On the fixed side, assisted by CDMA phones that are counted as fixed, Sri Lanka is the leader (17 connection per 100 people), followed by Maldives (15 per 100).

Like in cricket, the middle of the rankings are the most interesting. Both Pakistan (50/100) and Bhutan (37/100) are ahead of India (29/100) in mobile. This shows that India cannot afford to let up the pace of 10 million connections a month for some time. If it does, it might be overtaken by Afghanistan (29/100) and even Bangladesh (28/100).

Of course, the fact that Afghanistan is ahead of Bangladesh in mobile penetration should cause all sorts of palpitations in government offices in Dhaka. Bangladesh was one of the earliest in South Asia to adopt mobile and is the most densely populated country in the world. How they were overtaken by Afghanistan, a war-torn country with difficult terrain, should cause serious re-examination of policies such as the BDT 800 SIM tax. The fact that Afghanistan’s CAGR for 2003-08 is 109%, higher than Bangladesh’s 2003-08 CAGR of 101%, suggests that the gap between the two countries is more likely to increase than decrease.

In the fixed rankings, we find Afghanistan occupying the cellar (0.37/100 people) behind Bangladesh (0.84/100). Pakistan (2.5/100) is behind Nepal (2.8/100). This is very surprising given the apparent superiority of the Pakistan policy and regulatory framework. Both use CDMA on the fixed access side, so that cannot be the explanation. Comments from Pakistani colleagues would be most welcome.

India is the only country showing negative growth in fixed over the 2003-08 period (-2%), but this simply because India is more honest in its reporting, counting CDMA on the mobile side instead of on the fixed side. For example Sri Lanka is experiencing negative growth in wireline, that is masked by CDMA growth.

From 2003 to 2008, the number of active SIMs has increased by over 12 times, while the number of fixed connections has decreased marginally, the negative growth in India wiping out all the gains in the rest of South Asia. South Asia is clearly the territory of the mobile.

There is a lot more refarming to be done TRC; keep up the good work.

The move toward a more technology- and service-neutral spectrum policy was mainly triggered by a desire to treat all providers equitably, the urging of mobile providers to shift to GSM technology, and the need to use CDMA as a low-cost solution for fixed wireless access in rural areas. Although the Telecommunication Regulatory Commission of Sri Lanka (TRCSL) was constrained to some extent by existing allocations and defense considerations, it issued more spectrum space. The regulator also recognized the problem of scattering spectrum and attempted to streamline allocations while it cleared capacity in the 1800–1900 megahertz range. It did so by embarking on a thorough industry consultation process that involved difficult negotiations with stakeholders in the industry, which included different compensation schemes for spectrum refarming. Decisive action by the TRCSL resulted in the fair allocation of spectrum to incumbent and new operators alike, and helped the rapid proliferation of wireless technologies, proving that a forward-looking approach to spectrum management can help to increase the penetration of mobile services and mobility in general in developing countries.

Minister Milinda Moragoda who steadfastly supported the refarming process so that the rural waiting list could be cleared, the then Prime Minister Ranil Wickremesinghe who took a personal interest in telecom reforms, the TRC officers who participated in the process and who used the public consultation process, and of course the operators deserve the praise. The TRC Chairman who took over in November 2003 and slowed the process deserves none.

Before refarming, we had over 380,000 on a waiting list. Now there are none. By that test, refarming has served the people well.

Industry experts say it is an obvious phenomenon, with handsets turning in to a swiss-knife kind of solutions. Rural mobile penetration is now the focus of the service providers in these countries where the mobile markets are heading towards maturity.

In India circles like Chennai are touching near 100% mobile penetration in that case the operator has to go to new markets. The mobile is fast becoming a one-stop-shop solution. And the manufacturers are building products on applications that click with the buyer and these rewards are resulting in rewards as big as over 10 mn handsets sold every month.

Interestingly, earlier the market was inundated with FM chipset handsets, which were largely of interest to those living in urban cities. The users look for value for money, any manufacturer that can not realize the needs of his potential buyer will not survive.

Tata Teleservice’s ‘Radio Phone’ is a respite for a user in the area that does not have an FM radio. The model is the first of its kind in India that can access Am radio services and also among CDMA phones in the world. This enables telecom users in rural and semi-urban locales to listen to radio services.

