Mobile phone use is taking off in Sri Lanka – though not, perhaps, in ways that service operators might have hoped.

FROM THE ECONOMIST INTELLIGENCE UNIT

In the world’s poorer countries, the purchase of a mobile phone has become increasingly affordable. Using it, however, can still be a struggle. Low-income mobile phone owners in Sri Lanka are getting around this problem with a novel method for keeping costs down.

Known as ring cutting, mobile phone subscribers rely on ring tones to communicate with others, rather than actually staying on the line to talk. By a pre-arranged signal that will convey the desired message – “two rings means I’m home” – callers negate the need for a conversation. They simply hang up as soon as the number of tones are finished. The recipients’ phone log records the number of the person who dialled, and at what time. They can choose to call back, or not.

In a country where regular bloodshed, terrorism and sectarian violence has many people living in fear of their safety, ring cutting has developed into an extremely popular, cost-effective way of keeping in touch. A recent survey by LIRNEasia, a regional telecoms think-tank that studied mobile phone usage patterns in Sri Lanka, India, Pakistan, the Philippines and Thailand, found that Sri Lanka lagged only the Philippines in the ring cut stakes. LIRNEAsia surveyed around 9,000 low income earners aged between 18 and 80 years old. About half of mobile phone users in Sri Lanka are confirmed ring cutters, compared to 65% in the Philippines.

The economics of ring cutting are simply. Sri Lankans can buy a mobile phone for about US$30. But call rates of 5.00 rupees (0.05 US cents) per minute are not affordable to the many who earn less than US$100 a month. However, under a pre-pay system they can pay as little as 20 rupees (0.19 US cents) for a SIM card. If they mostly use their phones to ring cut, the credit on the SIM card can last for months.

Needless to say, telecom service providers are hardly thrilled by the practice. Mobile phone companies offer incoming calls for free and rely on a connection being completed to make their money. Adding insult to injury, many people use landlines, often at their workplace, to return calls, further circumventing the mobile network. Harsha de Silva, LIRNEasia’s lead economist, observes: “Missed calls are not good for the networks – less revenue; not good for the state – less taxes; and not necessarily good for the user – networks get blocked and we can’t talk.”

Model e-village

And for those Sri Lankans not able to jump onto the mobile bandwagon, a new service is taking root that’s even better than ring cutting. Far from the bright lights of Colombo, the country’s first 24-hour outdoor wireless computer network is now up and running in Mahavilachchiya, an tiny village 40km from the nearest town of Anuradhapura.

Mahavilachchiya is surrounded on three sides by the Vilpattu jungle, and most of the residents are farmers or labourers with a monthly income of about 5,000-10,000 rupees (US$50-100). While the village is connected to electricity supply, it is not yet covered by either terrestrial or mobile phone networks. The number of phones in the village: zero. The number of PCs in the village: 50 and rising.

Given the absence of telecommunications infrastructure and the scattered nature of the settlement, a more traditional wired network was not practical in technical terms, nor economically feasible. But thanks to the efforts of a charity, the Horizon Lanka Foundation, and the Information and Communication Technology Agency of Sri Lanka (ICTA), a workable solution has been found. Most of the computers are situated in the homes of local children, and as many as 200 use the machines for their studies, to access the Internet, and to send emails. Given a set of headphones, internet telephony is also possible. The computers are linked to a multimedia lab, which provides training and resources.

Projects like these, however, are not crimping growth in Sri Lanka’s telecom sector which soared to 7.3m users in 2006, led by a 59% rise in new mobile phone connections. Growth was spurred by competition from new market players and call rate cuts of as much as 40%, the Sri Lanka Telecommunications Regulatory Commission says. Although the waiting list for fixed-line phone services remains long – 366,000 at last count – fixed-line subscribers rose to 1.9m in 2006 from 1.2m a year earlier, after the Commission granted CDMA licenses to three firms, allowing them to use the cheaper technology to expand their offerings outside the main centres.

But it is cellular services, based on both GSM and CDMA technology, which have enabled many rural residents to get phones. The number of cellular phone users grew to 5.4m by the end of 2006, from 3.4m a in 2005. Liberalisation of the sector is hitting its mark and it’s an ongoing process. India’s largest private phone company, Bharti Airtel, is set to become the fifth mobile phone player in Sri Lanka, launching services by the end of 2007. Bharti plans to invest US$100m in the first year of operation, so the number of those without access to a phone can only keep falling.

As competition increases, rates will need to continue to fall, otherwise service providers will find more and more of their customers deserting them for internet telephony and tricks like ring cutting.

SOURCE: INDUSTRY BRIEFING

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Troops in Kashmir master new weapon: cell phones
Reuters
By Sheikh MushtaqSun May 21, 1:53 AM ET

Minutes after a bomb exploded recently in Kashmir and wounded Indian soldiers, a senior member of an Islamist rebel group called local newspaper offices to claim responsibility for the blast.

