April, 2008

October, 2009

I took the first photo. That was in April 2008 in an informal telecenter visit. The second one appeared in a Sinhala blog recently.

Mangedara Nenasala telecenter at Thulhiriya (less than 2 km from MAS Holdings) is one of the hundreds of defunct Nenasala telecenters. During better times it provided services such as utility bill payments and computer training. Now it remains closed since the operator, who was never paid for his services, left for better opportunities.

The findings of the telecenter operator survey done by LIRNEasia at a workshop organised by Sarvodaya in October 2008 will be useful to understand why Nenasalas fail. (Sample was not representative, but large enough to get a general idea about the telecenter operations in Sri Lanka.)

Do telecenters in Sri Lanka make money? Yes. They report an average monthly income of Rs. 22,119. (=USD 201) This is associated with a relatively large standard deviation of Rs. 21,714 (= USD 197) indicating a variation within a wide range. This means a large number of telecenters are running at a loss.

Providing Internet services ranked only third among telecenter income components (16%). The key sources of income are education and training (43%) and providing fax, photocopy and printing series (21%). They also make money from VoIP (4.5%), utility bill payments (2.5%) telephone calls (2.5%) selling other goods (2%) and VCD/DVD rentals (1%).

Do telecenters make a profit? Yes, but perhaps may not in real terms. They record a monthly average profit of Rs. 6,735 (=USD 61) with a large standard deviation of Rs. 9,504 (=USD 86). This indicates the loss incurred by some of them. This is again without considering the cost of the communication link. (The monthly average cost of a 2 Mbps business broadband connection is USD 46 in Colombo. This might be slightly high in rural areas.)

Telecenters operators are rewarded in different ways. Only 33% are salaried. 22% receive a share of profits. 13% receive an allowanced based on performance. 32% receive no personal income.

Sustainability is not an issue for this telecenter. It provides all its service, be it Internet surfing, computer training, library facilities or even typesetting and printing services free of charge, treating them as community services.

Thondaman Foundation, a non-profit organization, with a ministerial backing, that intends “to make available to the plantation community the wide advantages of the internet and intranet communication technologies” has set up this centre in the middle of the picturesque Glenore estate at Haputale, to serve a population of 5,000 from the surrounding villages. This is one of the 45 such centres in different estates in the Central, Uva and Sabaragamuva provinces.

The white dish, gives a sense of remoteness, but it need not be. As the crow flies, this place is close to both Bandarewela and Haputale – so close that 3G HSPA signals from both key providers are available. According to our tests, quality is medium to good for both. Had I not been late for my next visit, I could have done this blog post from there itself.

In other words, Minister Thondaman, you might be paying few times more for a dedicated radio link when you can have 3G HSPA broadband facilities from the same provider for not more than Rs. 3,000 (USD 26) per month.

Multiple dishes is a common sight at many Nenasalas – the ‘telecentres’ set up under the e-Sri Lanka program, funded by the World Bank. Some of them are huge – with diameters little less than 2m. Having not done a design recently, I cannot tell the prices offhand, but I do know they are expensive – one such dish (with equipment) costs few times more than the aggregate cost of the PCs and peripherals in the centre.

Why a telecenter is equipped with multiple dishes?

The reason is, sadly, poor planning. ICTA, the implementation agency changes the communication services provider frequently. Few years have elapsed since the services from the initial provider have been discontinued, but he has never bothered to remove the dishes. Why? Your guess is as good as mine. The capital expenditure has been fully included within the Rs. 90 million (US$ 900,000) amount charged to provide VSAT services to then 200 odd Nenasalas for a period of one year.

The sadder part is even with such a substantial expense these centres are not provided broadband. What they receive is 128 kbps – something not too different from dial-up.

That is when some of these centers are already within the 3G coverage areas. Out of the three above two centers receive 3G signals. Not too great, but adequate for a telecenter and certainly better than a 128 kbps link.

We will be glad to learn what Udaya Gammanpila, ex-Chairman Central Environmental Authority, (who was once worried about used mobile phones creating an e-waste issue) thinks about the environmental damage created by these non-functional dishes, even if we ignore the huge sunk cost.

Phone charges are same for prepaid and post paid. Cannot figure out why one should go for post-paid.

There is also a broadband package for Rs. 300. (Minimum commitment)

Download the rate sheet for more details.

How far onshore rural BPOs cater to the needs of their clients? It might not exactly be toy manufacturing outsourced to rural China, but close. The connectivity issues still exist, and capacity building too remains a challenge. The good news is in spite of all that things do happen.

