Business Environment of Cyber cafe and its impact on society in Dhaka city (A Sociological study)
To analyze the External environment (Both market and Non-market) of the industryBusiness Environment of Cyber Cafe
and its impact on society in Dhaka City Introduction
This report has been prepared for the Course-403 (Qualitative analysis of social data) Department of sociology University of Dhaka. as assigned by course Instructor Prof. Dr. Mahbuba Nasrin. The report would definitely enhance knowledge of students and facilitate understanding of the subject matter.

Objectives of the Report
The objective of the report is to analyze the external environmental factors affecting the Cyber Café industry of Bangladesh, and its impact on society in Bangladesh. The objectives are listed bellow:

  • To identify Issues, Interest, Institution and Information regarding the industry
  • To identify opportunities that Cyber Café industry can exploit
  • To identify threats this could minimize the profitability of the industry
  • Various impact on society

Scope of the Report
The scope of the study of Cyber Café of Bangladesh was very limited due to time constant and lack of resources (lack of sufficient data). We have taken only five respondents from five different Cyber Cafés for our study and all are from Dhaka city.

Type of Research:
In this study, exploratory research was undertaken to gain insights and understanding of the overall Cyber Cafe industry and also to determine the environmental factors surrounding it. After the analysis, a conclusive research was undertaken to fulfill the main purpose of the study.
Sources of Information
We have collected primary information by interviewing employees, managers by making a questionnaire and also by observing various organizational procedures, structures, and directly communicating with the customers. We have elaborated different types of secondary data in our research from various external sources. Among the sources that we have used, there are different sources of Internet, different books and periodicals related to the subject.

Data Collecting Instruments
In-depth interview: During the exploratory research, in-depth interviews were conducted with various managers, employees & customers of Cyber Café.
Questionnaire: We have prepared a questionnaire which leads us to a systematic way of data collecting. We had visited few cyber café in Dhaka city and asked questions from our questionnaire.


  • Time frame for the research was very limited. The actual survey was done within two months.
  • Large-scale research was not possible due to political instability, monetary constraints and transportation inconvenience.
  • The research only covers the customers of Dhaka city. Due to cost and infrastructure limitations Chittagong and other major area was not physically covered.
  • Part of industry characteristics was written from individual’s perception and may vary from person to person.
  • In many cases, up to date information is not published and therefore not incorporated in this report
  • To get and to acquaint information regarding the competitors was difficult and was also very limited in scope.
  • The topic of the report was related to the technology which we have less exposure and we had difficulties to explain all the technological terms.
Chapter II: Background
Dramatic changes have taken place in our lives after the invention of computers and improvement in digital technology and communication systems. The business community and individuals to creating, transmitting and storing information in the electronic form instead of traditional paper documents .Information stored in electronic form is easier, cheaper, much less time-consuming and less cumbersome than storage in paper documents. Information stored in electronic form is also easier to retrieve and speedier to communicate. As the blessings of technology is not yet within the reach of common people, Cyber Café can deliver cutting edge technical solutions for clients and thereby can bridges the gap between technology and the common people.What a Cyber café is?
The first Cafeteria was found in the Egyptian city of Cairo in the 11th century. People have likings for café from very early days. They like to spend some times gossiping with friends with a cup of tea or coffee. The world has changed and people have become busier and remain on the move most of the time. But being informed and maintaining communication is still needed. Cyber Café’s is a place or network of computers with broadband internet connection for the purpose of satisfying customers need for communication and information with the exchange of money. Internet cafés, or cyber cafés, have created a popular and affordable way to access the Internet and to send and receive e-mails. It is very popular with travelers and people on the move; they also provide opportunities for relaxing and socializing.

The introduction of cyber café has enabled us to go online even though we have no internet connection and telephone line. More interestingly, we even don’t need to have a computer of our own. Cyber café has initiated a new culture and injected some new value to our culture. It has been rightly said that “drink, surf and be marry”. One can enjoy of talking or communicating his or her friend with a cup of coffee in hand in a cyber café. The philosophy of cyber café is to create an atmosphere where user will feel homely, have privacy and feel free.

Facilities / Service
The facilities provided by the Cyber Café can be divided into two parts: Facility based service and Field based service.

