TRCSL invites bids for 5th mobile telecom player

Posted on June 6, 2006  /  51 Comments

From LankaBusinessOnline

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.


  1. From Telegeography, June 8, 2006
    Sri Lanka aims to attract fifth mobile operator

    Sri Lanka plans to expand its mobile phone market to five players in a bid to bring down consumer telephony costs, the Telecommunications Regulatory Commission (TRC) announced on Monday. Following hot on the heels of a 3G licence auction, a fifth national GSM network operating concession will be offered to potential bidders that apply before the closing date of 30 June, priced at around USD4 million. TeleGeography’s GlobalComms database notes that the regulator launched a 3G licence tender on 23 May by inviting expressions of interest from the country’s existing four cellcos — Dialog, Mobitel Sri Lanka, Celltel Lanka and Hutchison Telecommunications Lanka. It gave the companies two weeks to respond to the offer of an unspecified number of USD5 million UMTS concessions including W-CDMA spectrum in the 2GHz band. The 3G auction is expected to be completed in July 2006. According to GlobalComms, the country’s total number of mobile subscribers reached 3.6 million at the end of March 2006, a cellular penetration of more than 18%, up from 11.3% at the end of 2004. Telekom Malaysia subsidiary Dialog Telekom currently dominates the sector with 2.3 million subscribers, or 65% of the market.

  2. Why a 5th Player???????

    This is a big joke. 5th player too will cover only Colombo and suburbs and then erect huge billboards everywhere like the other players do. Why not TRC force any of the exisiting ones to cover the whole island. This is ridiculous as Sri Lanka being such a tiny country, you cannot use a mobile phone when you pass Ambepussa. All these players have no plans to cover the rest of the country. they simply put up a billboard saying COVERED when they erect a tower in a city but you cant access the network at least within a 5 km radius of a tower.

  3. As someone who has been monitoring mobile coverage since 1998, I cannot agree with the comment that coverage is poor. It has taken time, but Dialog has got quite extensive coverage and the other players are making significant investments to catch up.

    Here is an open invitation to the four mobile operators to respond to the criticism and provide data on the percentage of the population they currently cover.

  4. Even on low areas like kadhiranawatte (Colombo15) having poor reception.

    Take Anuradhapura
    Palm Graden Village Hotel area has no reception.
    How come you say Anuradhapura is covered?

    Byond Pasyala in Kandy road has no reception but we all can see a tower on a top of a mountain.

    Sri Lanka is one tenth of the state of California

    We have no island wide reception

    Donald Gaminitillake

  5. Coverage

    I too strongly agree with Prof.Samarjiva that coverage has improved and also all 4 players will cover the entire island within another few years. Out of 4 players Dialog has the best coverage and they continue to improve the same. They have done a quite a significant coverage during past year and with the new investment coming in they will continue to do the same to maintain there position in the market. As per information Celltel, Mobitel, Hutch too are doing simmilar expansions. Celltel will be going GPRS/EDGE soon.

    5th Player? Viable

    Our total population is 19M people. So I am sure it’s going to be tough for another party to survive and thrive in a sector which requires huge investments specially when it comes to offering data such as 3G services. I am sure in time to come there will be acquisitions and mergers between big and small operators and it will end up to 2-3 operators at the end. Even today 60% market is totally dominated by one player. Three is no challenge to the leader for past few years till now from any of the other 3. (no significant visible challenge to date to match the leader in all aspects) Also, the most imporatnt revenue generating corporate clients and big businesses are already with existing players and it would be a daunting battle for another party to attract customers and gain market share at a time other 4 players are doing mega expansiotns and investments. Out of 4, 2 are already planning to do commercial launch of 3G services.

    Overall my view is there will be mergers and acquisitions to survive in this competitive market place which will finally end up with 2-3 operator in future.

  6. I strongly agree with Donald. Looks like while Harsha and Samarajiva have never stepped out of castles in Colombo, likes of Donald are the only people who step out of Colombo at least for a fun trip. I think he has more reasons to take decisions when it comes to IT and Communications infrastructure compared to these Colombo- based princes who think “Colombo is Sri Lanka.”

    Donald, I know how hard life is for you to convince a set of headstrong idiots in this country.

    Harsha has all reasons to defend Dialog as he is selling his Sinhala software to Dialog.

  7. Everyone is talking about 3G at a time most parts of the country has no coverage. Country’s economy runs not because of a set of businessmen who have the latest models of cellphones. COuntry runs because of farmers in the outstation. So called Mahinda Chinthanaya and President Rajapaksha is there b becouse of those poor masses. If they are given the basic infrastructure, they will more productive and we in Colombo can consume low priced vegetables and rice.