Isura Seneviratne, 22, runs OnTime Technologies at Mahavilachchiya – the first rural BPO in Sri Lanka, born as a joint effort of Horizon Lanka Academy and FARO (Foundation for Advancing Rural Opportunities). Isuru and its first manager Nirosh did the business plan. Trained in Laos and India for BPO work, Isuru knows the nuts and bolts of the game. The operation is still lean, only 8 seats against 25 – the expect target within the first year of operation. Cannot blame because the business had to face the hard challenge of not only building capacity but also pulling legs by different parties. Fortunately the internal politics is now over with the bold step by Lovina Charles, a key donor of the Horizon project at Mahavilachchiya expressing her full backing for the BPO.

At OnTime technologies an operator earns Rs. 8,000 (USD 72) minimum per month, while the highflyers take something like Rs. 13,000 (USD 120) home. Assuming a reasonable PPP ratio this is equivalent to earning USD 240 – 300 in Colombo.

OnTime Technologies offer data entry, data verification, data Indexing, scanning, web designing and graphic designing services. Isuru is proud to mention his clients, John Keells Holdings and Dialog Telekom, two conglomerates. His next goal is a project too ambitious. From Mahavilachchiya Isuru and his team is going to handle the daily issues for a hotel network.

Isuru is not alone in the game.

Jayantha Wickramaratne of Panamura Nenasala, Embilipitita (a telecenter setup under the World Bank funded e-Sri Lanka program) provides e-commerce services using the e-Bay model through the site http://www.ecseva.lk. Advertisements placed by service providers are made available to the large base of site’s users. Anyone who has a job too can place an advertisement which will be then offered to a bidder through a competitive bidding process.

Selvaratnam Sri Kanthan of Koslanda Nenasala too runs a rural BPO service for local and international clients. Partnered with NLingua Services of New Delhi, a voice transcription and translation service, his Nanasala employs Koslanda residents to translate and transcribe audio files from Tamil or Sinhala into English, or vice versa. Web Design is another service he offers.

This does not mean everything runs perfectly. There are so many issues to be addressed. (For example Isuru can do a better job with a link of higher capacity than his present 256 kbps one) Still these courageous and innovative young men and women bring us hope – in difficult times.

The significant achievement was made possible by the mobile telephony segment of communications, which was once thought to be a gizmo for the rich – what with a tariff of Rs.16.80 per call when the telecom revolution began in the country in the early 1990s. But with tariff falling to 40 paise a call and incoming calls becoming free, mobile telephony began to appeal to the masses.

In fact, 2008 also saw Indian telecom operators add a whopping 8-10 million new subscribers to the network each month, making a host of global companies to look at the country as their next big market for growth, especially in the hinterland.

And the statistics speak for themselves.

As per the watchdog for the sector, the Telecom Regulatory Authority of India (TRAI), the total number of telephone connections in the country reached 363.95 million at the end of October 2008 against 256.55 million in the corresponding month last year.

Read the full article in sify.com here.

On January 16, 2008 a bus bomb went off killing 25 and injuring more than 60, in a remote area of Moneragala, arguably the least connected district in the island. Within less than two hours, the international news channels were up with clips. Nuwan Sameera (inset) FTPed them from his Nenasala telecenter in Bibile town – about one hour journey away.

Nuwan operates just within 200 m from a telecom tower (see photo) but bureaucracy is bureaucracy. Spending World Bank money generously, ICTA, the implementation agency of Nenasala telecenter network under the e-Sri Lanka program, first provided a VSAT link from a different operator. (Perhaps the tower came later and fortunately, and Nuwan does not have to foot the bill, about US$ 750 per month, in the first year) Then came the 128 kbps link that every centre gets. It costs about USD 100 per month.

FTPing is one of Nuwan’s main business lines. Narrowband 128 kbps would not have FTPed the video clips of the bus bomb so fast. Nuwan was lucky to have a telecom tower in his vicinity. Now another 1 Mbps links him to the world. That is the best he can wish for. With excellent Line of Sight (see photo) his quality of service issues are addressed. When tested he got 75%. (Not by LIRNEasia’s AT-Tester, which he is keen to use; please wait for the test results soon)

The glitch: In Bibile, 128 kbps costs TWICE MORE than 1 Mbps. You guessed it! From the same operator! 1 Mpbs is from open market. 128 kbps is ‘resold’ thru ICTA that buys in bulk.

Should we be surprised in a country where government sells Petrol at Rs. 22 more than the private sector?

Ambuluwawa, about 1,100 m above sea level, is probably the highest point in the vicinity of Gampola. Not surprisingly, all telecom operators exploit the geography. Transmission stations/towers encircle the summit. (See above) That is what one calls infrastructure.

