The Telecommunication Industry of Sri Lanka - · PDF fileThe telecommunication industry of Sri...
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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,