Build it, but will they come?

Posted on November 6, 2006 / 3 Comments

Maldives is a country with a population of around 300,000, around 32,000 fixed phones and around 232,000 mobiles [this has to level off, because pretty much the entire population is now using mobiles].

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.

3 Comments

Divakar Goswami
November 7, 2006, 11:47 am
It is difficult to understand the logic that has persuaded SLT to lay cables between Sri Lanka and Maldives. Maldives is not the best BPO destination (not enough trained manpower to scale up, high cost, vulnerability to natural disasters). For tourism related voice traffic it is hard to justify the cable capacity that is being laid. I wonder what the economic justification is for this decision. Especially because there is already a FLAG cable (Reliance group) that connects Trivandrum (India) to Male. FLAG cable also covers most of Northern Africa.

There is also a SAFE cable that goes to South Africa with a connection from Cochin, India.

Is there a good explanation we are missing here?
Harsha Purasinghe
November 17, 2006, 7:45 pm
Divakar/Prof,

As per some of my colleagues in Male, they decided to lay a cable to overcome all the limitations and service quality issues related to current international connectivity of satellite. The economics has been justified based on a long term recovery than immediate but even today they are paying huge amounts for satellite space segments which justifies a business case. Further they wanted international connectivity without going through any domestic networks etc.

At the moment there is no cable connectivity and all traffic is via satellite, however, there is a consortium formed (Wataniya & Focus) with Relliance laying a cable to India. Their work is in progress simultaneously but none of the cable is live at this moment.
Harsha Purasinghe
November 27, 2006, 8:43 pm
Some news from Maldives.

The SLT-Dhiraagu Sub-Cable is under testing now and seems it will go live soon. The outbound call charges will drastically come down and special corporate rates will be offered reducing communication-overheads for businesses including the #1 tourism sector. Also they are even thinking of various business opportunities to leverage on this tier-1 connectivity. Even BPO’s are something that they are thinking of, as they are even strengthening the domestic connectivity within maldives atolls. Once this is done though the lands are expensive in Male-city, peopel can start various business from atolls.

It’s interesting to see how maldives transforms with this newly acquired connectivity. I see more and more wi-fi hot spots popping up and ADSL connections been pushed by leading telecos as well.