You can imagine my surprise when I see a New York Times writer saying that fixed phones in America are becoming ornamental objects. It’s not that they are rooting out the copper lines or fiber; but that it does not make sense to have phones that are fixed to walls (except in baseball dugouts and places such as that).

The seed-strewn dugouts of baseball stadiums around the country may very well end up the final bastions of corded communication in this wireless era.

While landlines in homes collect dust and serve increasingly decorative functions, the attitude among baseball clubs is a familiar one in a sport tied tightly to old-fashioned ways: why change what works?

Is it better to have journalists who understand the technical aspects of the industry and the practice of regulation, than not? I think the answer is clearly yes. Does this fall within LIRNEasia’s mission, yes. Then the only issue that remains is that of sponsorship. Will LIRNEasia’s image be compromised by my speaking at an event sponsored by Grameenphone, the largest operator in Bangladesh? I do not deliver a script written by Grameenphone, so I see no problem. I spoke at a similar event in 2007 organized by Sri Lanka Telecom, Sri Lanka’s incumbent operator. Have not noticed any negative outcomes.

Looking at the post I wrote after that event, I see that I had said that we were tempted to organize such events in all the countries we worked in. This could be described as yielding to that temptation!

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.

This is a case of the market responding to what the customer wants in the face of regulatory failure, or a work around of the type we discuss in our book. From 1999, the Telecom Regulatory Commission has been considering a shift to Calling Party Pays, but has balked for various reasons. In 2004, the decision was taken and a news conference was announced. Just hours before the news conference, the politically appointed Secretary to the Ministry/Chairman of the TRC, unilaterally and possibly illegally overrode the Commission decision, saying he cannot be responsible for allowing this decision to go through just before the election. He kicked it to a public hearing. The public hearing committee counted the NUMBER of submissions pro and con, and decided that the public was against CPP even though it was obvious that the con submissions were based on a common template and were orchestrated by a union. So Sri Lanka remained RPP, while both India and Pakistan, which started the process later, converted and gave the customers what they wanted. Regulatory failure caused by political interference and staff incompetence.

The Tigo action comes in the context of a full-blown price war initiated by “No. 2″ operator Mobitel and the response last week by the market leader Dialog. For the last few years, everyone has been inching toward ending RPP. No RPP was being charged from postpaid customers for all practical purposes. The Mobitel salvo ended it for government employees and pensioners a few weeks back. The Dialog response last week ended it for all, but asked for a one-time fee to get the benefit. Now Tigo has written the script for Mobitel’s response and also perhaps for Hutch and Bharti Airtel Lanka.

The people have been given what they want. But the regulator still has work to do. The fixed networks should not get the free ride on the mobile networks they have enjoyed for the past so many years. Completion of a call originated in a fixed network on a mobile network causes costs on the mobile network. From the time mobile was introduced in Sri Lanka in 1989, the fixed networks have collected the retail price of the call (usually the higher price of a national call) and KEPT IT ALL, without giving one cent to the terminating network. The excuse was that the mobile networks could charge for terminating the calls under RPP.

On the other hand when a call to a fixed network is originated on a mobile network, the mobile operator PAYS A TERMINATION CHARGE to the fixed network. In 2007, for example, Sri Lanka Telecom earned LKR 593 million in such payments. A Sri Lankan fixed network operator will pay termination fees to other fixed operators; it will pay termination fees to foreign fixed operators; it will even pay termination fees to foreign mobile operators. The only operators it will not pay termination fees to are Sri Lankan mobile operators.

Now that consumer demands and competition have ended RPP, the mobile operators are providing termination services to fixed operators for free, cross-subsidizing it from origination services. This is wrong.

It is high time that this anomaly is remedied. Sri Lankan mobile operators are offering some of the lowest mobile prices in the world. The least the regulator can do is to ensure that they are treated fairly.

The recipients were Dr. Hans Wijesooriya of Dialog Telekom, Leisha De Silva of Sri Lanka Telecom, Harry Jayewardene of Distilleries and Aitken Spence, Sumithra Gunasekara of John Keells, Rajendra Thyagaraja of Hatton National Bank, Ravi Dias of Commercial Bank, Eran Wickremerathne of NDB Bank, Nustanfer Ali Khan of Ceylon Tobacco and Thila De Soysa of Bukit Darah.