    It is disspointing a person like Harsha does not see the reality. You are supposed to talk about the poor masses, not to defend big companies like this.

  8. Dialog is much better compared to other players.

    Celtell introduced a BIG BLUFF called TANGO to rural areas some time back. Poor folks baught this totally unsuccessful units with investing around 15,000 LKR to erect antennas and SIM supported phones but the phones proved a total faliure within few weeks. TRC?????? You guys will say this is not your job huh.

  9. Dear 5th player and Donald,

    Do not expect much support from any for this blog. majority of internet users are in Colombo and they never need mibile phones to work when they go out for fun stuff. They need to have fun with some other birds and the last thing they need is a call from the wife or the kids. This applied to the 4 CEOs of the mobile operators too. For them, covering outstation hotels in Kataragama or Wellawaya is totally useless.

  10. Let’s us try to think through this in a logical step-by-step manner:

    Has access to telephone service increased/remained the same/decreased since GSM operators were introduced?

    If coverage has increased, Which I think everybody agrees that it has, we get to the second point.

    What is the extent of coverage?

    Instead of giving us anecdotes about poor reception in some areas, why don’t you produce some agregate numbers on coverage?

    [Unlike what many in this board fantasize, many developed countries don’t have 100% coverage either. I was in Canada recently, and during large parts of my trip to the rockies I had no reception on my mobile. In the US too where I lived for a while, when I cycled outside the city to the rural area, many a times I had no reception. My bro-in-law who lives in a small village in Italy has to drive towards the town to get any reception on his mobile. On the other hand, I was impressed that I had mobile reception in Sri Lanka while climbing up Ritigale, or the sheer thrill of being able to browse the web while sitting in the train to Galle using GPRS and connected to laptop via bluetooth. These are all anecdotes, which though interesting don’t shed much light on the overall telephone coverage of the countries mentioned]

    Consumers usually always benefit from more competition. There is little reason to imagine that harm to consumers would be caused by the entry of a 5th operator. I bet we will see further drop in calling prices by mobile operators and consumers will benefit from cheaper prices. The 5th GSM operator (not 3G) will come into a market that is already quite saturated in the urban areas. If it has to find a growing market it probably is in the semi-urban and rural areas where there are people craving for connectivity (as Shoestring study shows) and either those people don’t have access or prices are unaffordable. This is an opportunity for 5th operator to exploit and regulatory intervention in form of requiring Dialog to provide cost-oriented interconnection can make it happen. If 5th operator instead of trying to innovate services in untapped markets tries to battles it out with the other operators in the urban areas, attrition may occur as predicted by some.

    Bottomline: Entry of 5th operator can’t do harm from consumer welfare point of view. It may squeeze the margins for existing operators, but that is the risk of doing business.

  11. Wel well well Sidath

    You are not aware how many srilankans live out side homeland.
    All these people are from villages not from the city of Colombo

    They communicate a lot with the loved ones. Most of them on mobiles

    Sri Lanka have only 300,000 tax payers but do have over 2 million mobile subscribers

    Colombo vote register was aprox (I may be wrong) 480,000 anyway Colombo is not a million city.

    If you allocate 600,000 mobiles to Colombo where would the other phones be!!!!!

    We need a change Hon President

    Please move the CEB HQ to Mulativ, Insurance Corporation to Wellawaya, Sri Lanka Telecom HQ to Mahavilachchiya, Bank of Ceylon head office to Kirinda, Peoples Bank Head office to Kaluthavalai, Ceylon Petrolium HQ to Hambantota then this country will develop.

    Donald Gaminitillake

  12. Donald,

    We should have made you the president of Sri Lanka. But what use, when Mahinda came, everyone thought he would think the way you do. But it never happens. They find it easy to go in the traditional way of comforting the elite. It is the elite’s money that make they win election, not people’s votes. Guy like you too would do the same.

    I was there at the Intel event and can remember Wanni asking the SLT CEO to cover horizon village with SLT. I’m not sure if SLT covered MV yet. Moving SLT headquarters to MV eh????

    I see a lot of people trying to defend mobile companies in here. why?

  13. One of LIRNEasia’s objectives is to provide evidence for informed policy debate. It was in this spirit that I invited the mobile operators to contribute evidence on coverage. While they are getting organized, I will point to some relevant evidence generated by LIRNEasia in its Shoestring research. Multiple powerpoint presentations and papers can be accessed by using “shoestring” as a search term within the blog.

    The shoestring research was done through representative sample surveys of persons who had (a) used a phone in the past three months and (b) had an income of less than LKR 10,000/mo. in the districts of Badulla (urban and rural); Colombo (urban); Hambantota (urban and rural) and Jaffna (urban and rural).

