Demand for Overseas Tele-communication Services in Bangladesh: An Analysis of Pooled Cross-Section and Time-Series Data

The demand for Tele-communication Services in Bangladesh has been increasing over time. Both outgoing and incoming overseas calls increased at annual average growth rates of about 25.84 and 25.39 per cent, respectively, during 1989-96 period (see Table-I). In FY 1996, incoming calls constituted about 83 per cent (138.5 million minutes out of 167.80 million) of the total number of overseas calls. Its share remained more or less similar during the past eight years. The net foreign exchange earnings was about Tk. 253.29 crores during FY 1996 and annual growth rates of revenue were 17.7 and 28.4 per cent, respectively, during FYs 1995 and 1996. Sources of foreign exchange earnings by the Bangladesh Telegraph and Telephone Board (BTTB) are the overseas incoming calls for which it earns 50 per cent of the Total Accounting Rates (TARs) per minute fixed mutually. TAR is generally fixed in terms of SDR and is mutual and bilateral agreement of settlements of accounts of telephone charges between two operators. For outgoing calls, a collection charge for each minute called is fixed for each overseas destination which forms the gross revenue but BTTB also pays 50 per cent of the TAR to the overseas operator of that destination. Both collection charges and TARs vary across overseas destination depending on distance and the nature of traffic communication (direct or transit).