The committee, which was set up to suggest annual spectrum charges for 3G, has recommended that due to the efficiency in capital expenditure and synergy in operations, operators having 2G spectrum and acquiring 5 Mhz of 3G spectrum should be charged at a higher rate.

GSM 2G operators get 4.4 MHz and CDMA players get 2.5 MHz of start-up spectrum with their telecom licences, on which they have to pay an annual fees of 2 per cent of their aggregate gross revenue (AGR). For spectrum up to 6.2 MHz, the operators have to pay 3 per cent of their AGR, while for spectrum up to 8 MHz they have to pay 4 per cent of their revenues and so forth.

Therefore, for a stand-alone 3G operator, the rate will be equivalent to the 5 MHz slab rate of 2G spectrum or 3 per cent of the AGR. But operators having both 2G and 3G spectrum will have to pay one per cent over and above the present 2G slab rate.

Read the full story in Business Standard here.

If they got it earlier, there would have been no need to change the description in the phone bills from mobile subscriber levy to telephone subscriber levy.

Hopefully this will also end the anomaly of taxing the same broadband service differently.

Of course, this is not the only telecom relevant item in the Budget. More as we get the news.

In its full color advertisement in today’s Sunday Times, Lanka Bell claims paying users for incoming calls is a new chapter in Telecom history. Is it? May be in Sri Lanka. But we have already discussed similar strategies elsewhere.

In his weekly newspaper column in the Lankadeepa, Mr Udaya Gammanpila, the Chairman of the Central Environmental Authority and the main proponent of mobile-specific taxes, has posed the question to me why the mobile sector keeps growing even as they keep loading taxes on it.   For example, the mobile subscriber levy of 10 percent of every bill was in effect in 2008 Q2.  Possibly, the 10 per cent levy on CDMA “fixed” phones was also in effect for at least part of 2008 Q2.  Yet, mobile connections grew by 43.5 per cent and fixed (primarily CDMA) by 42 per cent.

In one of my first columns on the subject of mobile-specific taxes, in September 2007, a year ago, I talked about the goose that lays the golden eggs:

“According to the fable, the regular supply of golden eggs was not enough for the foolish owners; blinded by greed, they cut open the goose to get all the eggs at once. They found to their grief that there was no trove of golden eggs in the goose’s stomach; that their greed had deprived them of any more golden eggs.

I do not accuse the government of being that foolish. They are not killing the goose; their behavior is more like that of trying to milk the goose for more eggs. The end result, however, will be a stressed goose yielding less eggs than it otherwise would have.”

I did not say the goose would stop laying eggs.  From our research we know that people will not radically increase their calling if the prices come down; we also know that people will not radically reduce their calling if the prices go up.  Note that I did not say less eggs than before the taxes; I said, “less eggs than it otherwise would have.”

Now Mr Gammanpila has a response.   The mobile operators are foreign owned and enjoy tax holidays.   All that he’s doing is preventing profits from being repatriated.   He imposes taxes on the customers; the operators reduce their prices because of competitive pressures.  The customers come out even; they pay more taxes, but they pay less to the company.   The company makes less profit; less profit is expatriated; we all live happily ever after in the JHU-mercantilist heaven.   The problem is that it’s not only profits that get affected.  Capital expenditure gets cut back too.  You don’t see the results immediately; they take a few quarters to show up.   But show up they surely will.  That’s when we’ll see the slowing down of growth in the sector, and as a result, in the economy as well.

How many quarters?   Four, I’d guess.   If not I’ll eat crow.

Which reminds me of an equity analyst who predicted that the mobile industry will plateau in 2008 at 38 SIMs/100.  Based on our teleuse@BOP research, both Harsha de Silva and I disagreed (see comments).   FYI, it’s 2008 and we have 45.76 mobile SIMs/100 according to the Department of Census and Statistics.  That is 20 per cent off.

Crow is served, Mr Equity Analyst.  Do you prefer it hot or will you have it cold?

Imposed few weeks back, they specify CDMA phones can be used only at the address it is issued to. (CDMA technology is used in Sri Lanka for fixed wireless and not mobile)

How on earth a CDMA phone can be restricted to one address, asks Udurawana, when you sometimes even have to climb to your neighbour’s wall to receive signals.