    I paste below some relevant extracts from the main paper. Much of the relevant information about access to mobiles in rural areas is in the figures which cannot be pasted on this space.

    “Mobile penetration in Sri Lanka (where cellular service has been available since 1989) was 15.85 subscribers per one hundred inhabitants as at end 2005, while that in India (where cellular service has only been available since 1994) was 5.96 as at September 2005 (Telecom Regulatory Authority of India, 2005) Fixed teledensity in the two countries is not dramatically different: 5.14 and 4.07 subscribers per one hundred inhabitants at end 2004, respectively (ITU, 2004; pp.A8-A9). India has a large number of public call offices (or PCOs) across the country, making telecom services more accessible throughout the country to those who do not own a phone themselves.”

    “One of the most striking findings of this study, is that almost everyone use phones; of the 3,690 persons approached (using the KISH grid) in Sri Lanka, only 0.3 per cent (a total of 12 people) were not interviewed because they had not used a phone in the preceding three months. In the Indian case, only 12 per cent of the 4,769 persons approached had not used a phone in the preceding three months. This means that 99 per cent of those approached in Sri Lanka, and 88 per cent of those approached in India had used a phone in the preceding three months.”

  14. In India even in remote areas one can observe small huts that display STD ,IDD boards. Compared to 1988.
    My wife tried to call my sister -in -law in New Delhi from Saranath trying to find out what time I would reach Saranath. Before she could get the line connected I came from Delhi to Saranath.

    Telecommunication is improving but in Sri Lanka the expansion is very marginal. SLT is yet to go to Mahavilachchiya. Dialog uses the Horizons tower to provide a cover less than few meters but if you go to a higher elevation you will be able to get the signal.

    Like Dr Samarajiva mentioned we need some postings from Mobile operators giving their problems and difficluties to expand the services.

    Those days people went into politics with own funding. DS, SWRD etc etc. even at village level.

    “Guy like you too would do the same.”

    Not me.

    Donald Gaminitillake

  15. I am not defending any company but I highlighted the facts. And also I am a person who travels outside colombo at least every 2 months or so. Even last 2 days I was in Osborne Estate in Dick Oya and I am pleased to say Dialog and Mobitel has coverage in that area. But on the way back towards Ginigathena reception was very low in most areas probably due to the fact that surrounding mountains. The main road to Hatton was pretty much OK as we manage to make calls from Dehiowita, Kitulagala, Yatiyanthota and also Hatton. When we reach the estate we manage to call as well, but had to come out from bunglow. So I must say things have been improving. Also wanni would agree the effort we put to get a tower to Mahawilachchiya.

    I strongly agree with everyone we should really think about the masses and provide infrastructure solutions to them. And I think SLT has more social obligation to full fill the desires of rural masses than any other operator but seems like they are taking positive steps as I just read today’s Daily News article on “Mobitel to invest Rs.700M”. Here they say “Internet usage in rural areas is very low and one reason for this is high investments people have to make for computers” and “to overcome this we are hoping to link with a computer supplier so that both connections and the computer could be offered on an easy payment scheme”.

    So above shows positive initiatives taken to full fill requirements of rural masses and am sure other players Dialog, Celltel and Hutch would do such as well. Also I need to bring to notice there is a “US$30 low cost handset initiative by GSM Association where Motorolla received the initial contract to supply the handsets to emerging markets”. And I know that few operators are already having plans to distribute these handsets in rural areas once it becomes available.

    My view remains the same where 5th Operator has to come up with a very interesting strategy to sustain and grow in this market. Perhaps who knows they will adopt a total rural initiative by offering low cost phone connections to rural masses and enter into market.

  16. The TRC is going to give out the 5th license for USD 4 million, is what I understand. What if there is more than 1 party interested? Will they give more than 1 license or will they have an auction to give it to the highest bidder? Or in the alternative will they go back to non-market based, corruption-ridden, tender board type “evaluations” to pick the “best”?

  17. See how much they waste on advertising. Can’t they use some of this money to erect towers and cover more areas? Coverage itself is a good advertisment.

    Harsha is talking about connecting Harron roads???? Why only roads? What about the people who live in those outstation villages away from roads. Mobile phones are not only for pilgrims man. Coverage should be there for the masses. Not for the people who visit these places once/twice a month to have fun. Focus on the people who live like animals in those villages without the very basic facilities.

  18. Looks like these two postings suit here as well

    # 88 Sri Lanka Telecom-man on Jun 12th, 2006 at 3:39 pm

    Some reasons why most of the companies do not expand their networks to rural areas:

    (a) Number of prospective subscribers are small (Unlike in cities, the population densities are less in villages)

    (b) Even among the handful of subscribers, the usage is minimal (for different reasons)

    (c) Collection is a hassle. (Rural folk cannot and will not pay at supermarkets)

    (d) Supporting the network is very difficult (technicians may have to travel long distances)

    (e) The opportunity cost of providing connections at rural areas is large. (With the same effort and investment, they can get a much higher income in the urban areas.)