  • Facility Based Service     
  • Browsing Facilities – Most of the Cyber Cafés provide browsing facility from 8am-10pm in the evening. Moreover, they provide home connection for even 24 hours.
  • Mailing – Traditional letter has been replaced by Electronic Mail (E-mail). From our visit to the cyber café, we have found that most of the user goes to cyber café to be in touch with their friends, relatives and beloved one.
  • Chatting – Popularity of cyber café has been enhanced with the introduction of chat. Especially, young peoples love it. They find their match through the chat and could make friendship to a person from any part of the world.
  • Printing – Printing is another facility, which brings revenue for the cyber café. Cyber café situated in the academic arena does printing jobs most.
  • Scanning – Scanning is getting popularity in recent times. Cyber café provide scanning facilities to the customer
  • Uploading and downloading file – Those who need to download and upload file from the web are also welcome. Though the cyber cafés do not provide floppy disk drive in every workstation, anyone can use floppy through the network.
  • Field Based Service:
  • Home Connection – All the above-mentioned services are facilities based. They also provide field based service to the customers’ environment. Various cyber café provides home connection to their locality.
Service Process Flow Chart
As Bangladesh is not connected to the submarine cable, we get Internet connection through satellite link. Moreover, Bangladesh has no communication satellite of its own. We need to get bandwidth from other countries such as Thailand, Singapore and Hong Kong through VSAT.
Satellite Ground Station/HUB
(Hong Kong/Singapore/Thailand)
Cyber Cafe
Field Based Customers
Facility Based Customers
After getting bandwidth from the overseas vendors; local ISP sell it to their clients like Corporate, Cyber Café and Individual Subscribers. Cyber Café buys bandwidth from ISP with a cost of Tk.1, 100 per PC per month (As of 2004). They charge Tk.0.50-2.00 per minutes to the customers depending on the environment and service they provide.History of Cyber Café in Bangladesh
Internet came late in Bangladesh, with UUCP e-mail beginning in 1993 and IP (Internet Protocol) connectivity in 1996. By July 1997, there were an estimated 5,500 IP and UUCP accounts (Press, L., 1999) in the country and by the end of 2000 it has been forecasted that the account holder could reach more than 50,000 through different Internet Service Providers (ISP), who are offering Internet services with bandwidth ranging between 64Kbps and 2Mbps through VSAT, Broadband and Zacknet downlink. Cyber Café industry in Bangladesh is relatively new. The industry has started its journey during the last few years of the 20th century. The first cyber café in Bangladesh is, Dhanmondi Plaza (3rd floor) Road No.06 Dhanmondi, Dhaka 1205. It has been established in the year 1996 and has two more branches in Uttara and Baily Road. As of now, total number of cyber café in Dhaka city is around 270 and altogether 600 in the country.

Non-market Issues
Few non-market issues rocked the cyber café industry over the year. These issues have multiplier effect in deciding the fate of the industry. Industry has defended few of them successfully and rests were attended poorly. Some of the burning issues are as follows;
Privacy: Privacy issue came forth with the allegation that few cyber café interrupt privacy of the customers. Some of the young customers browse porno web sites along with their partners and involve in objectionable behavior. One periodicals “Shaptahic 2000” reported in 2002, March issue that some of the cyber café is equipped with candid camera and record proceedings of their customers. Allegedly they market those in CDs. Shaptahic 2000 came up with photograph and interview of few victims. This has generated panic in the customers mind and has shown reservation about cyber café’s.
Security: Security is another issue which the cyber café failed to attend timely. Women specially feel unsecured to go to cyber café in the evening. Cyber café owner failed to bost the confidence of the people. This is partly due to the deteriorating national law and order.
Speed: Speed of the internet connection has ruined the future of the cyber café industry. Most of the interviewee of our study has agreed that customer’s suffered severely while browsing in the cyber café and feel cheated. This is mainly due to the national technological environment and connectivity of more machines.

Environment Analysis
An environment consists of those factors that directly or indirectly influences the operation of the business and thereby determine the attractiveness of the industry. Environment has two dimensions: Market and Non-market.
Market Environment consists of those factors, which directly influences the operation of an individual firm. The objective of market environment analysis is to find out strengths and weaknesses of an organization to combat best against issues and threats generated from both the market and Non-market environment.

