Now the Asian carriers have teamed up to roll-out another submarine cable called Asia Submarine-cable Express (ASE). It will bypass the earthquake-prone Taiwanese coast. I believe, like Southeast Asia Japan, the ASE will also allure the Indian carriers to join the party. NTT is leading this initiative and it is explicit about the cause of building this new cable (See in the picture). Full report.

The government is expected shortly to unveil a scheme to loop the country with fibre-optic lines that will support internet access at up to 100 megabytes a second, ten times the speed of the technology being replaced. Mr Son argues that to guarantee fair access to this network—and thus the most efficient use of it—it should be run by an infrastructure firm hived off from NTT, owned jointly by all the telecoms operators. Instead, the government is likely to let NTT continue to run the network, but erect “Chinese walls” between those operations and the business of selling telephony and internet access. The communications ministry is uneasy with Mr Son’s plan because it eliminates incentives to build alternative infrastructure—although in practice, the chances of any other operator building a fibre-optic network to compete with NTT’s seem slim.

Others saw it as the only sensible foreign investment made by NTT, a high-cost operator that was completely unaccustomed to the challenger role, but was the quintessential incumbent. Their culture meshed perfectly with the monopoly culture at SLT. In contrast to the losses incurred in Thailand and Indonesia, they did well in Sri Lanka, in the process turning SLT into some kind of modern organization, even if they could not make it efficient.

Now the Economist talks of the return of the Japanese. No stepping stone, now. Directly to India.

HERE we go again. When NTT DoCoMo, Japan’s dominant mobile operator, last ventured abroad, the results were painful. Between 1999 and 2001 it spent almost ¥2.2 trillion (about $20 billion) buying minority stakes in a handful of mobile operators around the world. But it ended up booking a loss of half the value of these investments in 2002 and scuttled home. In the past couple of years, however, DoCoMo has been buying stakes in foreign operators once again, with investments in South Korea, the Philippines, Malaysia and Bangladesh. Its latest move: India.

On November 12th DoCoMo said it would pay $2.7 billion for a 26% stake in Tata Teleservices, the mobile-telecoms arm of the Tata Group, one of India’s biggest conglomerates. The price, valuing the privately held Indian business at $10.4 billion, is steep: the operator is India’s sixth-largest, with barely 30m customers in a crowded market that boasts more than 300m. The company is believed to be unprofitable and is about to begin a costly network upgrade.

Pity the Economist missed the Sri Lanka experience of NTT.

As Taylor Reynolds, an OECD analyst, puts it, innovation usually comes in steps: newcomers first rent space on an existing network, to build up customers and income. Then they create new and better infrastructure, as and when they need it.

In France, for example, the regulator forced France Télécom to rent out its lines. One small start-up firm benefited from this opportunity and then installed technology that was much faster than any of its rivals’. It won so many customers that other operators had to follow suit. In Canada, too, the regulator mandated line-sharing, and provinces subsidised trunk lines from which smaller operators could lease capacity to provide service.

In South Korea, where half the population lives in flats, each block owns its own internal cabling and allows rival operators to put their equipment in the basement; each tenant then chooses which to use. In Japan, politicians put pressure on the dominant operator, NTT, to connect people’s homes by high-speed fibre lines. And this week the communications ministry indicated that it will make NTT open those fibre connections to rivals.

As broadband grows more popular, the political mood may change in many countries. At present, consumers are often misled by the speeds that operators promise to deliver. Soon regulators can expect to face pressure to ensure truth in advertising, as well as to promote easier access.

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The source quoted by LBO below appears to have been quite familiar with the ORIGINAL shareholders agreement signed between the Government of Sri Lanka and NTT in 1997, but appears to have been comatose since then. Provisions regarding no universal service obligations (USO) and international exclusivities were in that agreement and did bind the Government of Sri Lanka. The no-USO provision continues to date, though the international exclusivity ended with the issuance of external gateway licenses in March 2003.

Why LBO’s anonymous source is claiming that provisions that were in force since 1997 are newly being imposed in 2007 is a mystery. And how the humpty dumpty of SLTL’s ambiguous international exclusivity can be put back again, the Rip van Winkle interviewed by LBO does not tell us.

If the Colombo Stock Exchange applies its rules without exception this kind of confusion can be avoided. Why does it not? Should the SEC get involved?

LANKA BUSINESS ONLINE – LBO

Sources familiar with the deal’s provisions claimed it could also undermine telecom regulation in the future because it prevents a universal service obligation being imposed on SLT and has provisions to protect its dominance in international telephone services.

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