    So the question is not supplying telecom facilities to the villages, but how to convert the villages into cities so that this will no more and issue.

    Providing telecom facilities to the entire country cannot be done without a support from the government. Whether you like that type of solution or not, there is no other option. Till the volume increases the price will not come down and till the price comes down the volume does not increase. So it is more a chicken and egg situation.
    # 89 Sri Lanka Donald Gaminitillake on Jun 12th, 2006 at 5:08 pm

    So the question is not supplying telecom facilities to the villages, but how to convert the villages into cities so that this will no more and issue.

    You are not aware how many srilankans live out side homeland.
    All these people are from villages not from the city of Colombo

    They communicate a lot with the loved ones. Most of them on mobiles

    Sri Lanka have only 300,000 tax payers but do have over 2 million mobile subscribers

    Colombo vote register was aprox (I may be wrong) 480,000 anyway Colombo is not a million city.

    If you allocate 600,000 mobiles to Colombo where would the other phones be!!!!!

    Please move the CEB HQ to Mulativ, Insurance Corporation to Wellawaya, Sri Lanka Telecom HQ to Mahavilachchiya, Bank of Ceylon head office to Kirinda, Peoples Bank Head office to Kaluthavalai, Ceylon Petrolium HQ to Hambantota then this country will develop.

    Donald Gaminitillake

  19. Dear Telokom man,

    “(e) The opportunity cost of providing connections at rural areas is large. (With the same effort and investment, they can get a much higher income in the urban areas.)”

    This is why so called TRC is there to regulate. Why can’t they ask these companies to cover certain percentage of rural areas when licensed are issued. We have a set of mut heads in TRC who will close CBN to entertain other competetors but they dont have the same interest when it comes to covering the rural sector. TRC should have first gone for discussions before closing the CBN putting 25,000 subscribers in trouble. Bloody red tape eh? TRC wants to destroy. Not to create. I wonder they had the same urge to close tiger satellite TV stations perated from Colombo.

    TRC is yet another dinosur (like Sam Sung) which does not see the positive side of the country’s development initiatives.

    eSri Lanka also should have focussed on covering villages in its startergies.

  20. From today’s Financial Times:

    Ceycom takes Hutch to Siyambalanduwa

    A pioneer in satellite based communication solutions, Ceycom Global Communication Ltd. (a member of The Golden Key Group of Ceylinco Consolidated), was the partner selected by Hutchison Telecommunication Lanka Ltd to implement a GSM based Satellite Trunking (Backhaul) Solution to carry their mobile services to the remote parts of Sri Lanka.

    Siyambalanduwa, a remote township in the District of Moneragala was the first location that Hutch wanted to touch down in as part of their aggressive expansion strategy into remote areas. Until Hutch came along, Siyambalanduwa did not have any mobile phone service let alone fixed lines services, which was limited to a few lines scattered in the town.

    ‘We are pleased that Hutch selected Ceycom Global Communication Ltd as the implementation partner for the Satellite Trunking Solution. As an experienced satellite infrastructure solutions provider, Ceycom has the necessary expertise and commitment to roll-out complex networks of this nature,” Golden Key Group Deputy Chairman/Chief Executive Officer Khavan Perera. “Uplifting the quality of life of the rural community has been one of the foremost drivers of Ceylinco’s expansion strategy. Enabling telecommunications in remote areas of the country in order to uplift the rural communities does blend well with our core beliefs We went Into this project with open arms to support Hutch’s commendable strategy to expand their coverage to remote and underprivileged areas of Sri Lanka,” Mr. Perera said.

    “The Telecommunication Regulatory Commission of Sri Lanka had been requesting mobile operators to cover remote areas in order to improve the quality of life of the villagers. As a part of its strategy in offering affordable teleco services to the masses Hutch decided to implement a GSM based Satellite Trunking Solution to reach Siyambalanduwa, which was the only practical way of reaching remote towns where the terrestrial infrastructure could not reach due to distance and naturally adverse topography of the terrain,” Hutchison Telecommunication Lanka Chief Executive Officer Thirukumar Nadarasa said. “As the only mobile services provider in Siyambalanduwa, we are pleased to note that the villagers are now more than familiar with mobile phone usage and that their quality of life has increased considerably as a result of the freely available services,” he added.