The objective of Non-market environment analysis is to identify strategic opportunities and threats in the industry’s operating environment. Three interrelated environments should be examined at this stage:

  • The Immediate or Industry Environment in which the Organization Operates
  • The National Environment, and
  • The wider Macro-environment/LE PEST C Analysis.
Industry Environment
Industry environment requires an assessment of the competitive structure of the organization’s industry, including the competitive position of the focal organizations and its major rivals, as well as the stage of industry development. Moreover, porters five forces model analysis would provide a better insight about the nature and structure of the industry. Before going in-depth, we have a graphical representation of porter’s model:Figure 3: Porter’s Five Forces Model
Bargaining Power of Supplier: Suppliers of the Cyber Café industry includes ISP’s, Governments, Creditors, and Public Utility Providers and so on. All of the above mentioned suppliers enjoyed tremendous power in this industry. Here we have discussed each of them in brief;
ISP’s: Cyber café depends on the ISP’s for their bandwidth. AS Bangladesh is not yet connected with the submarine cable connection, thereby the ISP’s fix charges for bandwidth as their will, sometimes with no concerns to the cyber café’s. Moreover, ISP’s don’t provide promised bandwidth all the time and the internet connection get slow. This is one of the reasons of declining the prospects of the industry.
Government: Though Bangladesh has entered in to the free market arena, still the government intervenes in to the business in many forms. Government is the sole provider of safety and security to the business which they have spectacularly failed to do.
Creditors and Banks: As the industry is showing no sign of improving, the financial institution and banks are showing no interest in this industry. Initially, Janata Bank had a special loan package for cyber café business; but now they have repealed that opportunity. Moreover, a person needed to be an IT educated to get that loan facilities. At present there is no special financial package for the cyber café industry. Other then this, corruption is another problem, which made it difficult for the investors to get access that loan. Red-tapeism is another problem in the way to easy access to the loan.

Bargaining power of Buyer’s:  Buyer’s are the least powerful similar to other industries of this country. Both the government and the owners of the cyber café’s are not aware of the buyer’s need. The environment and the service quality are so poor that the parents do not want to send their kids to the cyber café. Moreover, the staffs are so poorly trained and ill mannered that people do not feel comfortable to spend time out there.

Threats of Substitute Products: Over the year, home connection has increased and people start coming into cyber café’s in a small number. This reduction is due to many reasons. Mainly the reduced cost of broadband connection and lowering cost of computer and other communication tools are poising serious threats to the cyber café business. Last generation mobile phone and Lap top and Palm top computers are increasing in number and serving peoples communication needs in a better and convenient way.

Potential New Entrants: Potential new entrants in this industry are limited in number. The reason is the less profit and dull future of this industry. There are lots of telecenters in the Dhaka city which can turn into a cyber café with less or little effort.

Rivalry among Established Firms: Rivalry among established firms in this industry is intense. As we have said earlier that the profit margin is reducing and many firms have left the industry. Those who remain in the industry are fighting for the remaining market share which is shrinking day by day. The competition is creating cost pressure among the contestants.

Industry Structure
The investment required for this industry is not huge and thereby numbers of firms are also large in this industry. The entry barrier is low and there are no such obstacles that can prevent an entrepreneur to enter into this industry. If someone has required capital and willingness to do business is welcome. Moreover, the technological know-how is also little to run a cyber café. If a person knows how to operate a computer and log on to the Internet is sufficient to run a cyber café. At best, they only need to know the simple trouble shooting techniques to best operate the firm. So, the human resources required for this industry not necessarily required to be highly skilled and technologically educated.

There is also no dominance of one or two firms in this industry. Products are all similar and no or little scope of product differentiation. Price is also same to all firms. Moreover, the industry is locally concentrated to some areas and products are also localized as per the customer’s needs and wants. Adding some features with the existing products or extending the product line can only differentiate the product. There is little or no room for price increasing and decreasing.
Characteristics of Cyber Café Industry

  • Low barriers to Entry and Exit
  • Semi-skilled human resource
  • Small-scale industry and Low capital requirement
  • Locally concentrated firms
  • Fragmented industry and no supremacy of any single buyer
  • Private ownership
  • Less government restriction

Industry Life Cycle
Cyber café industry right now is at the declining stage in the industry life cycle. The attractiveness of this industry is less and the numbers of customers are reducing in a great number. The trend of declining customer has started in the early 2000 with the government relaxing tax on VSAT and on other computer accessories. The industry had started its journey with lot of expectation and enthusiasm in the mid 90’s. It has experienced bomb within 2 years of its introduction and then star declining during early 2000. Here we present the industry life cycle, which give a graphical representation of the industry:
1998     1999-’00     2001-


Figure 3: Cyber Café Industry Life Cycle

LE PEST C Analysis:
Macro environment analysis consists of examining the macroeconomic, Social, Political, Legal and Technological factors that might affect the organization.

