Unilateral liberalisation of services: a case study of the mobile phone sector in Bangladesh

Unilateral liberalisation of trade in goods and services has been considered an important policy objective. Most trade in services liberalisation in the developing world has taken place unilaterally; but it is not common among Least Developed Countries (LDCs). Among LDCs Bangladesh is a forerunner in pursuing unilateral liberalisation of mobile telephone services. There is a dearth of empirical studies on Bangladesh’s unilateral liberalisation of mobile phone services and its impact on users. Furthermore, no scholarly studies are known on the influence of unilateral liberalisation on undertaking binding liberalisation obligations under the General Agreement on Trade in Services (GATS) framework of the World Trade Organisation. This study examined factors that motivated Bangladesh’s unilateral liberalisation of mobile phone service and its impact on users. It also investigated how unilateral liberalisation influenced Bangladesh to undertake binding liberalisation commitments under the GATS. The study applied a qualitative research design to address the research questions. Primary data were obtained from three different sources: informants from mobile phone firms, senior managers across the six mobile phone firms, trade experts, telecommunications analysts, policy makers, the telecommunications regulator, public officials and private sector representatives. Focus group discussions with different mobile phone users were conducted to determine the impact of unilateral liberalisation of mobile services. In the first 6-7 years after unilateral liberalisation of the sector, there was a lack of competition, mobile phone tariffs were high, quality of service was unsatisfactory, and the diversity of services was limited, which affected the growth of the sector. The competitive landscape of the sector changed dramatically after the state-owned firm and another large private operator commenced mobile phone service operations in 2005. Stiff competition took hold, which resulted in cheap and easy accessibility, a drastic reduction in mobile phone tariffs, and improved quality and variety of services. The main implications of the study are: (1) An unfettered market is detrimental to consumer benefits. A powerful independent regulatory body, which is held accountable for its actions, is needed for a free market to operate in the broader public interest; (2) Unilateral liberalisation is a ‘necessary condition’ and provided a foundation for the government of Bangladesh to undertake binding liberalisation commitments under WTO GATS