Home Asia-Pacific 2004 The Regulator and the Mobile Market

The Regulator and the Mobile Market

by david.nunes
Themiya HurulleIssue:Asia-Pacific 2004
Article no.:3
Topic:The Regulator and the Mobile Market
Author:Themiya Hurulle
Organisation:Telecommunications Regulatory Commission, Sri Lanka*
PDF size:100KB

About author

Themiya Hurulle is the Director-General of Sri Lanka’s Telecommunications Regulatory Commission. He is the CEO of the Commission and is responsible for expediting the implementation of the Telecommunication Reforms and development currently under way in Sri Lanka. Mr Hurulle served as a Member of the Parliament of Sri Lanka, and was subsequently appointed Project Minister of Science and Technology. Prior to entering the government, he served as the Executive Director of Wijeya Graphics, the Apple Computer re-seller in Sri Lanka. Mr Hurulle is currently the elected Vice-Chairman of the Commonwealth Telecommunications Union, London. He was elected by the Member countries of SAFIR, the South Asia Forum for Infrastructure Regulation, as its Chairman in the year 2002. Mr Hurulle earned his degree in General Engineering from the University of Moratuwa and qualified in Refrigeration and Air Conditioning at South Bank University, London, UK. He is a Member of the Institute of Refrigeration, UK and he began his career working in this field first in the UK and then in Sri Lanka.

Article abstract

Throughout the world, the growth of mobile telephony, new wireless technologies, convergence, liberalisation and market growth are forcing policy makers and regulators to address new issues. The challenges facing the Sri Lankan regulator and, as well, the other regulators in the South Asian region are similar, and the sharing of their experience would be of mutual benefit. In today’s dynamic environment, regulators have to promote public confidence and popular support, through transparent regulatory and licensing processes, and by conducting public consultations.