        Legal                                                                                                 Competitive
          Ecological                                                                                      Technological

Political                     Social  

  • Legal Environment:
There need to have only a trade license from the city corporation to establish a cyber café. Otherwise, the legal requirement is less. Initially, the legal requirement was not favorable to the business. The government has realized that the IT and ICT sector can become the torch bearer of the development of the country and has taken initiative to make some laws regarding to the development of the IT and ICT sector of Bangladesh. Though, we have responded late to the quest of the IT development; gradually our legal environment is being amended in the channel of the development of IT industry. Government of Bangladesh constituted on 16 May 1983, a centrally institutionalized mechanism called the National Committee on Science and Technology (NCST) to perform the following functions:
Special IT Policy of Bangladesh Government
  • IT (Information Technology) declared a thrust sector
  • Government speedily implementing the 45 recommendations of JRC high powered committee for IT industry
  • Waiver of all taxes and duties from import of computer hardware and software thus increasing affordability and proliferation of PC use in general, a prerequisite for the IT powerhouse that Bangladesh of 140 million people with more than 30 million Science graduates wishes to become
  • Tax holiday for Software and IT services companies
  • Export over internet or other electronic media recognized under sales contract or agreement without any need for LCs
  • Simplified tax free export earning remittance procedures with 40% retention in foreign currency
  • Special funds allocated by government for extending collateral free loans to IT entrepreneurs
  • Deregulation of process of acquisition and use of VSAT to facilitate faster, cheaper and higher bandwidth connection and to encourage more widespread internet use than that being provided currently by 60 or so Internet Service Providers (ISPs)
  • Intellectual Property Rights law approved by President and has been enacted in the Parliament.
  • Ecological Environment:
Ecological environment is not important in this industry. As the industry is in the service industry, not poising any threats to the environment.
  • Political Environment:
The number one threat to any business in Bangladesh is the political instability and deteriorating law and order situation. There is no certainty that whether there will be a strike or not in the next day. Peoples have no security of their life and lack of trust on the law-enforcing agency due to high corruption and lack of resources. People need to come out of the home to take service from the cyber café, which is not risk free even in the daylight. Recent bomb blast has worsened the situation and exposed the cyber café industry one more time in to the hostile criticism.
The political norm of Bangladesh is that the opposition would boycott parliament session and government would have no initiative to bring them into the house. In the last 12-13 years we are observing more then 35-40 Hartal per year. As per the cyber café owner, Hartal is the number one criminal and they want immediately to stop this hartal culture. During Hartal, people don’t come to cyber café and prefer to stay at home. This has reduced the subscriber and thereby the profitability of the cyber café’s.
  • Economic Environment
The state of macroeconomic environment determines the general health and well being of the economy. This in turn, affects industry’s ability to earn an adequate rate of return. State of four most important factors in the macro economy is as follows;
  • Growth Rate of Economy (GDP): The GDP of Bangladesh is dancing around 4.5%-5.5% in the last few years. Thereby, the growth of the Cyber Café industry is also not visible.
  • Interest Rate: Recently, the government has reduced the interest rate from 11% to 6%. This decrease in the interest rate will generate more money and thereby create opportunities for investment in the cyber café industry.
  • Currency Exchange Rate: In the cyber café industry currency exchange rate is of significance. The cyber café purchase their bandwidth from a local ISP who purchases it from overseas supplier, mainly from Thailand. This involve foreign currency exchange and thereby if the dollar goes high then the cost of bandwidth will also go high and thereby the cost of browsing in a cyber café will also increase.
  • Inflation Rate: Inflation can destabilize the economy, producing slower economic growth, higher interest rate and volatile currency movement. If inflation keeps increasing investment planning becomes hazardous. The key characteristic of inflation is that it makes the future less predictable. Inflation rate is moderate hence not threatening cyber café business.
  • Social Environment
Social changes create opportunity and threats for the business. The composition of social class largely determines the fate of the business of an Industry. If the society is composed of more high social class people, then there might have the fewer prospects for the cyber café business. The upper class might not be willing to go to a cyber café instead; they will have their own connection and stay home. The extent to which the middle class is extended in a society is a critical factor for the success of the Cyber Café business. With globalization and open market economy in action, middle class is shrinking in Bangladesh. They are promoting to the upper class or lowering to the lower class. Important thing is that both the upper and lower class has less attractiveness for the cyber café. The cost of broadband connection is within the reach of the upper class and need not to go to cyber café. On the other hand, lower class has less demand for the internet and thereby for the cyber café. This silent but crucial change has changed the lucrative ness of the cyber café industry.
The chemistry of social changes largely determines the success and failure of a business. Social awareness among the people regarding Internet use and increased need for communication has increased the attractiveness of this industry. Moreover, increased number of expatriate Bangladeshi national has also increased the attractiveness of the cyber café industry. People go to cyber café to talk to their friends, fiancés and relative at a lowered cost.
Furthermore, the opening of the society has also enabled people to go to cyber cafe and enjoy the wonder of technology. On the other hand, the social stigma of law and order situation has created an atmosphere of insecurity in the mind of the consumer or people. Therefore, people are reluctant to stay longer period in the outside environment.
The social evils we have are all playing a role in determining the fate of the cyber café industry. Eve teasing is a major barrier for women not going to the cyber café. Women feel embarrassed when they find that a person sitting besides her is browsing some objectionable sites. This has been strengthening by the fact that children’s (Below 18 years) entry is restricted to most of the cyber café. Moreover, the image of the cyber café to the society is hampered in the recent past with few incidents. The latest one is the suspected e-mail sent from a cyber café, threatening leader of the opposition. This has frightened prospective users of cyber café of being harassed by the law enforcing agency.
  • Technological Environment:
Technological environment is one of the most significant environmental forces which can make established products obsolete overnight and at the same time it can create a host of new product possibilities. What is the best technology today might be found out of date in the next morning. Thus technological change is both creative and destructive -both an opportunity and a threat. One of the most important impacts of technological change is that it can affect the height of barriers to entry and as a result radically reshape the industry structure. Technological environment is more volatile then any other environmental force. Over the year, technology, especially in the IT and ICT sectors has experienced a tremendous growth. The world is now within the reach of the common man. The impact of technological environment in the development of cyber café industry is huge. Technological environment of Cyber Café largely depends on the following factors:
  • Internet Scenario of the country

