Global Information Society- Term Paper

The Telecommunication Industry

of Sri Lanka

Submitted by:

Neha Rauniyar (PPE Major)

Soumya Samuel (CS Major)

Thushanthini Jeyatissa (CS Major)

Submitted to:

Professor Faheem Hussain

Table of Contents

Country Profile

Introduction

Situation Analysis

The present status of the ICT/Telecom industry

Telecom/Internet penetration and market players

Status of Internet connectivity and market players in ICT industry

Telecom and ICT regulations/Acts

Universal service

New and emerging technologies (i.e. 3G, WiMax, VoIP etc.)

Status of '3A'

Challenges/Problems identified

Strategic Priorities/Recommendations

Conclusion

Country Profile

Sri Lanka

Capital : Colombo

Population : 20.4 million (2010 data)

Currency : Rupee

Literacy Rate : 91% (2008)

GDP per capita (PPP): 5026 (2010 Est.)

Political System: Republic (2010 Est.)

Source: (Legatum Institute, 2010)

Introduction:

The telecommunication industry of Sri Lanka, though started from a small basis, has

shown a significant growth in the recent years. Sri Lankan telecom sector was liberalized in 1991

and was further advanced with its part-privatized in 1997 (Sri Lanka Telecommunications

Research, 2009). Further, the monopoly status of Sri Lanka was weakened in 1996 with the

increment in fixed-line telephone service operators, reaching 60 by mid-2009 (Sri Lanka

Telecommunications Research, 2009). Also, the challenges faced by Sri Lanka of a nearly two-

decade long conflict between the government and separatist Tamil Tiger rebels facilitated

towards founding the telecom sector well positioned for dynamic growth (Sri Lanka Key

Statistics, Telecom Market Overview & Forecasts). Today, telecom Industry sector is a $0.8

billion industry, contributing around 2% directly and 5% indirectly to the national output

(News). This paper focuses on the current situation of Sri Lanka telecommunication industry, its

problems and challenges, and suggests some strategies to enhance the present telecom industry

of Sri Lanka.

The present status of the ICT/Telecom industry:

At the present, Sri Lanka has a liberalized telecommunications market which has huge

impacts on economic and social development of the country. The Telecommunication Authority

of Sri Lanka (TASL) is the regulator of telecom industry and TASL is responsible for licensing

for any companies to provide various telecommunication services under the Telecommunication

Act of 1991 (Sri Lankas Information Infrastructure, n.d). There are four Fixed Access

Operators, five Cellular Mobile Operators, six Data communications and Internet service

Providers (facilities based), twenty four Data and Internet Service Providers (non facilities

based) and thirty two External Gateway Operators. Also, 7500 public phone services are spread

across the country (List of License Operators, n.d).

The Fixed Access Operators are: (List of License Operators, n.d)

Sri Lanka Telecom Limited.

Suntel (Private) Limited

Lanka Bell (Pvt) Limited

Dialog Broadband Networks (Pvt) Ltd

Cellular Mobile Operators are:

Dialog Telekom Limited

Hutchison Telecommunications Lanka

Mobitel (Pvt) Limited

Celltel Lanka Limited

Bharti Airtel Lanka (Private) Limited

Telecom/Internet penetration and market players:

The Government of Sri Lanka owns 52% shares of Sri Lanka Telecom Limited (SLT)

which is the only fixed wire-line telecommunications service provider. In 1999, the government

divested the stakes of Sri Lanka Telecom (SLT) and assigned the company management control

to Nippon Telegraph and Telephone Corporation (NIIT) of Japan. This partial privatization of

Sri Lanka Telecom (SLT) has a greater level of penetration on fixed line and mobile phone

market (SLT / Vision & Mission, n.d). The SLT is integrated and has monopoly power in

telecommunications market for domestic services, international voice service operations until

2002. Since the privatization, the growth rate of fixed line subscribers is increased and there after

due to the rise of annual tax and marketing prices for domestic services subscriber growth is

declined. However, with this decline in the telecom environment the Code Division Multiple

Access (CDMA) and mobile phone are introduced in the telecom which is the fixed. Due to these

market diffusion the telecommunication services sector has grown significantly and it has 54.5

percent of average growth rate from 1994 to 2004 (Perera, 2010).