Full Article

A historic event for the global mobile market occurred in the year 2002, when the number of mobile subscribers exceeded fixed line subscribers. By the end of year 2002, there were 1.162 billion mobile cellular subscribers as compared to the 1.091 billion fixed telephone lines. This was already the case in Asia and several South Asian countries including Sri Lanka, Maldives and Bangladesh. As a result, the telecommunications industry is currently undergoing changes in the roles and functions of the operators regarding the provision of fixed and mobile services. The present trend in Sri Lanka is that mobile services are substituting fixed services especially in the suburbs and distant rural areas. This is a common occurrence in the South Asian region, as mobile has become the primary mode of communication due to the shortage of fixed services. This is partly attributable to the fact that cellular networks can be deployed faster than fixed services networks and can cover geographically challenging areas. Mobile services have boosted competition, especially since the introduction of pre-paid cards increased the mobile subscriber base. In 2002, the mobile market in South Asia accounted for 1.37 per cent of the global market where the whole Asian market accounted for 38.6 per cent. The number of mobile subscribers in South Asia, Asia and the World in year 2002 are depicted in Table 1 shown below. Regulation and the Telecommunications Sector in Sri Lanka Regulation was formally introduced in Sri Lanka with the establishment of the Sri Lanka Telecommunications Authority by the Sri Lanka Telecommunications Act No 25 of 1991. In 1996, following amendments made to this Act, the regulatory institution was converted to a five-­member Commission named the Tele­com­­munications Regulatory Commission of Sri Lanka. Since the enactment of the Telecom­munications Act in 1991, the telecom­munications sector in Sri Lanka has ­developed rapidly, moving from a single incumbent and one cellular operator to three fixed, four cellular mobile and twenty nine ISPs, amongst others. The fixed line teledensity was 4.7 per 100 population at the end of 2002, while the mobile density was 4.9 per 100. Issues Many of issues faced by the Sri Lankan Regulator are common to the regulators of the South Asian region, although the problems may surface at different times, within different contexts. Regulators in the region are following transparent procedures and are conducting public consultations to obtain the views of the stakeholders on important issues. The regulator’s role is to consider all these aspects and provide equitable solutions. The Sri Lankan Regulator (TRCSL) has conducted several public consultations and one public hearing during this year. These issues, inter alia, covered topics such as: Asymmetric regulation, Licensing of External Gateway Operators, Radio frequency bands for mobile communications, and Billing-related issues. Radio Frequency Spectrum considerations for mobile services RF Spectrum is a scarce natural resource. It affects competition in the mobile communication market because it limits the number of operators. We are currently licensing two slots in the 1,800 MHz band of spectrum to two mobile operators who wish to expand their services. An international consultancy recommended improvements in the TRCSL’s spectrum management functions and the changes have recently been concluded. Effect of limited mobility for WLL services A public consultation was carried out to obtain the views of the stakeholders on this issue prior to taking a final decision in the near future. In India, fixed-line operators have been offering cheap, limited mobile services to customers, thereby cutting into the profits of established mobile phone companies. In order to end a bitter dispute between mobile and fixed line operators regarding limited mobility, the Indian regulator proposed to issue a single licence for each of the telecommunication service providers. It also recommended fining the country’s largest private group, Reliance, 4.86 billion Indian rupees (100 million dollars approx.) for violating the terms of its fixed-line licence by offering mobile services. Quality of Service (QoS) issues To ensure that the services provided adhere to minimum standards, QoS parameters for fixed services have been established and the fixed services operators now regularly furnish the regulator with the relevant information. To inform the public, the results have been published in national news­papers. In the future, the Commission will establish similar QoS parameters for mobile operators. Universal Service Obligations Under the USO, the Commission will take steps to provide telephone services to 590 distant rural sub-post offices in Sri Lanka that lack this facility. Shortly, the regulator will invite interested parties to provide telephone facilities to these sub-post offices using technology neutral solutions. At present, a pilot project provides telephone services at 55 such sub-post offices. An innovative idea, currently being tested by a payphone operator in Sri Lanka, uses payphones mounted on bicycles to bring service to rural areas. Mobile phones are a key access tool. A Grameen Bank initiative in Bangladesh shows that mobile phones, shared and used as pay phones, can improve connectivity in remote villages. In India, 3,000 village-based “mobile payphones” promoted by Koshika Telecom operate as personal revenue-sharing businesses. Other Indian cellular operators are following suit and developing mobile payphone businesses. Calling Party Pays (CPP) regime Studies have been made to move to a Calling Party Pays (CPP) regime for mobile cellular services in Sri Lanka. An international consultancy was retained and call termination rates were computed using an agreed cost methodology and cost models. The Commission, at present, is reviewing these rates to determine how low-income subscribers and payphone subscribers could be helped. All the operators are technically ready to move to a CPP regime and are awaiting the final decision of the Commission in this regard. Interconnection Issues In order to facilitate and regulate equitable interconnection, the Interconnection Rules of 2003 were established by section 68 of the Sri Lanka Telecommunications Act No. 25 of 1991 (as amended). Even though the provision of interconnection by external gateway operators is mandatory in terms of the 2003 Interconnection Rules, several PSTN Operators, including the incumbent, have found it difficult to provide Interconnection to the External Gateway Operator service in accordance with the rules. The most common difficulty claimed is their lack of capacity to fulfil new requirements. However, the Commission has intervened and directed the incumbent and other PSTN operators to increase the capacity of their switches to facilitate requests for interconnection. Tariffs The Commission regulates all tariffs based on costs, keeping in mind the ITU’s recommendations and, as well, Sri Lanka’s WTO commitments. A key WTO commitment prohibits tariffs that lead to anti-competitive practices. In order to encourage competition, the Commission is also in the process of de-regulating mobile and Internet tariffs. The TRCSL approves both permanent and promotional tariffs. Increased competition leads to reduced tariffs. Therefore, to encourage competition, promotional tariffs are considered for approval within seven working days. However, the consideration and approval of permanent tariffs requires more time. 3G test licences The Commission recently issued 12-month test licences for 3G (third-generation mobile services) trials, as requested by interested operators. A consultation paper on 3G services, inviting the views of interested parties, will be published in due course. Future Issues The convergence of services and evolution of ICT technologies have obliged South Asia’s regulatory authorities to consider and adopt new policies and legislation to accommodate the changes. Sri Lanka has developed a new communications policy to address ICT issues. These issues are further addressed by the “e-Sri Lanka, Smart People, Smart Island Programme” that went into effect recently when Sri Lanka’s parliament passed the ICT Act. The Government intends to develop technology neutral policies for the future. Regulatory initiatives are also taking place in the South Asian region; these are expected to harmonise the national ICT policies and regulations in these countries. ICT development is making the convergence of different types of network platforms and services a reality, and South Asian countries are responding by merging their telecommunications and information technology sectors. As a result of convergence, liberalisation and market growth, more will be required from regulators regarding dispute resolution and consumer protection. In today’s dynamic environment, regulators need to promote public confidence, through transparent regulatory and licensing processes, and by conducting public consultations and public hearings. With the paradigm shift, now that mobile subscribers outnumber fixed subscribers, policy makers and regulators have to address new issues. Some of these will be, inter alia, to assess the need for regulatory intervention, revision of policies and appropriate legislation. * The views expressed in this paper do not necessarily reflect the views of the Tele­communications Regulatory Commission of Sri Lanka or the Government of Sri Lanka.

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