Last year, the Indian authorities relaxed their strictures on infrastructure sharing, allowing the sharing of active and passive infrastructure except spectrum. Now in more mature markets, there are moves to go even further. As growth stabilizes, governments and operators in emerging economies should start looking at this option. Two of the world’s largest cellphone operators, the Spanish company Telefónica and the British giant Vodafone, said Monday that they would share infrastructure in several European markets in an effort to cut costs and protect profit margins. The companies said in a statement that they had agreed to share networks in Britain, Germany, Ireland and Spain, and were in “detailed discussions” about doing so in the Czech Republic.
Since 2005, LIRNEasia has been critical of the very high amount (5%) charged from Indian telecom consumers through the operators and then left unspent in government accounts (approx. USD 4 billion at last count). Our criticisms were presented in multiple forms including a book chapter. We made them known to the leadership of the Department of Telecommunications in face-to-face conversations. Most recently, I discussed the harm caused by taxing poor people to purportedly serve poor people and then keeping the money unspent at a UNCTAD meeting on trade and regulation.
At the “multi-year expert meeting” on services, development and trade: the regulatory and institutional dimension, organized by UNCTAD in Geneva, there was rich discussion on the increasing importance of regulation in an environment in which services trade is assuming greater importance. As attention shifts to services trade (for example, the most important element of the proposed Comprehensive Economic Partnership Agreement between India and Sri Lanka, is the services chapter), there is of necessity a need to start looking at regulatory restrictions on services trade. Tariffs do not apply to services, so the only barriers are opaque, arbitrary and discriminatory regulatory provisions. This has been well recognized in telecom, with the reference paper on regulation being one of the key contributions to liberalization made by the GATS. The issue being raised at the UNCTAD meeting was whether there was value in exploring the regulatory aspects of trade in other infrastructure services.
Old habits die hard. When you have been a member of a tiny Trotskyite left political party for the longer period of your life and seen the World Bank as your arch enemy, you may forget that you are on the same side now. This seems to be what happens to Sri Lanka’s Minister of Science and Technology, Prof. Tissa Vitharana, once in a while. His latest holler, as reported by ‘The Catalyst’ – the newsletter of the Information and Communication Agency of Sri Lanka (ICTA), the apex body of ICTs that spearhead the e-Sri Lanka program, funded by the World Bank, goes as follows: “At a time when the ‘world funding bodies’ proposed the setting of Internet cafes in cities of Sri Lanka in a manner that would only cater only to the rich elite, President Mahinda Rajapaksa decided that Nenasalas or wisdom outlets should be setup instead island-wide to cater to the poor rural folk.
Two surveys of India’s telecom regulatory and policy environments conducted in 2006 and 2008 by LIRNEasia show a dramatic increase in the score for universal service policies since the policy changes effected in 2007. From being ranked lowest among six emerging Asian countries, India now has close to the highest score for universal service policy and implementation in the mobile subsector, the most dynamic and important of all. What is also noteworthy is that the 2006 score for universal service was the lowest among the six policy and regulatory dimensions that were assessed then. By 2008, that unenviable position had been passed to the dimension of management of scarce resources (spectrum). The increase in the USO score in the fixed subsector was 36 percent; and in the mobile sector 64 percent.
Glimmerings of a return to the bad old days, when governments “nationalized” telecom companies. The end result was pillage by the government flunkies and bad/no service to the public. The Russians are back in this game, but this time through the courts and with a different beneficiary, the local partner oligarch. Already jittery investors were alarmed on Thursday when a Norwegian cellphone company announced that a Siberian court had seized its multibillion-dollar investment in a Russian joint venture and would turn it over to a company thought to be allied with a Russian oligarch. The decision signaled an escalation in a long-running dispute between the Norwegian company, Telenor, and the Alfa Group, an alliance of Russian businessmen that was also at the center of a separate fight with the British oil giant BP last summer.
LIRNEasia’s price-benchmarking research shows that Pakistan has overtaken Bangladesh as the country with the cheapest monthly prepaid costs in the SAARC region, when compared to September 2008. Pakistan recorded a monthly cost of USD 1.75 for a low user, followed by Bangladesh (USD 1.96) and India (USD 2.10).
