Telephone boom

Sri Lanka is generally referred to as a Third World country. The implication is that it is still developing. Sri Lanka has already reached middle income status, which means we are on our way to becoming a developed nation.

Although Sri Lanka is a developing country, some indices pertaining to the quality of life here are on par with those of the West or just shy of those targets. Health and education are two examples. This is a result of massive investments in these sectors by successive Governments. Many Western analysts are amazed by Sri Lanka's success especially in these two sectors. Sri Lanka has universal free education, free health services, a very low infant mortality rate and a high literacy rate, among other things.

There is one other sector that Sri Lanka has achieved considerable success: Telecommunications. Sri Lanka used to have one of the lowest telephone densities (number of telephones: population ratio) in the world, but this picture has changed dramatically over the last few years with the entry of the private sector to the telecom field which was dominated by Sri Lanka Telecom.

Today, there are four fixed line operators and five cellular operators in the market, with a total of around 12 million or more lines among them, not counting the thousands of coin and card operated payphones. This is very healthy for a population of 20 million and the most obvious fact is that most of the population has access to a telephone.

The cellular telephone or the 'mobile' as it is usually called, has changed the telecom landscape completely. It was just 20 years ago that they were introduced to this country. There was just one operator at that time. The cellphones as well as the tariff plans were horrendously expensive - the first 'brick' sized Motorola phone cost more than Rs.100,000 and a call unit cost Rs.10-15. The coverage was minimal - Colombo only, in other words.

Today, there are five cellular operators - Dialog, Mobitel, Tigo, Hutch and Airtel. At least one more company has applied for a mobile licence. Handset prices are really low - a basic branded handset can be yours for just Rs.3,000 which almost anyone can afford.

Most tariff plans are really affordable - and the prepaid option lets the user control his or her calls. All operators offer a myriad of plans and it is not easy to select a package amidst all the confusion. This competition has translated into good deals for the consumer.

The popularity of SMS texting is astounding to the point that voice calls have become an afterthought. The result is that almost every adult in Sri Lanka now carries a cellphone.

They can only get more popular as time goes on and the phone companies venture into more areas. Very soon, there will no longer be any 'blank spots' in cellular coverage throughout the island.

The newly resurgent North and the East have a vast potential for cellular expansion. Such services have just started in the newly regained areas and as more people resettle in their original dwellings, a mobile will add quality to their lives. The Government should assist the telecom companies in every possible way to start and expand their services in the North and the East.

The other major revolution was witnessed in the fixed line business.

It used to be a monopoly held by Sri Lanka Telecom but the entry of two private companies - Lanka Bell and Suntel changed this status quo. The traditional fixed lines were costly - because it was an end-to-end wired solution.

The wires had to be physically drawn to the user, even though microwaves and fibre optic cables could be used for a part of the transmission. The answer came in the form of CDMA telephony (Code Division Multiple Access), a cellular system that could be adapted for landline use.

This system was pioneered by Suntel and Lanka Bell, as regulatory problems delayed SLT's entry to the CDMA field. Dialog has also entered the CDMA fixed line business.

Again, we have witnessed tumbling prices for both hardware and calls. Another advantage is that these landlines are SMS compatible, heightening their appeal and popularity. Infrastructure costs are much lower, so the operators can roll out CDMA services much faster in more areas including the North and the East.

The CDMA revolution has taken us closer to realizing the dream of a landline for every household.

A very positive outcome of the telecom expansion is the drastic slashing of International Direct Dialling (IDD) tariffs. Just a decade ago, a call to another country cost nearly Rs.100 a minute.

Today, some countries can be reached for as little as Rs.5 per minute. With a vast number of Lankans living around the globe, this is a godsend for their families in Sri Lanka.

If you have a PC, you can already initiate free overseas calls via Skype and similar services - thus it is only a matter of time before traditional IDD calls become as cheap as local calls - around Rs.2 per minute.

Convergence is another positive trend. Broadband Internet, interactive digital TV, radio and voice telephony are coming together, as seen in SLT's PEO TV service.

In fact, this is likely to be the future, as nearly telecom operators now offer Internet packages.

In the long-term, it will make more economic sense to offer bundled packages for a variety of services than just a single one.

The consumer will also find it cheaper than paying for multiple services separately.

However, it would be wrong to assume that everything is rosy with the telecom scene. Rural areas do need more attention vis-à-vis telecom infrastructure.

The installation of more payphones and Internet kiosks in rural areas will be a boon for the rural population.

The further lowering of cellular and fixed line tariffs will also enable more people islandwide to join the telecom revolution.

The goal of 100 percent telecom coverage of the entire population will be possible if the Government and the private sector get together and formulate plans for telecom expansion. Sri Lanka will then set another fine example to developing world.