Lanka's mobile industry ahead of SA counterparts

As Sri Lanka's mobile telecommunications industry rapidly approaches the milestone of 50% per-capita penetration (38.2% as at 12/2007, TRCSL), incumbent mobile operators (Dialog, Hutch, Mobitel and Tigo) cited fair and consumer centric competition, progressive regulation by the Telecommunications Regulatory Commission of Sri Lanka (TRCSL), long term and committed investment and accompanying stewardship of the Board of Investment (BOI) as key drivers of their achievement.

While Sri Lanka's mobile operators through decade-long investments have achieved 70% geographic coverage and 90% population coverage, in the very near future one in two Sri Lankan's would own a mobile phone.

Per-Capita adoption alone outstrips neighbouring India by nearly two-fold - per capita adoption in India being 20.5% as of 12/2007 (Telecommunications Regulatory Authority of India)signifying the giant strides made by Sri Lanka's mobile sector in terms of affordability enhancement.

A fair playing field, healthy competition and a Regulator with foresight have contributed in no small measure to industry growth.

Sri Lankan consumers have benefited from the competitive landscape in the island's mobile sector.

Competition has been healthy and delivered not only successive reductions in pricing levels bringing mobile telephony within reach of all segments of Sri Lankan society, but additionally quality services and advanced technologies well ahead of the region.

In this backdrop of a near two-decade long tradition of healthy competition, the mobile sector is left perturbed by references to anti-competition attributed to new entrant Airtel of India, and reported in newspapers on August 31 and September 1.

The mobile operators dismissed as misleading and distracting, the comments attributed to a senior official of Airtel.

In the opinion of the mobile operators the references to anti-competition distract the Sri Lankan consumer from the larger issue of the readiness of the new entrant who obtained the fifth mobile operator licence on April 12, 2007 (Source: TRCSL) to provide services which are on par with those available in the market. Interconnection is a regulatory construct which forms the cornerstone of competition and certainly not anti-competition.

The interconnect rules of 2003 derived and gazetted (Gazette no 1278/18 dated March 7, 2003) by the TRCSL contain an Interconnect rate of Rs 1.50 per minute at peak time trailing to 38 cents during the discount time band.

The interconnect rate is specified to ensure fair compensation for the use of the terminating (receiving party) network infrastructure by the network originating the call. The rate applies in both directions and hence represents parity and fair bilateral compensation.

Sri Lanka's mobile operators commenced charging each other these gazetted rates (pending a new cost study), in advance of the launch of the fifth operator to provide a level playing field for the new entrant.

The new entrant would be paid the same rate for all calls terminating on its network.

The implementation of this biliateral and parity interconnection charge as well as an ongoing exercise to re-evaluate this rate in the wake of cost escalation since 2003 is being conducted under the stewardship of the TRCSL.

The mobile operators are confident that the regulatory body which has distinguished itself in the region in terms of fostering competition with requisite benefits to the poorest segments of Sri Lanka's populace is well equipped with the knowledge and sensitivity with respect to maintaining free and fair competition.

Sri Lanka's TRC has succeeded in ensuring that cost of owning a mobile (total cost of ownership) in Sri Lanka is among the lowest in the world.

In a recent study done by Nokia across 80 emerging markets had concluded that Sri Lanka has the lowest total cost of ownership for mobile services.