Source: Colombopage

The Nation Economist, Sunday 26 August 2007 | See Print version

I have to say that JHU does not know economics. What is the rationale behind taxing the only sector that is growing? The industry is giving government enormous amount of revenue. Twenty percent of every mobile rupee goes to the government. If you squeeze the goose for more eggs the goose will ultimately die. To my knowledge some of the taxes the government is thinking of will really kill the industry. We have got data which say people in the bottom of the pyramid are willing to spend Rs.500 per month on communication. So if the government put another tax these people will be discouraged to get themselves connected and as a result of that the government will lose revenue.

By Indika Sakalasooriya
The entry of the Indian business tycoon Sunil Miththal’s Bharti Airtel, India’s biggest mobile operator into the Sri Lankan market has left many players in the telecom sector to ponder on the harsh effects of severe competition in the future.

The existing mobile operators in the market seem to have appraised the impact even before the physical arrival of the Indian giant. The majority of the industry analysts are now of the view that the profit margins of the mobile operators will become thin due to the expected intense competition in the market.

However, amidst all these developments, from the government’s side we heard a story of further taxation of the growing mobile industry. The Nation Economist thought it opportune to get some insights from Professor Rohan Samarajeewa, a former head of the Telecommunications Regulatory Commission of Sri Lanka who is a keen observer of developments in the telecommunication sector in the Asian region to find out his assessment of the Sri Lankan mobile industry and where it is heading.

Here are the excerpts of the interview
Q : What is your general assessment of the Sri Lankan telecom sector as it stands today?
A : Doing well and could do much better. Why do I say doing well is compared with every other sector, the telecom sector is doing well. Its contribution to the GNP growth rates is considerable. Why do I say it can do better is Pakistan has overtaken us in mobile and our ADSL data situation is not really satisfactory in terms of people getting value for money. A lot of the BPO industry is not growing as fast as we expected. So in that sense we really could do much better than we are doing now.

Q : What kind of an impact will the arrival of Bharti Airtel have on SL telecom industry and to the mobile operators in the market?
A : Well, first we have to look at the Indian market and Bharti Airtel. India is one of the exciting markets in the world because every month 7 million new phones are added to the market. That means 7 million new subscribers. So now you get a sense of how big the Indian market is. And also India belongs to BRIC (Brazil, Russia, India and China). BRIC has the most happening markets in the world and we are sitting next to a BRIC. In the Indian telecom industry Sunil Miththal and Bharti are seen as innovators. He is getting awards and prizes in India. We have to find out for what he is getting prizes?

They are not getting those for being the biggest or for being profitable. We have to understand that there is no technological innovation but business innovation when Bharti is considered. The business innovation is how you make high profits on very low revenues per user. The company has pioneered very innovative techniques and that is they don’t run their networks. They outsource the whole thing down to the supplier. So what they are doing is basically brand managing. They own the brand and manage the interface with the government and they supervise the outsourcing process. Having the two facts in mind let us think of the size of Sri Lanka. Sri Lanka is about the size of greater Mumbai or greater Delhi. So, here we have is a company extremely good at managing costs and handling numbers. So here they come to Sri Lanka. I’ll be very concerned if I’m one of their competitors.

However there are two things that go against them. One is Sri Lanka has a few very efficient and sharp mobile companies and among them nobody is a sleeper. The second reason is Bharti is investing two little. It suggests to me that they are basically going to do a very conservative roll out. In 2004 the Central Bank of Sri Lanka in the Consumer Finance Service said 25% Sri Lankan households except in Mannar, Kilinochchi and Mulathiwe areas had some kind of phone. Now I’m willing to stick my neck and say it has gone up to 55% by now and that’s an extrapolation from some data we have. So we have to understand that this is a highly saturated market. At the same time we don’t have mobile number portability. The only country that has mobile number portability is Pakistan. So considering all these facts I’d say it is not easy for Bharti.

