have been penalised. No previous commissions had dared to investigate these practices before the fall of the previous government,” one official said.