We hope the Sri Lanka rural users who have faced similar problems would readily empathise. (We hear once the mother-in-law of a former Director General of TRC too had to take her phone to a particular spot at a paddy field to catch signals)

Mr. Priyantha Kariyapperuma may want to respond to Udurawana. Thanks in advance for CCing LIRNEasia.

Such wise words were not always heeded.

Four new levies, reported Financial Times today, will come into force this month under the Environmental Conservation Levy Act No. 8 of 2008.

All communication towers will be charged Rs 50,000, according to the Central Environmental Authority (CEA) Chairman Udaya Gammanpila, who explained it was done to ‘induce telecommunication companies to share the towers’.

Sharing telecom towers is good, but if Mr. Chairman thinks that happens just by forcing them to pay for erecting towers, he is wrong. Had cost been the issue, sharing would have already happened, given the high cost of tower erection – from leasing the land to bribing authorities of all levels. Further if the CEA’s concern was reducing the numbers it could have been done more effectively working together with Telecommunication Regulatory Authority of Sri Lanka (TRCSL). That is how it happens in other countries. They could have learnt from the recent attempts by Bangladesh Telecommunication Regulatory commission.

Perhaps TRCSL is too busy with monitoring porn. So this will levy be eventually paid by the mobile and CDMA subscribers.

If that is not enough, mobile phones will further be levied two percent of their monthly bills. (Even without this mobile users pay 26 cents as tax for every Rs. 1 usage – the ratio among the highest in the world) The funds such generated will supposedly be used to build an e-waste recycling plant. Says CEA Chairman: “Currently we do not have such a facility and users dispose of their old mobile phones improperly, causing damage to the environment.”

We anticipate CEA Chairman to be better informed than we are in environmental matters. All we know is used mobile phones are not an environmental concern in Sri Lanka. Recycling firms confirm it is only rarely they find a mobile phone discarded. When Dialog Telekom initiated an island-wide drive to collect used mobiles (with attractive cash prices) they could not gather even a hundred.

So we can only assume if at all another recycle plant is needed, it is for the other forms of e-waste. Parts of all types of electronic goods including televisions, radios, washing machines, refrigerators, air conditioners, sound systems and computers are being added to the environment in bulk. We fully agree. That is the environmental concern.

However almost all of these are luxury goods while mobile and CDMA phones are increasingly used by the poor. So why should poor pay for clearing the e-waste of the rich? Why not impose an environmental levy on all electronic goods?

May CEA Chairman please explain?

Sri Lanka uses CDMA technology for fixed connections but with signals available anywhere within local loop, or if not been blocked by the operator even outside, it can be converted to a ‘mobile’. Given the distinct sharing behaviour we have seen at BOP, many may use their CDMAs in multiple locations. (eg. Guides at Udawalave park use them as car phones). New laws can bring the usage down, unless present non-owner users purchase their own immediately, which is unlikely. This will make government revenue (as tax) less and not more – unless we miss something.

Couldn’t Financial Times be more careful?  This 10.7 million is neither the number of telephones nor the number of subscribers. It is the ‘access paths’: Number of connections in case of ‘fixed’ lines (including the dissent CDMA) plus SIMs in case of mobile (including ones not used, issued to tourists for short term use and perhas as sales promotions too) Many subscribers have used more than one SIM. So certainly it cannot be the number of telephone subscribers (or owners) which has to be less.

Can it be the number of phones? No. Many mobile users have used more than one handset. We need not elaborate. Read these two Sri Lankan bloggers giving their full mobile histories: Dinidu De Alwis and Kalinga Athulathmudali . If an average subscriber is as half tech savvy as them, we are sure to have twice more mobile phones in Sri Lanka than people!

India’s booming mobile services market will see investments of over Rs 100,000 crore (around $24 billion) by 2010, the fastest investment ramp-up seen in any telecom market globally even as analysts predict a bruising battle that will see tariffs fall sharply.

The investments include between Rs 48,000 crore and 60,000 crore ($12 billion to $15 billion) from six new telecom players (including Reliance and Tatas’ proposed GSM mobile services) over 12 to 24 months to create capacity for 250 million more mobile subscribers.