    Wijesiri Malasinghe – General Manager, Network said “Hutch usage has grown tremendously since implementation of the Satellite Trunking Solution by Ceycom together with the support of our in-house engineering team lead by Sujitha Rahubedda – Manager, Transmission. In fact, we have recently upgraded the satellite link to cater to the rapidly increasing demand”. He went on to say that Hutch will be rolling-out many more such Satellite Trunking Solutions in the future in order to touch down on remote areas such as Siyambalanduwa.

  21. Dear Samarajiva,

    Thanks for this news. It is a pleasure to know that a place like Siyambalanduwa is getting coverage. We understand the 4 players’ inability to invest on covering the whole country but can’t they at least cover those places where there are some initiatives for development. Mahavilachchiya is the most talked about in these blogs. And there are other places as well which try to come out of the jungles using IT. Why can’t these big companies give a small push for these projects by giving some coverage. One company can take one project. Let’s invite the 4 companies to take a good step here rather than harping on “no money for rural areas’ song.

  22. “The 5th GSM operator (not 3G) will come into a market that is already quite saturated in the urban areas. If it has to find a growing market it probably is in the semi-urban and rural areas where there are people craving for connectivity (as Shoestring study shows) and either those people don’t have access or prices are unaffordable. This is an opportunity for 5th operator to exploit and regulatory intervention in form of requiring Dialog to provide cost-oriented interconnection can make it happen. If 5th operator instead of trying to innovate services in untapped markets tries to battles it out with the other operators in the urban areas, attrition may occur as predicted by some.”

    This is a good approach but who will take such a risk? Isn’t it the government/TRC should encourage such an invester by giving subsideries? Can we expect this from our Stone Age TRC? Kanchana …. Food for thoughts……

  23. Why cant the mobile companies publish some information regarding the difficulties they have after taking permission form the TRC.

    I will give some areas
    1. land to put the tower
    2. Electricity supply
    3. to get the gareway to SLT of equipments
    5. Lightings
    6. any other licences from other ministries etc etc

    Mahavilachchiya do have their own tower and 3 phase electricity. Why cant you put proper connection over there and pay some percentage (15%) electricity bill to Horizon from the income generated from that tower.

    Donald Gaminitillake

  24. Donald,

    Do you think that a village like MV has a subscriber base to pay this 15% you mention? Won’t it be an utter waste of money for any mobile operator to install a base in a place like MV where farmers and hunters are the majority. They have other places to cover before these pre-historic villages.

  25. In Mahavilachchiya Horizon have their own tower , Electricity only you have to install the equipments
    Have you ever done any research on villages for mobiles. Why are you getting worried about R&D work.

    You dont lose anything fixing for six months as a tral and see the results. How much that tower generates what is the break even one need after paying just 15% of what ever revnue you collect.

    Have you been to MV? Go to the villages and see the energy these people have.
    We got to improve their knowledge base for betterment of Sri Lanka

    First offer the facility then the people will adjust.

    Donald Gaminitillake

  26. As mentioned in another thread if we are to think of overall socio economic development of the country such investments in rural areas should happen else we will continue to see more social unrests/struggles without development.

    Further as pointed by donald, it’s amazing the energy and drive they have to succeed. I am sure people like donald know the struggle wanni put to take internet to village where previously they travel to Anuradhapura to update their website. And when we met them 4 years ago they were planning their strategy for the future under a tree even the prize giving was held under a tree but with much more organized manner (like Oscars) with projectors and all that. It was much more oranized and innovative than a prize giving in a colombo school. Lots of People/organizations started visiting MV after accessing their website. The support / assistanec started pouring into this village. They kept on working hard to realize what they want to achieve. Look at the place now. For me who saw what it was 4 years ago can say that they have come a very long way to where they are now. There are so many houses with computers and youth / kinds who design their own content exist in MV now.

    What we all should dream about is to see more MV’s emerging but it’s a story of energetic visionary person guided by good support who worked and struggled to bring knowledege to their village and empower the village community. If places like MV to emerge, Do we have to see more energertic people, struggling/fighting hard to gain access to knowledege ? or Do we like to see them given access to knowledge by building infrastructure so they will make use of them and contribute for a better future.

    The rural village communities have unlimited potential and they deserve access to ICT infrastructure which will lead to ovreall socio economic development of sri lanka.

  27. Harsha,

    Do you think that governments and provate sector has done enough for Horizon and similar projects. Still these guys run the projects without sufficient funds even to pay salaries, etc. Why can’t governments and pvt. sector do something substancial so that these creative guys will work freely without thinking of other burdens.

    Giving a telephone coverage, is nothing for a big company and they can get a big mileage too.

    Didnt they meet intel big shot recently? Does anyone know what the outcome is? We hoped that Intel will do something significant for Horizon.

