Increasing mobile penetration in Sri Lanka
Sri Lanka may be amongst the top of mobile phone penetration per capita in the South Asian region, in comparison to some other countries in Asia, but the national penetration levels still is at just around 28%
In this commentary, Nokia Networks Country Director Sunil Lakshmanasinghe highlights potential strategies and lessons that can be learnt from other successful countries in making the convenience of a mobile phone a reality for all Sri Lankans.
When you look at the region, countries like Malaysia and Philippines have achieved over 80% and 50% penetration levels respectively. Countries like India, Bangladesh and even ourselves, are setting similar benchmarks and progressively turning our goals into reality. However, we are ahead of other countries in the South Asia region at 28% mobile penetration. There are countries in the APAC region which, have even achieved near 100% mobile penetration. Thus, Sri Lanka can expect to keep growing mobile penetration for some years to come. We have had exponential growth over the last couple of years at near 50% levels.
This is a good sign that shows people are faster in their mobile uptake, which is a trend seen in other rapidly growing markets as well.
On telecom subscriber rates:
Due to improved technology, aggressive competition, affordability, quick connectivity and large coverage, the national telephone density (telephones per 100 persons) for fixed access telephones increased from 5.1 to 6.3, while total telephone density including cellular phones increased from 16.4 to 23.6 in 2005. By end 2006 fixed line density increased to 9.5%, while overall tele-density spiked to over 36%.
The mobile telecommunication industry in Sri Lanka will grow in the next two years in terms of demand as the number of subscribers reach eight million or as the mobile telephone penetration reach 40% of the population. However, future growth will slow down, compared to previous years. Penetration rose to 27% by the end of 2006 and will continue to rise to 40% in the next couple of years. In countries such as Malaysia the penetration level is over 80% now and in some of the countries in the ASEAN/ APAC it is at a near 100% levels. In some developed countries it is over 100%. Sri Lanka has plenty of room to create a level-playing field to increase the telephony penetration further.
India continues to be one of the fastest growing major telecom markets in the world. Sweeping reforms introduced by successive Indian governments over the last decade have dramatically changed the nature of telecommunications in the country. According to figures from the Telecom Regulatory Authority the mobile sector has grown from around 10 million subscribers in 2002 to 80 million (including both GSM and CDMA services) by early 2006, aided by a mix of higher subscriber volumes, lower tariffs and falling handset prices. Whilst GSM technology remains the dominant technology platform in the market, CDMA has quickly grabbed a 23% market share. Despite the huge mobile subscriber base, this represented only around 8% of India's one billion plus population.Therefore, in comparison Sri Lanka is on the right path.
On raising penetration levels:
Several factors influence the decisions made by operators to increase penetration, especially since the Average Revenue per User (ARPU) levels of customers from these areas will be low. Operators must consider the initial capital cost of investment and the ongoing operational cost. It is critical that they pick products/technologies that can meet these challenges and help to reduce the total cost of ownership by significantly bringing down the CAPEX and OPEX. The speed of rollout into rural areas and areas with less support infrastructure is also critical.
A whole range of new products and technologies are available - base stations are becoming smaller and can be moved around and installed speedily, they consume less electricity, need no air-conditioning or shelters, can be mounted on poles or buildings, etc. Technology such as WiMAX and Flash OFDM make it possible to deliver voice and high speed data to the rural populace at lower costs. Operators are also moving into high capacity 3G networks in urban areas like Colombo and its suburbs, while moving 2G infrastructures into the areas demanding low capacity. Investments need to be made on effective infrastructure platforms that enable operators to manage these different technological domains effectively without incurring too much cost on network management.
A liberalised environment certainly encourages competition and improves penetration as seen in other countries such as South Korea, Malaysia, Singapore and Japan that have achieved rapid mobile penetration due a liberal regulatory regime. The phenomenal growth we have seen is also due to the liberalised policies set by the TRC. Also, it is important to provide incentives to ensure that gains made in urban sectors will be channelled for rural telecom development and the TRC appears to be cognizant of this need.