Grey market may rein India’s overseas calls again as the regulator has increased international termination charge and slashed local termination fees, warned the Association of Competitive Telecom Operators (ACTO). This trade body was formed last month by AT&T, BT, Cable & Wireless, Orange Business Services and Verizon Business. “Increasing the termination rates of international calls defies the time tested and proven principle of cost based interconnection charge[s],” ACTO president Satyen Gupta said. This trade body has been demanding change in the conditions of India’s International Long Distance (ILD) license, which it says “is predominately tailored for switched voice services and does not take cognizance of emerging technologies.” Read more.
I may be wrong, not having conducted a systematic study of mobile advertising in Sri Lanka, but the impression I have is that while there is plenty of it, it’s all about calling to maintain relationships if not about price/quality aspects. In the short term this works, because this is where people’s heads are. But unless there is more money in people’s pockets, it’s unlikely that the mobile operators will be able to continue to make money in the long run. Voice is getting commodified and profits are declining. People are not taking up more-than-voice services because they do not have money and see mobile as a consumption good.
In a futile move, the Bangladesh government has blocked YouTube and esnips.com for hosting the recorded consultation between the prime minister and the country’s army officers. Country’s regulatory head has confirmed it to the press. This consultation was held after a brutal mutiny had wiped out the entire hierarchy of the country’s border guard force on February 25. More than 50 army officers, who were seconded to the paramilitary force, were butchered and buried in mass-graves by the mutinous troops.
An AFP story published today talks about the Indian boom in mobile connections, despite all round economic gloom: a record 15m new connections were added in India in January 2009 according to the article. India’s “mobile revolution” is still mainly seen in the cities, but the real prize for phone companies is the vast rural market, where nearly 70 percent of the 1.1-billion-strong population live, analysts say. By the end of January, 34.5 percent of the population owned a telephone, Telecom Regulatory Authority of India said.
Detailed findings from LIRNEasia’s Telecom Regulatory Environment (TRE) study conducted in 2008, have been published in Voice&Data, India’s only magazine on the business of communications, including analyses on the business, technology and regulatory aspects of Indian telecom and networking: Telecom growth is phenomenal in some emerging nations of the Asia Pacific region, but the risk attached to investments in each country varies. Pakistan scores the highest in five parameters, while India tops in one in the Telecom Regulatory Environment survey. Read the full article here. Findings from the TRE study were presented in Delhi, India, last week, at a panel discussion, co-organized by Voice&Data.
In the third round, LIRNEasia has extended the testing to one more location. With that we have tested two packages in New Delhi (MTNL and AirTel), two in Chennai (BSNL and AirTel), five in Colombo (SLT ADSL, Dialog WiMax, Dialog 3G, Dialog 3G Unlimited and Mobitel Zoom 890) and two in Dhaka (SKYbd and Sirius). A strenuous task for five teams, no doubt, who took readings at different times staring from 8 am and went up to 11.00 pm (some had to spend nights at offices) but results are worth the effort. What did we learn?
Just liked everything else in telecom, the signs were visible in Asia first, Indonesia and Sri Lanka in particular. The debate in the blogsphere is all about HSPA and HSDPA, no one cares about tired old ADSL. We do, of course, and will continue to work on fixed, nomadic and mobile broadband price and QOSe. But nice to know the Economist is not too behind the curve. AS HANDSETS turn into computers, laptops are becoming more like mobile phones.
Contention Ratios varying from 1:50 and 1:20 (Can be relaxed a bit in residential as the links are not shared) is what LIRNEasia and TeNet jointly proposed, but Telecom Regulatory Authority of India (TRAI) thought it best to adopt 1:50 and 1:30. According to ‘Guidelines for service providers providing Internet/broadband services for ensuring better quality of service’TRAI issued on March 2, 2009, ISPs are expected not only to maintain contention ratios above these values but also be open to subscribers on what they will deliver – instead of promises they cannot make. In addition we received some publicity from Indian online media. Good to know people start taking notes. More on LIRNEasia’s Rapid Response program here.
Given coincidence of the SAARC Minister’s meeting and the release of LIRNEasia’s twice-a-year price benchmarks, I was tempted to see how much progress had been achieved, with regard to the Colombo Declaration’s para 6 which called for low intra-SAARC international voice tariffs. Not much progress to report, unfortunately. On the fixed side, the only countries with intra-SAARC tariffs lower than to non-SAARC countries, are Bhutan and Nepal. Bhutan, because it has a special price for India (other SAARC prices are high) and Nepal because it has not changed its extremely high tariff structure (and the lower-by-comparison intra-SAARC prices). Lanka Bell in Sri Lanka offers low prices to India, but our methodology does not capture that, because we take the prices of the largest operator, SLT.