Telecom Infrastructure in Bangladesh

  • ISP Situation
  • Computer
Current Situation of Internet and Cyber Cafés of Bangladesh
While, over half of UK households are online; only 0.1% of homes in Bangladesh are online. These could have been a huge opportunity for the Cyber café industry. But to our surprise, the cyber café industry of Bangladesh is currently experiencing huge downturn. Over the last few years, lot of cyber cafes’ have shutdown or reduced their investments in this industry. This is due to some environmental factors that we have analyzed in the environment analysis part. In brief, we can say that this downturn is mainly due to some external threats as well as some internal weaknesses. The cyber cafe industry has experienced tremendous growth during the late 90s’.Now the industry has lost its shine and attractiveness. Present situation in Bangladesh as of September 30th 2002 is as follows:
Subject Statistics
Registered Dial-Up user accounts 120,000
Broadband (Radio, Cable, xDSL) accounts 5,000
Cyber Café Users 6,000 (Per Day)
BTTB – Dial-Up user accounts 8,500
BTTB Coverage (District) 50
Internet Service Provider
Highest Bandwidth available 4 mbps
Internet Access Charge:
Bandwidth Cost
Broadband-64kbs to 128kbs
Broadband-128kbs to 256kbs
Tk 0.20 per min

Tk.30,000 – 40,000
Tk. 60,000 – 70,000
Tk. 1,00,000 – 1,10,000

Tk. 20,000 – 25,000
Tk. 30,000 – 35,000

                                    Table 1: Communication infrastructure of Bangladesh
After the withdrawal of imposition on VSAT in April 2000 the Internet scenario of the country has changed drastically. An entrepreneur has only need to obtain a simple permission from the government run BTTB with an annual mandatory fee of USD3500 and can choose any globally available transponder services. Breaking of this monopoly has increased competition in the market with rapid reduction of equipment cost and cost of satellite services, reflecting abrupt reduction of Internet usage fee.
Costs of VSAT equipment are nearly USD 40,000 and annual lease fee to the Internet provider costs around USD24, 000 with the mandatory annual fee to BTTB. Legal framework now also permits ISPs to float public share in the stock exchange (Rahman, H., 2000).
Initially there were only a few UUCP (Unix-to-Unix Copy Protocol) accounts in the country and then they were replaced by IP (Internet Protocol) accounts. At a later stage low bandwidth 64Kbps VSAT (Very Small Aperture Terminal) link became the main Internet backbone of the country with 120 million people. Demand did not inclined high compared to the huge population base, because most of them live in rural areas where minimum tale-communication infrastructure is missing and at the same time purchasing power of the general communities limiting Internet connectivity with prevailing socio-economic conditions. The slow speed of access provided by VSATs (max. 128.8 kbps) is a major constraint. A number of Cyber cafes providing e-mail and Internet browsing facilities have been opened in Dhaka city; these are quite popular among the young generation. Public kiosks with Internet facilities are also being planned.
Bangladesh Telegraph and Telephone Board (BTTB) have already established a network for high bandwidth Internet connectivity through offering commercial services. BTTB is establishing a fiber optics backbone throughout the country and also has a plan to offer ISDN (Integrated Services Digital Network) service using the facilities of the already installed digital exchanges in Dhaka and Chittagong cities. They have opened X25 and X28 services in eight cities of the country and established Digital Data Network (DDN) at Dhaka and four other cities. Through DDN they are going to offer IPLC (International Private Leased Line Circuits), National (Point to Point High Speed data Circuits), Local (Point to Point High Speed Data Circuits) and E1 Access from PSTN (Public Switched telephone Network) to ISPs.