Q : Will the competition be healthy in terms of survival of the industry?
A : Yes sure. I’m always there for intense competition. Many think that the margins of the service providers will go down with the entrance of a new player. But I don’t think so. In 1994 when Dialog enter the market many people thought Sri Lanka was a tiny little market and there was no way that a fourth mobile operator can succeed. First it was said that Dialog would not succeed and secondly the margins will come down. But what happened? A fourth player came. Did the margins come down? Let us assume that what you are saying is correct. So the worst thing that can happen is the exiting of one player. The player who cannot give the enough commitment will exit the market. What is wrong in that?

Q: With the arrival of Bharti it was reported that some parties in the government had proposed to further tax the mobile industry as the sector is considered to be profitable. What is your reading on that?
A : I have to say that JHU does not know economics. What is the rationale behind taxing the only sector that is growing? The industry is giving government enormous amount of revenue. Twenty percent of every mobile rupee goes to the government. If you squeeze the goose for more eggs the goose will ultimately die. To my knowledge some of the taxes the government is thinking of will really kill the industry. We have got data which say people in the bottom of the pyramid are willing to spend Rs.500 per month on communication. So if the government put another tax these people will be discouraged to get themselves connected and as a result of that the government will lose revenue.

Q: Since you mentioned the issue of number portability, what are the pros and cons of number portability? Will the implementation of number portability lead to some perfect competition?
A : Competition has to be the basic rule we should be working on. An essential quality of competition is when a customer is not satisfied he or she should be free to go to another supplier. So now the question is if I’m not satisfied by my present mobile services provider I still have to bare it since I’m not ready to change my mobile number. But in a place where you have total competition you should be free to go to another service provider while keeping the same number. That is what mobile number portability is all about. People might ask me if the number portability is so important why didn’t you push for it when you were the DG of TRC? I had to deal with less than million phones and we had various problems such as interconnection. So during that time the idea of having number portability is very close to a dream. By now our telecom industry is growing and today mobile number portability has become a very important aspect of the industry.
There are two ways of doing number portability. One is call forwarding and the other way is to do it in a straight way through an intelligent network. It has costs and will take time. But it will definitely improve the market.

Q: As a former TRC DG and present advisor to the government of Bangladesh on telecom related matters, what are the reforms you are suggesting for the present telecom regulatory regime for the betterment of the industry?
A: I am a policy and regulation guy. For the industry to grow what we really need is a greater attention to be paid to what we call wholesale access. All the mobile operators should get the privilege to use the under sea cable going out from Mt. Lavinia on a non discriminatory cost oriented way. At the moment there are only three companies using the cable, SLT, GSNL and Dialog. But these other two companies get step motherly treatment from the SLT and that should be straightened. That’s a regulator’s job. Within the country majority of the fiber optic cables belong to SLT. But they should offer that facility to other companies at reasonable prices. Because it doesn’t make any sense in our country for every company to have their own fiber optic cables or to build microwave networks on top of already existing networks. So at a fundamental level I would put that as the highest priority because that can reduce the cost of a call. The other thing as I mentioned earlier is the mobile number portability.

Q : What are the key areas that the existing and the prospective telecom service providers should concentrate in carrying out operations?
A : The bottom of the pyramid is the place they should focus. I’m telling this because we have done research on the matter. The companies should understand that it is where the money is. As Professor Prahalag said, there is a fortune to be made at the bottom of the pyramid. The other fact is in Sri Lanka the main two growing sectors are telecom and banking. Why can’t we put the industries together since that is where the action is.

Q : Some say that the present regulatory system is in favour of the SLT of which the government still has the major stake. What is your opinion on this?
A : The Act we at the moment have is archaic and obsolete. The law is not very good and the staff is not very competent and it is possible that the regulatory authority is not doing well. What I can say is in my time Sri Lanka Telecom was fined for violating its licence condition. Therefore at least I can say during my period SLT was not favoured.

Q : As a person who is running a research body that overlooks the entire Asian region, can you explain why India still does not practise 3G operations?
A : Well the reason is the problem we also have. But India has it in a bigger way. Indian military is occupying a lot of frequencies. Therefore to start 3G operations the Indian Army and the other defence forces should be moved away to clear the frequency. We are not in bad shape as in India but we are close to it. We have not only military problems but also there are other parties who are using these frequencies for low value purposes.