A few hours later, troops smashed the door of his hideout and arrested the militant “commander” after a brief gun battle.

Indian intelligence officers credited the bust in south Kashmir to the tracking of his mobile phone.

Until a few years ago, intelligence officials resisted attempts by the federal government to lift a ban on cell phone services in the region, fearing mobile phones would aid militants in planning attacks.

Now they know better and security officials say troops have eliminated many militants by tracking their mobile phones and tapping conservations, citing the example in south Kashmir.

“Such a quick strike operation was just impossible three years ago,” a senior intelligence official told Reuters.

“We tracked the calls made from his mobile to local newspapers which led to his arrest and that of some other suspects.”

India has been battling a 16-year Muslim separatist revolt in its part of Kashmir. Tens of thousands of people have died in shootings, bombings and other violence.

In 2003, New Delhi allowed mobile services, eight years after the rest of India, now the world’s fastest-growing market for cellular services.

At that time, India said it was a move to win the hearts and minds of Kashmiris, weary and alienated after years of conflict in India’s only Muslim-majority state which is also claimed by neighbor Pakistan.

After three years, there are now more than 850,000 mobile phone users in a state of 10 million people. And the spin-off for anti-insurgency operations has enthused security officials.

“So far, we have arrested or eliminated dozens of them (militants) including many senior commanders through mobile-tracking,” the intelligence officer said.

“It is easier to track them if they use mobile phones.”

BOON OR BANE?

Elsewhere across some trouble spots around South Asia, mobile phone services are still seen as a bane.

In Sri Lanka, which is teetering on the brink of a return to civil war, Tamil Tiger rebels do not allow mobile phone services in areas held by them.

“We do not allow mobile telephones because of security concerns,” said rebel media coordinator Daya Master. The Tigers fear they could be tracked and targeted through mobile signals. So they use satellite phones instead.

In Nepal, the ousted royalist government of King Gyanendra resorted to shutting down mobile services when the monarch’s opponents planned big rallies against his rule to foil the protests.

Indian security officials admit their initial resistance to mobile phones in Kashmir was misplaced.

“Earlier, we thought it would help terrorists in their communications and help their subversive activities,” army spokesman Lieutenant-Colonel V.K. Batra said.

“But it is proving counterproductive to them.”

Militants also use satellite phones from their forest hideouts. But security forces say they are able to intercept or jam such communication.

Police in Kashmir say mobile phones have also saved the lives of hundreds of people trapped in buildings stormed by suicide attackers.

Hostages have often communicated with the police through mobiles and managed to guide security forces to rescue them amid gunfire, said K. Rajindra Kumar, a top police officer.

“This is the success story of mobile phones in anti-militancy operations,” Kumar told Reuters.

(Additional reporting by Simon Gardner in COLOMBO)

“We are looking at amending the Telegraph Act to accommodate the cellular services and CDMA-based services to reach the rural areas. We are looking at sharing of the passive infrastructure with the cellular service providers,” communications and information technology (C&IT) minister Dayanidhi Maran told reporters.

Besides covering the villages, the minister is of the opinion that the wireless services should also provide connectivity to the Railways and highways especially in rural areas. When asked about the time frame for amending the Act, Mr Maran said, “We have just started the process.”

Cellular Operators’ Association of India (COAI) welcomed the Wednesday’s announcement. COAI director general TV Ramachandaran said, “This will make the expansion into the rural and semi-urban areas by cellular operators economically viable. We need more cash surplus to fund capital expenditure in rural areas.”

So far, the state-owned Bharat Sanchar Nigam Limited (BSNL) has received the lion’s share of the USO fund as it has covered around 80% of the villages in the country by offering fixed line services. The private operators share in offering rural connectivity has been low in the past.

But if the Telegraph Act is amended then the private sector could play a major role in offering wireless services in rural areas. This is largely because the private players have a stronger presence in wireless services than in fixed services. Also while the urban areas getting saturated in terms of telecom coverage, the rural areas present a largely untapped market. Around Rs 1,814 crore have been made available to the operators for rural telephony of which Rs 1,314.50 crore have been provided during 2004-05. For the year 2005-06, a provision of Rs 1,200 crore has been made available for the USO support.

The minister on Wednesday announced that India has crossed 100 million phones. “The US, Japan and Germany have almost 100% tele-density, while China has a tele-density of 55%. India, with a tele-density of about 9%, is bound to surpass the growth in these countries by a wide margin over the next 4-5 years,” he said.
The minister said the country was likely to have 250 million phones by 2007 with a tele-density of 22%.
“Of the additional 150 million that would be added by 2007, almost 80 million will be done by BSNl and MTNL alone,” he said. On the present access deficit charges (ADC) regime, Mr Maran said the ADC regime will continue for at least another two years. “There is no rush to abolish the ADC. ADC will be reduced with the passing of time and the benefit would be passed on the users,” the minister said.

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