An Information Technology village is going to be set up very close to Dhaka. The government has already made 18 acres of land available for setting up this IT village. This would be similar to the Software Technology Parks in India. The entire infrastructure, including high-speed telecommunication facilities (2Mbps link) would be provided. These would enable the small companies to move into buildings with readily available facilities. Since this is going to take at least two years, a decision has been taken to initially set it up in an existing building in Dhaka (Chowdhury, J.R., 1999).
Due to the failure of the government the country could not able to obtain a link to the sub-marine cable in 1991 and also due to negligence in government policies the country domain .bd is still not functioning properly. In the absence of a ccTLD (country-code Top Level Domain), the email and Internet users are suffering from bandwidth wastage and in this way cost of the browsing is increasing and speed of email communication is decreasing. Hopefully, the matters would be resolved in the shortest time through pertinent measures from appropriate authorities.
ISP Situation
In June 1996, the government decided to allow private entrepreneurs to act as ISPs using VSATs (Very Small Aperture Terminal). In 1999, there were about 22,000 account holders with 10 ISPs (8 in Dhaka and 2 in Chittagong) and the total number of users ranges around 100,000, while in 2000, there are about 60 ISPs providing Internet services to more than 250,000 Internet users. The growing demand of the society and the congenial global atmosphere towards Internet has pressurized the entrepreneurs to re-think their policies and strategies to accommodate the newly emerged rapidly enlarging target group.
Situations have been improved lately due to the withdrawal of the imposition on VSAT by the government and at present there are about 60 Independent (private) ISP companies, including the government owned BTTB. Concentration of ISP is the most in Dhaka city, where more than 80% of them are located. Only three has been established in Sylhet, three in Chittagong and one each in Rajshahi, Khulna and Bogra. There are about 5 large ISPs and among them Grameen Communications has a customer base of more than 6000. Two of the ISPs are offering their Internet services through 2Mbps full-duplex VSAT link, while highest peak time Internet usage rate ranges from Taka 1.50 to lowest Taka 0.20 (2.00 to 6.00 am for one ISP).
Anyone can install a VSAT with a simple permission from BTTB. Cost of VSAT equipment is nearly USD 40,000 and annual monthly lease fee to the Internet provider costs around USD 24,000 with an additional mandatory annual fee of USD 3500 to BTTB. Legal framework now also permits ISPs to float Public share in the stock exchange.
The highest peak time charge (Internet usage fees) now is about Taka 1.50 paisa (6: am to 6: PM) and the lowest – off peak time charges is around 00.20 Paisa (2: 00pm to 6:00am) depending on the ISP.
Grameen Cyber net (an ISP) has the largest number of subscriber base (about 6000) and the current bandwidth available now – what local ISP’s are providing, ranges from 64kbs to 2mbs (BOL Online Ltd. and Proshikha are providing 2mbs access).