In a press conference held yesterday to announce South Asia’s first Broadband Communications Congress and Expo (SABCCE) General Manager/ Head of Consumer Market Development Division of Sri Lanka Telecom SLT M.Z Saleem said CDMA Broadband technology will be introduced to the local market by SLT soon.

Most of the service providers in the local telecommunication industry are in the process of introducing this technology to the market. However the equipment needs higher investments for introducing this technology,
he said.

‘Broadband communications are very cost effective. It provides high-speed data transformation to the users, he said. The SABCCE will be held from September 4 to 6 in Colombo. The SABCCE will establish ties between decision makers of broadband industry in the region and provide the forum for sharing information and experiences.

Executive Director of Lirneasia Prof. Rohan Samarajiva said broadband communications are important for the country’s economy. These technologies will help businesses to be much more competitive in the market.
‘When using broadband communications people face technical problems and regulatory problems. SABCCE will provide the platform to discuss and share knowledge among the countries in the region on using broadband communications.
We need to have these type of congress in Sri Lanka, he said.

Sri Lanka Telecom (SLT) said Tuesday it has received BOI status from the Board of Investment that would enable it to import and buy locally project-related items free of customs duty.

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30 January 2007

Internet facilities and 8,000 telephones cut off in Jaffna Peninsula

The Free Media Movement (FMM) is deeply disturbed to learn that basic communications facilities to the Jaffna Peninsula have been blocked from 28th January 2007. Internet facilities and around 8,000 landline telephones of Sri Lanka Telecom (SLT) are dysfunctional to date. SLT, jointly owned by the Sri Lankan Government and Nippon Telegraph & Telephone Corporation (NTT) of Japan, is the sole Internet provider in Jaffna Peninsula with a population of around 600,000 according to official statistics.

The FMM was told that there is no official decision by the Telecommunication Regulatory Authority to block communications in this manner in the Peninsula.

However, a number of citizens in Jaffna and journalists confirm that there is no Internet access in Jaffna for the past 3 three days, when contacted through mobile phones. SLT Jaffna office told FMM that for security reasons SLT link to Jaffna has been disconnected form Anuradhapura, a north central city.

Two Tamil newspapers, Sudaroli and Thinankkural told FMM that they are unable to receive or send any news and photos to their other newspapers in their media group by email since Sunday. Freelance and independent journalists based in Jaffna also cannot send any photos by email or access Internet.

FMM notes that the freedom to receive and impart information and ideas through any media regardless of frontiers is enshrined as a fundamental right in Article 19 of the United Nations Universal Declaration of Human Rights. We also note that given the context of uncertainty and fear, access to and the dissemination of accurate information through the media is of paramount importance in securing human rights and human security in the Peninsula.

Accordingly, the FMM strongly urges the relevant authorities to take immediate steps to reconnect the Jaffna peninsula by unblocking access to the Internet and facilitating unrestricted access to basic telephony in the region.

for more information – (+94) 777 315665 Spokesperson- S. Sivakumar 0777 315665

Convenor – Sunanda Deshapriya ( 0777 312457) – Secretary – Sunil Jayasekara ( 011 2851672/3)

No. 237/22, Wijeya Kumaratunga Road, Colombo – 05., Email : fmm@diamond.lanka.net,

www.freemediasrilanka.org

groundviews » Mobiles Working Again

After the tension situation (aug 11th) all the mobile phone connections cut by security forces in Jaffna for security reasons. From 25th the mobile phones working again in Jaffna. The mobile phone companies sent the bill for the cut period also. Only Dialog and Mobitel is workin in Jaffna.

LANKA BUSINESS ONLINE – LBO

A new fibre optic undersea cable that connects Maldives to Sri Lanka will bring down international call charges from the Indian Ocean coral atoll, officials said Tuesday.Until the cable was commissioned this month, bilateral traffic of 600,000 minutes per month was routed via more expensive satellite links.

The undersea cable is a 20 million US dollar joint venture between Sri Lanka Telecom, owned by Japan’s NTT and the government of Sri Lanka and the Maldive state telecom firm, Dhiraagu.

“We expect call charges to fall,” Sri Lanka Telecom Chief Executive Officer Shoji Takahashi said.

