'TRCSL controlled anti-competitive behavior of operators'

How has the Sri Lankan telecommunications industry grown in the last fiscal year?

Mobile service has become an essential service to Sri Lankan citizens rather than a prestigious service. Over the past decade, telecom industry has been the fastest growing area of Sri Lanka's economy led by the mobile telephony segment. The composite telephone penetration has risen from just 5% in 1999 to 85% in 2009. After a rapid increase, the mobile market nearly saturated which led to all operators getting into a price war to retain their subscriber base. There was a huge competition in the market which further led to undercutting prices, thus making the industry unstable. This, combined with a slow economic growth, less business volumes, increased inflationary cost pressures, and unprecedented high levels of interest rates caused losses to almost all telecommunications service providers. The resultant financial strain left little space for telecom companies to reinvest in a new technology and expand network capacity.

How did TRCSL support
operators' profitability during the time of voracious tariff war?

Considering the above situation, TRCSL imposed a minimum floor price for call charges and SMSes effective from July 15, 2010, and interconnection rates for operators to recover costs. These were two major steps TRCSL took in order to control the situation.

What was the minimum floor price?

This floor price prevented undercutting of call and SMS charges which were existing from 2008 and 2009. The minimum floor rate for per minute billing on net voice was changed to `1 per minute and `1.35 per minute for per second billing. Similarly, for off net voice, minimum floor rate for per minute billing was changed to `2 per minute and `2.50 per minute for per second billing. For off net SMS charges, it was changed to `0.25 per message.

...and interconnection rates?

TRCSL has imposed an interconnection rate for operators to recover the cost of terminating voice calls and SMSes originating from rival operators, after conducting a proper study.

By imposing the floor rate and interconnection rates, TRCSL controlled anti-competitive behavior of some operators and stabilized the industry.

Broadband Internet is the new growth market in Sri Lanka. Brief us about your broadband growth and upcoming developments.

Presently, TRCSL encourages all operators to develop and expand their data services throughout the country, and is also establishing a countrywide fiber network with the support of World Bank.

Akanksha Singh
akankshas@cybermedia.co.in