  28. Thanks Harsha except for the SInhala issue — for some unknown reasons — always fall in line with me. We got to thank the thoughts of Hon D S Senanayake and Bulankulama family of Anuradhapura for creating these villages. Unfortunately none of them are living to see some fruits from the trees that they had planted. Neither Harsha nor I will be in this planet to see the results of Mahavilachchiya in forty years from now. This is a project that moves on a slow long time line.

    All these events lead and focus into the Sinhala project. If we have a proper Sinhala character allocation table and proper coneectivity urban children will have to come to villages for their tuition.

    Preserve the village culture develop the agricultural economy using the modern technilogy with the dignity of labour. All this is a possible in Mahavilachchiya. It also could be replicated in other parts of Asia. Now Higurukaduwa , Kabitigollawa and Malabe are trying to move on the same path. There are difficulties, and hardship but wuth proper guidance — will move them forward.

    Donald Gaminitillake

  29. It is all very to ask for more money either by government (grants. subsidies), by companies (CSR) or by operators (CSR or cross subsidies) to be given to rural areas. It makes the person who is doing the asking feel good, and possibly makes the company/government doing the giving also feel good.

    But sadly, it rarely solves the real problem in a sustainable way. The photographs are taken, the press releases issued, and quietly a few months/years later, the project reverts to being a computer training center disconnected from the Internet.

    The real problems of rural connectivity, that we have found from research in multiple countries, are:
    1. Incumbents (i.e., SLTL) do not see the economic gains from rural connections because they see only originating revenues; not the revenues generated elsewhere on the network from calls made TO the rural areas. Unless you have the appropriate interconenction regime in place, this problem will not be solved. Only the REGULATOR can solve this problem. Does not require money.
    2. More innovative new entrants will not go the rural areas because of high costs. The highest cost item for a new entrant is backbone (the big pipes needed to get close to the village to be served; distinguished from the access network). It makes no sense to build a big pipe until you have developed enough traffic. In the early stages you want to be able to use the incumbent’s backbone on a non-discriminatory and cost-oriented basis. This is called an access regime. What does it take to get one? Money, no. Good regulation? Yes.
    3. Any operator (new or old) has a choice on where to invest. Investment is always constrained. When you invest in A you have to postpone investing in B. So it is reasonable that operators make assessments about where to put their investment dollars. This depends on costs (costs to use backbone; cost of getting a local authorities permission to build an antenna tower, etc.) and perceived revenues (how much will these people spend on telecom?). One of the things we are trying to show scientifically is that rural people and poor people spend more than people think on telecom (see our shoestring research). In the e Sri Lanka design we also tried to increase *economic* demand in the rural areas through a voucher scheme whereby school leavers, for example, would be given money like entitlements to use the Internet in rural areas, making more business for the service providers. We do not know what happened to that scheme.
    4. Despite all these, the hesitancy of operators to go to rural areas suggested that there was a real capital barrier in our rural areas. Therefore, under e Sri Lanka we also tried to implement a USD 20 million least-cost subsidy auctions for the deep south quadrant and the North East triangle. The money was obtained, the research was done, but the subsidy scheme is dead in the water for a variety of reasons.

    Bottomline: regulatory preconditions such as interconnection and access have to be met for any subsidy scheme to work, whether big (like the e Sri Lanka subsidy) or small (like what is proposed for one village in the NCP). If not all the contributions are akin to “gangata ini kepima.” Read our Nepal study from 2005 if you want evidence.

  30. jegan,

    You seems to be trapped in your little world and thinks ICT and happeings technologies of the ICT arena is for the colombo’s elite….

    Farmers were the live wire of this country in the good old days and what makes you think that farmers or even for that matter the the hunters would not want to establish communication with the out side world… have you ever been to MV ??? have you ever seen the energy the kids in MV have…in general their thirst for knowledge, local teleco’s only put up tamsha’s for the colombo elite and the corporates, nothing apart from that..

    rural areas of our country needs the ICT propagation and know how to be shared with, teleco’s have a social obligation for that fact.. but sadly progress is dead slow… it’s more of the No Action Talk Only Syndrome…


  31. Companies like Dialog keep winning CSR awards. Don’t they??? If Mahavilachchiya has such a potential, I don’t think they will neglect it. Isn’t MV one of those places where the farmers are forcefully dragged to computer lab and force to use computers like most of those Indian projects? Sorry, I haven’t been there yet. Hope things will be ok for a visit soon.

  32. jegan,

    why dont you pay a visit to MV and check out for your self, I believe the environment is conduceive for a visit..


  33. Quote
    where the farmers are forcefully dragged to computer lab and force to use computers

    How come one drag a farmer to a computer when these computers run on English!!!