Figure 4: Growth of ISP and Internet users
Current bandwidth of Internet backbone ranges between 64Kbps and 2Mbps through full-duplex VSAT links. There are a few companies, who are trying to make popularize their Broadband connectivity sharing an allocated bandwidth. Zacknet seemed to lost popularity because of its one-way communication. There were a few ISPs who were using Zacknet for downloading during rush hours, but cost of the service has been restricting its popular use.
It has created lot of threats in the form of latest generation mobile phone through which a mobile owner will be able to browse Internet in the street or on the move. Many of the mobile set and service providers are already providing WAP and E-mail service to their client. Grameen has recently launched its e-mail facilities for its subscriber. Though it’s not in action till to date but in near future it will start functioning in full swing.
Moreover, the ever-changing computer technology is also playing an important role in the development of the cyber café industry of Bangladesh.

  • Telegraph and Telephone Department’s implementation of DDN (Digital Data Network) as in country high speed (up to 2 Mbps) surface link in Dhaka and four other major cities of Bangladesh.
  • Decision to link to global highway through submarine cable link by next two years.

Telecom Infrastructure in Bangladesh

There are 750, 000 fixed lines Operated by BTTB (Government monopoly) and in the next five yrs demand for fixed lines will be 3.5 million. In four companies 950,000 Mobile Phones are in operation. Grameen has current subscriber base of GP is 7, 30,000 while it has coverage in 44 districts including all six divisional headquarters. Grameen’s target is to expand 1 million by Dec-02- came to market 1997. Grameen Phone connections would stand at 2 million by 2004. Aktel’s target is to expand 150,000 by Dec-02. City Cell, Sheba 20,000 Village phones are in operation in 18,581 villages of 324 Upzillas, 50,000 Bangladeshi women making living as Grameen phone ladies.
Name of the Company BTTB Grameen Aktel City Cell Sheba Village Phone
No of Subscriber 800,000 2,400,000 850,000 350,000 50,000 20,000
Table 2: Break down of telecommunication facilities by different companyFigure 5: Share of subscriber by different company

Computer is a very sophisticated technology and the computer industry is characterized by high uncertainty. The technological change is rapid and to some extent disruptive. Both hardware and software industry come with new technology almost in every year. This has also made the Cyber Café industry uncertain. The recent trend shows that the government has decided to spread computer technology throughout the country. Moreover, different government agencies and ministries are also going through computerization. A joint survey by the Bangladesh Computer Council and Bangladesh Bureau of Statistics, published in April 1999 has found that there were more than 78,000 PCs in Bangladesh by the end of 1998, with more than 120,000 licensed software marketed (Report on Survey of IT Resources of Bangladesh and Identification of Y2K Problem Areas, 1999). The highest concentration is in Dhaka with more than 72% of the computers involved in IT related activities. However, it is expected that the number of PC user would be increased by at least 50% within a year after withdrawal of government imposed import taxes from computer and computer related accessories in 1999.