This fresh investment will be over and above the estimated Rs 48,000 crore ($12 billion) being put in by incumbents like Bharti Airtel, Vodafone-Essar, Idea Cellular, Bharat Sanchar Nigam Ltd, Reliance Communications and Tata Teleservices (the latter two for ramping up CDMA mobile operations) in 2008-09 alone.

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Several months ago, the government of Sri Lanka blocked access to Tamil Net, a website used by many, including almost all the important journalists, to find out the other side of our one-sided news stories on the war. Of course, this was easily circumvented by those who wanted to. But I now regret that I did not speak out against it at that time. When the government shut down phone networks in the North and the East, I posted the facts, but did not explicitly protest. Few others did.

The lack of strong opposition to their censorious actions has now led the government to take another step: to shut down SMS use on Independence morning. Censorship is coming close to home.

Mobile or fixed phones (the million plus CDMA phones can also for this while people are moving around) can be used to convey messages and coordinate actions. So can SMS. If the government believes that SMS poses a security threat, it should come out and tell us exactly what that threat is, before shutting down a service we have paid for and are entitled to use.

The Telecommunications Act lays down specific provisions for these kinds of actions. I want to know whether these lawful provisions were followed. Were these provisions followed when the phone networks were shut down for long periods in the North and the East?

If not, the actions taken last night to shut down SMS were unlawful. The shutting down of the phone networks in the North and East were illegal. I believe that it is necessary to protest these unlawful and arbitrary actions if we are to prevent the extension of the Great Firewall to this country as well. Otherwise we will not end up like China; our fate will be that of Burma.

Great Firewall of China Faces Online Rebels – New York Times

In almost every instance, the resistance has been fired by the surprise and indignation when people bumped up against a system that they had only vaguely suspected existed. “I had had an impression that some kind of mechanism controls the Internet in China, but I had no idea about the Great Firewall,” said Pan Liang, a writer of children’s literature and a Web site operator who first learned the extent of the controls after a friend’s blog was blocked. “I was really annoyed at first,” Mr. Pan said. “Then the 17th Party Congress came, and I received an order that my Web site, which is about children’s literature, had to close its message board. It made me even angrier.”Like others, Mr. Pan used his Web page to post solutions for overcoming the restrictions to some banned sites, and then he used a historical allusion to mock his country’s censorship system.

“Many people don’t know that 300 years after Emperor Kangxi ordered an end to construction of the Great Wall, our great republic has built an invisible great wall,” he wrote. “Can blocking really work? Kangxi knew the Great Wall was a huge lie: just think how many soldiers are needed to guard those thousands of miles.”

A 17-year-old blogger from Guangdong Province who posted instructions on how to get to YouTube, overcoming the firewall’s restrictions, was no less philosophical. “I don’t know if it’s better to speak out or keep silent, but if everyone keeps silent, the truth will be buried,” wrote the girl, who uses the online name Ruyue. “I don’t want to be silent, even if everyone else shuts up.”

“After our application for a full-fledged CDMA mobility licence is approved, we plan to roll out CDMA services in all major cities and towns. The initial investment will be about $500 million,” BSNL managing director Kuldeep Goyal said. Read more.

Interestingly, Telus of Canada is spending $500 million to migrate from CDMA to GSM early this year. Calling CDMA technology the “Betamax of wireless” the Toronto Star gives details.

But please read this in context:  we wish the 10% tax had not been imposed on mobiles; but there was absolutely no reason to tax mobile while exempting fixed; that is why I support the extension of the tax to fixed CDMA.   But for some reason the government seems to have difficulty in doing anything right the first time.  

Why, for God’s sake protect fixed wireline?   These are most privileged people in the country.   If you taxing wireless, tax wireline too.   Then, as quickly as possible, take off the taxes.

LANKA BUSINESS ONLINE – LBO

The Sri Lankan government Wednesday said it would extend a 10 percent tax on mobile phones to wireless CDMA phones in an effort to raise revenue.

The move was announced by President Mahinda Rajapakse, who is also finance minister, when he presented the government’s budget for 2008 in parliament.

The imposition of the levy on wireless phones is expected to raise 2,200 million rupees.

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