    Remember that the “race kole” is printed in English — the the people who have no knowledge of english “reads” this “race kole” and put the bets in!!!

    This is Sri Lanka. Give the opportunities they will do far better than anyone else. Go to Kabitigollawa, Mahavilachchiya and Higurukaduwa . observe what the students are doing over there.

    You have no guts to visit these areas!!!

    Please do not under estimate the potential of the people in the era of digital thinking.

    Donald Gaminitillake

  34. Dear Jegan pls download the following pdf file and read

    I quote from the above pdf file

    Almost four million adults in the USA cannot read, sign their names, or perform simple addition or subtraction. Another 30 million workers can read and write only minimally, and yet an additional 40 million are still not at a level sufficient for the demands of our rapidly evolving technology.

    In industrialized countries, more than a third of adults have less than an upper-secondary education.

    98% of the world’s illiterate live in developing countries. Three-quarters of the world’s illiterate live in ten countries: Bangladesh, Brazil, China, Egypt, India, Indonesia, Iran, Nigeria, Pakistan, and the Sudan.

    Rotary is doing a great job and Rotary Sri Lanka is following this topic for 2006/2007

    Mahavilachchiya is above all. Be proud!

    Donald Gaminitillake

  35. If Mahavilachchiya is the best as you guys say, why cant ICTA replicate them throughout the country instead of utter faliure, Nenasala? I have been to Nenasalas and see how much is wasted there. With high speed satellite Internet connections, nobody does anything. What a waste. Does anyone know ICTA did anything significant to Mahavilachchiya? We take examples from India at a time Mahavilachchiya seems the best example.

  36. “Mahavilachchiya is above all. Be proud!”

    I think Mahavilachchiya seems a very good case study for all Sri Lankan IT programs and ICTA and private sector should take a collective approach to take this project forward into newer heights. But what I hear is that many forces try to either ignore or disturb this project due to unknown reasons. Project suffers due to dirty politics of decision makers in big places.

    Here in USA when students try to do something different private sector honestly help the projects to go into the next steps.

    I think it is high time SL mobile operators provide connetivity to Mahavilachchiya. If those kids could afford second hand computers (see worth 100 USD and few carrying laptops ( there is no reason for them not to buy mobile phones worth 50-100 USD. Give them the resources and rest of us can learn from them.

  37. Quote
    instead of utter faliure, Nenasala?

    Nanasala is a faliure
    1. Language barrier – unable to use Sinhala and Tamil correctly
    2. No dedicated staff.
    3. Intentions of the ICTA is wrong – just to make a showcase — and to sell hardware
    4. not managed properly
    5. No trained personals to guide the public 24/7

    Mahavilachchiya seems a very good case study

    YEs , but Mahavilachchiya is in Sri Lanka not in India or in Bangaladesh. Our guys wants foreigner to dictate terms. I have been advised to bring forward the SInhala issue using an American or a British. If a white skin talks of Sinhala isuue ICTA will listen not me.

    ICTA replicate them throughout the country

    To replicate Horizon

    1. we need proper leadership to lead the way.
    2. Traning of staff
    3. Proper salary scales
    4. intensives for the staff
    5. Usage of Sinhala and Tamil in the computer
    6. English classes.
    7. Computer training lessons
    8. Vedio presentations using multimedia projectors
    9. DVD and CBN SAt type television viewing facility
    10. Proper individual self sustaining accouting system
    11. proper income to sustain the project.
    12.Central administration to manage the project

    Donald Gamnitillake

  38. With a bomb going in the district of Anuradhapura, will all the assistance promised stop for MV now? This is scary to hear. Read in another thread that ICTA president vetoed an important event in MV. Will they keep history repeating.

    We don’t see any of the mobile operators here. Do they read this thread. Did any of you informed them about this thread.

    Can someone do a proper servey in MV and its capacities to be “a place to be proud” as Donald say.

    Can’t ICTA or any other body do a proper survey in MV and publich it?

  39. Dear JEgan

    Dont get scared of bombs. They go off inside the ARMY Headquaters!!!!

    I have been to MV even before the cease fire agreement took place.

    No worries in Mahavilachchiya and you risk your life in the cities more than on these villages

    Why not you go and do a servey yourself.

    Donald Gaminitillake

  40. TRC Closed yet another Satellite operator, LBN!!!!! In other countries, the authorities help solve the problems and enable the compnies grow.

    Hope they wouldnt close down the mobile operators too.

    Nice job Kanchana.