  • Competitive Environment
 As the industry is facing downturn Competition in this industry is intense. Existing firms are mainly competing in-terms of price to be remaining competitive. The price varied in-terms of place and the environment cyber cafe provides.
Impact on society
There are various impact of cyber cafe in our society. Through the cyber cafe our life style have made very fast. Through the cyber cafe we can communicate easily one country another country. We can send various Message, E-mail, wishing to our friends, relatives. There are negative impact of cyber cafe in our society as like as our young generation can watch various pornography for this reason they fall various problem mental and physical.
Opportunities and Threats
  • Bangladesh government has declared IT and Agro-based industries along with the RMG as the thrust sector and allocated special fund for Joint Venture  projects. These provide huge opportunity for IT entrepreneur (Cyber Café, Software and hardware) to launch new and innovative projects.
  • Bangladesh is a country of approximately 130 million people. NGOs like are bringing the remotest villages into the worldwide communication systems and opening up huge possibility of bringing all into worldwide partnership. This has created huge opportunity for the cyber café industry to expand in to the rural areas of the country.
  • Substantial talented and educated but unemployed youth is ready to be mobilized into the soldiers of the technological revolution. This huge unemployed educated young are therefore the prospective customers of the cyber café.
  • The recent trend shows that the government has decided to spread computer technology throughout the country. Moreover, different government agencies and ministries are also going through computerization.
  • Integration of computer in to the learning process is increasing. Students need to go online to prepare their Assignment, Project, Case Analysis and preparing for the final examination. A research done by the MBA student of BRAC University has revealed that, Blending Mode (Blending Internet with Traditional Learning method) is the most suitable method of learning. Some of the students might not have sufficient internet facilities and hence would go to cyber café for additional support.
  • The number of expatriate Bangladeshi has been increased in the recent past, which has created an opportunity for the cyber café industry to provide net phone facilities to the relatives of expatriate Bangladeshi nationals.
  • Government has reduced the tax on VSAT and other computer accessories, which increased the number of PC users in the country. This increased computer users will thereby create demand for the service of the cyber café. ISP would be pressurized by both the government and the customers to reduce their connection charge.
  • By 2005, Bangladesh will be connected to Submarine Cable that will reduce the bandwidth cost and thereby the Internet charge. This would ensure high speed and uninterrupted Internet connection.
  • Scope of amusement is diminishing with the huge urbanization and thereby cyber café can provide some sorts of amusement as well as Internet facilities.
  • Establishing VSAT link at the root level may seem expensive at the primary stage. There may be possibilities of using locally designed long distant Micro wave through multiple wireless routers and these links are readily available locally at very reasonable rate for accessing remote area users. It has been found that straight line of path (60Km range with 3Mbps access speed), each tower unit cost approximately USD2400 (Chowdhury, T., 2000).
  • Introduction of private university has largely affected the Cyber Café industry and took away many subscribers. Most of the private university provides 6-12 hours Internet facility to their students along with printing facilities. Now, there are more then 55 private universities with broadband Internet connection. If we see the rate of decline of cyber café industry we will see that during the early 2000, decline starts. That is the time when many of the private universities start functioning.
  • Government has reduced the tax on VSAT, which enables ISP to import VSAT in a lower cost. This will in turn lead to a decrease in the Internet connection charge and would increase the home connection. Increasing number of home connection has poised the biggest threat to the cyber café industry. A person can get broadband Internet connection approximately with tk.1000 in the Dhaka city.
  • As most of the people goes to cyber café to better communicate with their friends. Introduction of TNT mobile phone will certainly have huge impact on the cyber café. People will have easy access to the communication channel and thereby will reduce the customer number.
  • One person through e-mail has claimed the responsibility of the recent bomb blast in the Awami League rally and threatened the leader of the opposition. One person from a cyber café has sent this e-mail, which destroys the image of the cyber café. The irony is that the alleged person might be innocent as the chance of manipulating e-mail is high. This has apprehended cyber café users and is scared of police harassment.
  • Government has reduced tax on computer and computer accessories that enabled more people to buy computer and thereby decrease the reliance on the cyber café.
  • Recently, government has legalized VOIP, which create business opportunities and increases the number of competitors. Many Tele-centers and Calling card companies are utilizing this VOIP facility and posing threat to the cyber café business as they are also in the net 2-phone business.

Internet has changed the way of living in many ways. The world has become closure and information is easily accessible through internet. Peoples of this age are information overloaded. Cyber café is one of the important channels to meet the growing customers need for information and communication. Internet first came in Bangladesh in the year 1993 and the first cyber café of Bangladesh was introduced in 1997. It has taken only 7-8 years to start this industry declining. From the above mentioned analysis of the external environment of the cyber café industry, we have identified some reasons for this too early downturn of this industry. We also have identified few opportunities and threats relevant to this industry. It has been found that the industry is fragmented and there are no barriers to entry and little barriers to exit. The strategy to sustain profitability and to remain in the industry could be the Chaining Strategy. is already following this strategy and doing well. They have three Cyber Café in Dhaka city which enables them to gain economies of scale and reduce operating costs. Moreover, Cyber café alone would be able to sustain in the long run and thereby there need to have diversification of the business. It would reduce the business risk. There could be drinks and fast food business in a small scale side by side to the cyber café. Furthermore, there is no government policy for this industry. Cyber café is neither considered an IT industry nor an SME (Small and Medium Enterprise). Along side, government must maintain law and order and ensure safety. Finally, cyber cafes need to provide less privacy to improve its image in the society. There is a popular feeling that misuses the privacy of cyber café and browse objectionable sites.


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