It has a lot of high-end hotel rooms, but the USP of the tourist industry there is not business travel, it is utter and complete relaxation.  And relaxed people are not known to generate lots of data and voice traffic.

All this is relevant to the question of what will go through the two cables landing in Maldives by 2007.  Reliance/FLAG is already live, I believe.
Maldives did not switch to education in Dhivehi like Sri Lanka did, and as a result they have a significant population of young people ready to work in BPOs. So is it possible that Maldives is investing in cables in order to go into BPOs in a big way? Perhaps, some Sri Lankan or Indian entrepreneurs should get a running start . . .

One would also hope that all this construction will have some effect on the prices of IPLCs out of Colombo [international private leased circuits]. My understanding is that SLTL’s IPLC prices are many multiples higher than those offered by Indian vendors. Unless prices come down, the cables can be built, but will they come?

LANKA BUSINESS ONLINE – LBO

A 20 million dollar joint venture with Sri Lanka Telecom and Dhiraagu Telecom of Maldives, the 850 kilometre cable is due to be commissioned in the first quarter of 2007.“This cable has a 10 Gigabit capacity, but it can be expanded to 1 terabit because there is a possibility that we can connect to the African side, via Maurtius, Ascension Islands, Madagascar and also South Africa,” Suhei Anan Chief Executive of Sri Lanka Telecom (SLT) told Lanka Business Online shortly after a cable laying ship set off towards the Maldives from the West coast of Sri Lanka.

Streaming Fast      
28 September 2006 19:00:19
Sri Lanka Telecom links up with India’s BSNL to offer wider choice
 
September 28 2006 (LBO) – India’s Bharat Sanchar Nigam Limited Thursday officially kicked off a 1.8 billion rupee undersea cable unit with Sri Lanka Telecom, which will bring down call rates between South Asian countries.
The optical fibre cable, which run between Mt Lavinia (Sri Lanka) and Tuticorin in India, will enable SLT customers to enjoy high speed broadband services such as audio and video streaming.

 Read full article on LBO

The above column presents evidence to the effect that:

“Given enough time and competition, reformed infrastructure does reduce disparities among regions.

The reforms that started to have effect in the mid 1990s, with the licensing of the fourth mobile operator and the two fixed entrants in 1995-96, the partial privatization and managerial reform of Sri Lanka Telecom in 1997, and improvements in regulation starting from 1998, did result in allowing the rural people of this country greater access to telecom services.

Of course, it must be noted that the dazzling growth in the Northern Province (Jaffna and Vavuniya districts) was only made possible by the cease fire agreement of 2002, the lifting of the nonsensical ban on mobile telephony in conflict areas, and the courageous decision by Dialog Telekom to provide service in that region within three weeks of the signing of the CFA.”

Extended Family      
05 June 2006 14:23:29
Sri Lanka opens the door for fifth mobile phone operator
 
June 5, 2006 (LBO) – Sri Lanka plans to expand its mobile phone market to five players, in a bid to bring down costs of telephony, the telecom regulator said Monday.
 
Sri Lanka’s mobile market had grown 53.5 percent to 3.34 million customers as at end 2005, according to TRC figures. 

The island’s cellular penetration is expected to increase to 20.0 percent in 2006, from 17.3 percent last year, according to industry analysts. 

“Mobile phones are one of the fastest growing segments in the economy now, and it is showing potential to grow further,” notes Ratwatte. 

Dialog Telekom, currently dominates the market with over 2-million subscribers. 

A unit of Teleokom Malaysia, Dialog competes with Mobitel – a unit of Sri Lanka Telecom; Celltel Lanka Ltd and Hong Kong’s Hutchison Telecommunications International Ltd. 

Newcomers will have to pay 4-million dollars for the license fee, says Ratwatte adding that the closing date for applications has been fixed for June 30. 

In May, Sri Lanka invited mobile operators to set up a next generation or third generation mobile phone network, with the aim of offering high speed wireless services. 

TRC has fixed the license fee at 5-million dollars. 

Third generation or 3G licenses will be available on the 2GHz (gigahertz band) and the initial spectrum allocation will be limited to existing mobile operators.
 
Dialog is currently offering 3G test runs and hopes to offer high speed internet access on mobile phones later this year. Mobitel is also expected to start test runs for 3G shortly.