  41. I have pretty doubts about new investors with TRC approach to corporate world. TRC chief seems like Mahadenamutta who cut the goat’s head and then removed the pot by breaking that too.. TRC should have systematically corrected the mistakes of these satellite TV stations rather than closing them. We know law is there. But one should be sensible before taking a drastic decision. Nobody tried to stop tigers aquiring all these facilities though

  42. All the mobile operators,

    Why not one of you guys cover this unbelievably enterprising village and see the results? If the results are positive, you can do the same in other villages too. I did a quick search and there are few more projects in Sri Lanka it seems which seem doing some wonderful work without central government’s support.
    I think the existing 4 players should pay attention to these projects in their CSR programs. It is unfortunate most of these only focus in housing or disables concerned projects in Sri Lanka. If you guys help one of these villages, a whole commuity will come up.

  43. Case of MV

    At one time the mobile companies told no tower!!! It will cost lot of money to built one!!!!

    Now MV do have a tower also 3 phase electricity.

    All what the tower need is proper equipments on top of the tower , a generator to power the tower in case of power down on national grid and insurance.

    Monitor how many calls are generated from the tower and how many were received by this tower. Pay the electricity bill using a private meter and give 15% to Horizon for leasing the commercial facilities from the income generated from this tower.

    Donald Gamintillake

  44. This is shocking to hear. In this part of the world, projects like horizon lanka gets everything free drom companies. Comapnies give them sponsorship for Internet, software, telephone, etc totally free of charge and it gives the companies a big mileage than advertising!!!! Is Sri Lankan companies asking money from a project like Horizon????

  45. [quote]

    Is Sri Lankan companies asking money from a project like Horizon????


    What do you think? Of course, we are Sri Lankans.:-)

    Sri Lankan private sector is still too immature; they seek a profit from each and every business transaction. They never think that the good will they gain from the society will help them more to build their business image.

    Sri Lankan private firms have lot to learn from Microsoft and Cisco.

  46. Toppi says
    ….Sri Lankan private firms have lot to learn from Microsoft and Cisco…..

    Has Microsoft and Cisco done anything for Horizon?????? Hope the two companies operate in Sri Lanka too.

  47. Jamal,

    Microsoft or Cisco might not have done anything to Horizon per se, but I know they have helped many similar initiatives in the region.

    As far as I know Intel has given four computers to Horizon sometimes back. Not sure any other big player has contributed anything.

    By the way, Microsoft has an office here but Cisco has not come to Sri Lanka yet. Yes, perhaps I should have taken a better example than Microsoft. The local office has so far not done anything worthwhile for Sri Lanka or for ICT industry. Perhaps because they too think in monetary terms and find Sri Lankan market too small.

    Microsoft is helping in big way to improve heath conditions and prevent diseases like AIDS, Malaria and TB both in Asia and Africa. What Bill Gates says is heath issues are more important than ICTs. (One might not necessarily agree.)

  48. All Visit this link

    Looks like some of the companies have done some for Horizon. It is not apparent whther they are doing a considreble difference though in their budgets.

    As always, Dian Gomes there on the top. Looks like SL companies have to learn from this man before learning from Microsoft and Cisco. This man has a passion in everything he does.

  49. Jamal,

    This might be another reason why no private firm supports pro-bono type projects like Horizon in Sri Lanka.

    Usually private firms do this type of work from the profits they earn. Now let us take one example and see whether the firms get any profits by doing business in Sri Lanka.

    Take the Lak Gov Net for example.

    To win this project a company (say Samsung) fist has to bribe the master; then they have to bribe master’s brother. Then come master’s wife and wife’s family. Finally they should give something to people like Prof. Samaranayake, so Sam and the TEC would give some marks for non-existent local partners or experience. Not to mention the members of the Tender Board. All these palms need to be oiled.

    So after bribing all these people Samsung will find their profit margin is badly diminished so they cannot spend more for pro-bono work.

    So unless you beat this system, private firms might not be able to support any projects like Horizon.

  50. Dear TVelenda,

    Your arguement could be true on the whole but one doesn’t need to pay government officcers any bribe to cover Mahavilachchiya with a mobile telephone network. CSR doesn’t mean throwing a wheelchair for a disabled alone.

  51. I fail to see the value of insisting that mobile operators have to provide services in locations that various people designate as worthy.

    Offering services free or below cost requires the creation of cross subsidies, a technical term for taking revenues from one part of the business where one has a degree of market power that allows the extraction of supranormal profits and applying them to another part of the business.

    This was entire basis of the unsuccessful government monopoly model of providing telephone service.

    Of course, there is a degree of inevitable cross subsidy in conducting business that has to be allowed, especially in a competitive or semi-competitive market.

    But one has to be cautious about too many of these so called CSR demands. When they come from anonymous bloggers they do not carry much weight (or danger), but once government officials and politicians get into the game, the entire commercial basis of the market can be threatened.

    One man’s Mahavilachchiya is another man’s Beliatta.