Just 10 km away, Sirimalwatte Ananda thero, a young and energetic Buddhist monk, runs a Nenasala, a telecenter established under the World Bank funded e-Sri Lanka program. He is not content with the Internet facilities. He pays Rs. 11,250 (about USD 100) per month for a 128 kbps link of inconsistent speed. This is twice more what a user in Colombo pay for her, not 128 k but 2 Mbps link – from the same operator.

Use simple maths. Ananda thero pays THIRTY TWO (32) times more per kbps than a user in Colombo. Why such a large gap? Don’t tell me lack of infrastructure is the culprit.

In an ongoing audit, ordered by the government to establish the genuineness of customers, DoT found that out of 10 lakh connections verified so far, more than 2 lakh had been issued to customers whose identity could not be established.

The extent of fake identities has rattled the government which has started penalising service providers at Rs 1,000 for every fake user found.

Sleuths suspect that the Mumbai attackers, like in the past, had obtained SIM cards on fake identity and had used it for communication with their handlers across the border. Though details are yet to be made public, officials have procured details of SIM cards from where they were procured and whose identities were used for the same.

Read the full story in The Times of India here.

Here are the summarised results from the telecenter operator survey done by LIRNEasia at the weCan workshop in October 2008. Sample was not representative, but large enough to get a general idea about the telecenter operations in Sri Lanka.

Out of a total of 147 operators surveyed, the bulk, 101 were from Nenasalas, the 500 odd telecenter network created under the World Bank funded e-Sri Lanka programme. 10 were from Sarvodaya multi-purpose telecenters and 6 from others (eg. public libraries) 30 have not specified the type of the telecenter.

Do telecenters in Sri Lanka make money? Yes. They report an average monthly income of Rs. 22,119. (=USD 201) This is associated with a relatively large standard deviation of Rs. 21,714 (= USD 197) indicating a variation within a wide range. Not a surprise since some telecenters are running at a loss (presumably temporarily) and few reporting a monthly income of over Rs. 100,000 (= USD 900).

However, providing Internet services ranked only third among telecenter income components (16%). The key sources of income are education and training (43%) and providing fax, photocopy and printing series (21%). They also make money from VoIP (4.5%), bill payments (2.5%) telephone calls (2.5%) selling other goods (2%) and VCD/DVD rentals (1%).

Asked for the preferred income profile, the results were not too different. They still want 33% income from training, 21% from fax photocopy and print services and 17% from Internet services. Is this an indication of being more realistic or less ambitious? You decide.

Average monthly expenditure of a telecenter is Rs. 15,837. (USD 144) This may not reflect the real costs as the Internet charges for Nenasalas are borne by ICT Agency from the money comes from e-Sri Lanka programme. Salaries is the highest cost component (39%). Then comes electricity (25%). About 10% each for telephone and rent.

On average basis a telecenter has 5 PCs and employs four staff members – two permanent, two temporary. Correlation between the income and the permanent staff strength was 0.56; the income and the number of PCs, 0.62.

Do telecenters make a profit? Yes, but perhaps may not in real terms. They record a monthly average profit of Rs. 6,735 (=USD 61) with a large standard deviation of Rs. 9,504 (=USD 86). This indicates the loss incurred by some of them. This is again without considering the cost of the communication link. (The monthly average cost of a 2 Mbps business broadband connection is USD 46 in Colombo. This might be slightly high in rural areas.)

Telecenters operators are rewarded in different ways. Only 33% are salaried. 22% receive a share of profits. 13% receive an allowanced based on performance. 32% receive no personal income. How they prefer to be rewarded? 51% wants a monthly salary; 26% a share of profits and 18% a performance based allowance. Doesn’t sound too entrepreneurial but in Sri Lanka culture job security plays an important role.

The objective of the fund is to provide opportunities to the entrepreneurs to undertake innovation in the field of telecom with regard to content, software and technologies, Bharti Airtel Joint MD and CEO Manoj Kohli told reporters.

This is the first ever telecom innovation fund in the country, he said.

Source: The Economics Times

The Department of Telecommunications (DoT) will hold a pre-bid conference here with all the potential consultants – one of whom would oversee the process to e-auction spectrum for next generation mobile applications, officials said.

Read the full story in ‘sify.com’ here.