In a while, new, faster and more efficient technologies are introduced to the Sri Lankan

telecommunication sector. The telecommunication environment is established by second

generation digital communication systems (2G), automatic international roaming, short

messaging services (SMS), wireless application, protocol mobile internet (WAP) general packet

radio service (GPRS) and band and multimedia messaging services (MMS). In 2004, the

participation of private sectors expands the mobile marketing with new technologies and

enhanced network coverage (Sri Lankas Information Infrastructure, n.d). In addition, the access

of Sea Me-We 4 international fiber optic submarine cable is launched on 2005 and that connects

South East Asia to European Countries through Indian Subcontinent and Middle East. Then, SLT

has signed an agreement with Bharat Sanchar Nigam Ltd (BSNL) of India for an under

submarine cable system to connect South India to Colombo (SLT:Our History, n.d). Also Sri

http://www.mobitellanka.com/http://www.celltelnet.lk/

Lankas largest mobile operator, Dialog Telekom Limited, become as a shareholder of Telekom

Malaysia in order to have the access of this new cable system (Perera, 2010).

Furthermore, Wireless Internet (WiMAX) network is launched within two years by SLT

and SLT also offers mobile broadband access and internet protocol television (IPTV). The

Telecommunication Regulatory Commission allocates 3.5 gigahertz frequency broadband for

WiMAX and also a test of frequency was allocated to SLT for the rollout of WiMAX project in

Colombo, Kandy, and Galle (Category, n.d). Additionally, Indians Bharti Airtel Ltd enters into

Sri Lankan telecommunication market as a fifth mobile phone operator in 2008 and offers 2G

and 3G services (Perera, 2010). In 2008, Nippon Telegraph and Telephone Corporation (NIIT) of

Japan, the shareholder of SLT, sold its entire holding to Global Telecommunications Holdings

N.V. of Netherlands (SLT:Our History, n.d). Overall, expandability of telecom services

providers improves telecommunications market penetration.

Status of Internet connectivity and market players in ICT industry:

Sri Lanka telecom industry is established by fixed and wireless local loop operators, and

mobile and public phone operators. ICT industry of Sri Lanka focuses on IT and

telecommunication sectors, such as PC, internet, mobile and fixed telephone services, and

broadband market. However, the broadband penetration level is very low and its cost is high in

Sri Lanka. Sri Lanka has developed the available technology for internet connectivity such as

ADSL (Asymmetric Digital Subscriber Line) fixed wire-line services to WiMAX fixed wireless

broadband access, and GPRS (General packet radio service) mobile telephony internet to HSPA

(High Speed Packet Access) mobile broadband internet to the consumers. As the result, usage

of internet has a significant growth which is shown by the table in next page (Local Industry

News, n.d).

Table: 01:- Statistic of Internet users and Population of Sri Lanka

Year Users Population %Pen. GDP (US$)2000 121,500 19,630,230 0.5% N/A2007 428,000 19,796,874 2.2% 1,6232008 771,700 21,128,773 3.7% 1,9722009 1,163,500 21,324,791 5.5% 2,0412010 1,776,200 21,513,990 8.3% 1,807

Source: International Monetary Fund (Internet Stats, 2010).

Within 10 years number of Internet users throughout Sri Lanka has increased almost 8%.

Table 01 shows in 2000, there is only 0.5% of population have used internet. However, in 2010,

the usage of internet among the countrys population is 8.3% (Internet Stats, 2010).

SLT is fixed wired broadband provider who offers ADSL internet service in the country

and also owns WiMAX broadband network. Besides, Lanka Bell is also a fixed broadband

internet provider in Sri Lanka (Sri Lankas Information Infrastructure, n.d). Then, Dialog

provides WiMAX fixed wireless internet access and HSPA mobile broadband internet

connectivity. Moreover, Mobitel provides mobile 3G broadband internet connections under

HSPA and Airtel operator also provides HSPA mobile broadband internet access only (Perera,

2010). However, still now there are only 5 market players and providers for internet service in

the ICT industry of Sri Lanka. Presently the country has the lack of competition within the

internet service market which reflects on the cost.

Telecom and ICT regulations/Acts:

The Telecommunications Regulatory Commission of Sri Lanka (TRCSL) is responsible

for regulating and monitoring the development of the telecommunications sector. Also TRCSL

ensures the competition in the telecommunication industry as open, fair,