Responding to Rohan Samarajiva’s views on newly implemented Environmental levy in Lankadeepa last week, Central Environmental Authority Chairman Udaya Gammanpila calls it essential and the ‘first progressive tax’ in Sri Lanka. Assuring it does not burden public, he says any tax can be initially unpopular but the impact should be seen in long term. (Lankadeepa, August 19, 2008)

These are his points in brief:

1. If not for the Environmental levy, the government has to find money to address environmental issues by increasing either VAT or customs charges. That will raise prices in general. It is unfair. Why should villagers who have never seen a mobile phone contribute for its removal whenever they buy flour to make rotis? Instead we have introduced a tax only on pollutants. So only the culprits pay for remedial measures.

2. Mobile phone usage has drastically increased during the last few years. Now there are about 8 million mobile phones in Sri Lanka. (sic) The cost of a mobile phone was reduced from Rs. 75,000 in 1994 to Rs. 3,500. These have made the lifetime of a mobile phone shorter and more mobile phones are being released to the environment. (sic) Our intention is to build a recycling plant for e-waste. Such plants can be seen in India and Singapore.

3. Why we tax mobile usage? Because it is one commodity the prices have fallen during the last 15 years. In 1994 an incoming call was charged at Rs. 20 and outgoing at Rs. 30 per minute. Today incoming is free while outgoing is Rs. 4-5 per minute. How can one allege us insensitive to Cost of Living?

4. Before complaining about these taxes one should note their actual impact. 90% of Sri Lankan mobile subscribers are pre-paid. The average revenue per unit of a prepaid account is Rs. 360. Let us assume it to be Rs. 500. Two percent of that is Rs. 10 per month. That is all we ask to protect environment. Is this adequate even for a cup of tea?

5. Atmospheric pollution in Sri Lanka is too high. The tax on motor vehicles is meant to control this. Vehicles are taxed only if they pollute. If they run on electricity or water (sic) no levy is applicable. The levy is proportionate to the level of pollution. Vehicles such as buses, lorries and three-wheelers are exempted on Cost of Living considerations.

6. CFL bulbs solve one environmental problem, but their release to environment causes another. So we need to collect the used CFL batteries for recycling. A Denmark company has agreed to setup a recycling plant if we ensure enough input. We believe taxing 3% on non-CFL bulbs will make CFL bulbs more popular.

7. Tower tax is meant to encourage telecom operators to share towers. That has no effect on Cost of Living.

8. The money collected will be credited to a special environmental fund. Ministers of Finance and Environment have to annually report on this to the parliament. This ensures tax money will be used solely for environmental protection purposes.

(We open the discussion to our readers.)

Why a Wi-Max broadband consumer should pay 100% more tax than any of her ADSL counterpart for the same service is an interesting question. Wi-Max technology does not pollute environment more or Sri Lankan government (or regulator) is not necessarily biased towards wired solutions over wireless. It is just that the two tax components 10% mobile tax and now 2% environmental levy are unique to ‘mobile’ services.

Wi-Max is very much a ‘fixed’ technology (compare with 3G) but one still get it from Dialog – better known to public as a ‘mobile’ telecom services provider. (Strictly speaking it should be Dialog Broadband Networks) So you are taxed additionally for ‘mobile’ services, while no such mishap when receiving ADSL services from SLT – most still know as the good old ‘fixed’ phone services provider!

Take this hypothetical case: If Dialog decides to sell their publication ‘Zero77’ (now given free) do we have to pay 30% tax for that too?

Should we just ignore this as another farce of the ridiculous tax structure?

Not everybody agrees.

Talking to Sunday Observer, Chartered Accountant cum Tax Consultant N.R. Gajendran, Partner, Gajma and Co. claims the Green levies have been introduced to cover the Government’s expenditure on the SAARC Summit and the Provincial Council elections. Revenue proposals, says he, should be made through the budget and not as interim proposals.

“A mobile phone is not a luxury item. A tax on the phone will be an added cost to low and middle income earners. Consumers will have to pay for the tax on new telecommunication towers”, Gajendran emphasises. 

Levies on mobile phones, telecommunication towers, use of non CFL bulbs and petrol vehicles came into force from August 1 under the Environment Conservation Levy Act No. 8 of 2008. Under that all communication towers will be charged Rs. 50,000. A levy of 2 per cent of the monthly Bill will be imposed on mobile phones, Rs. 3 will be charged on non CFL bulbs and there will be a levy of Rs. 100 on motorcycles and Rs. 300 on cars per annum. CEA targets a revenue of Rs. 500 – 800 million annually from the taxes.

Rohan Samarajiva, Executive Director of LIRNEasia now takes the issue to local language media. In an interview given to Lankadeepa he questions the effectiveness of the proposed levy in reducing environmental pollution.