Guest blog post: Rajiv Weragama, Engineer – Service Assurance, Sri Lanka Telecom PLC
In early days Sri Lanka was well known for its unspoiled natural beauty, endemic wild life, incomparable hospitality, rich and diverse culture full of customs and rituals and much more. But in recent years the country has been able to attract the attention of world not merely due to what is mentioned above. That is mainly due to the development of Information and Communications Technology (ICT) in the country. During the era in which the country was struggling with the civil war which spanned for thirty years, ICT was the only sector which showed the signs of continuous blooming which paved the way to the current development.
If anyone is questioning on how we can relate the country’s development and the internet penetration, recently ITU has provided some proven figures which clearly show the strength of the relationship between these two. In Asia-Pacific (APAC) region, 10% increase in broadband penetration will yield an additional 1.38% growth in GDP and 1.9% in trades, while doubling the internet speeds will result 0.3% increase in GDP. According to the figures published by Internet Live Stats, the internet penetration of Sri Lanka which was 25.8% by the end of year 2014 has been increased to 29.3% at the moment.
Connectivity has become a mandatory requirement in all industries and almost all new job opportunities contribute to the increasing trend in data usage in a positive manner. Apart from that, the Sri Lankan mobile phone market which has touched one million (per annum) mark by the end of 2014, though it is largely dominated by the feature phones (IDC, 2015). Smart phone usage is rising but it will take more time to replace the existing feature phones which are being used by a majority of the population. Furthermore, by the end of 2012, Sri Lanka was ranked number one by the ITU for the lowest fixed broadband charges, and slashing the cost per GB by the two main Communication Service Providers (CSPs) in Sri Lanka namely Sri Lanka Telecom PLC and Dialog Axiata at the beginning of this year will make 2016 rankings more interesting.
The next question is the market saturation. In a market where 3 fixed line operators and 5 mobile operators battling hard to attract more people out of the total population of 21 million and the mobile penetration exceeds 116% by the end of 2015, is there any room for them for a further expansion of their market share? The answer is “Yes”. Though it seems to be over saturated, the percentage of unique mobile subscribers is slightly below the 50% mark by the end of 2013 (GSMA Intelligence report, October 2013) when the mobile penetration exceeded the 100% mark. The abnormality in the figures of mobile penetration is caused by the use of multiple Subscriber Identity Modules (SIMs) by individuals which is further supplemented by the availability of “multiple-SIM” phones at lower costs.
Under these circumstances what would be the role of fixed line operators and will they have a chance to survive in this tensed competition? People still have the faith on wired and fixed wireless solutions at industry as well as households due to the variable nature of mobile broadband data rates based on the location and the load on the base station.
FTTx and 4G technologies have been able to enhance the customer experience tremendously in last few years increasing the chances of fixed line operators to hold on and expand. Even though the smart phone penetration increases, the number of devices which support LTE and beyond is significantly low at the moment. That is resulted by the cost of a LTE enabled smart phone compared to its predecessor and due to the coverage issues. Mobile operators who have invested heavily on 3G networks are yet to recover the investment already made, so that they are somewhat reluctant to invest profoundly on 4G expansion. On the other hand fixed line operators also face similar issues due to the cost and the time associated with the FTTx network development which makes the penetration rate low and less cost efficient.
In this context, mobile operators have no other option but to expand their 4G/4.5G coverage to cope up with the speeds which are provided by the wired line operators through FTTH. The market share they will hold depends on how quick they can expand their network coverage. The network expansion will be further supplemented by the “Project Loon” which is still under experiment and to be carried out by the Google. Under this project a number of solar powered balloons will travel in stratosphere approximately 20 km above the surface will cover around 40km radius using LTE (Google, 2016).
The next approach will be the Wireless-To-The-x (WTTx) which has emerged recently. This will be more beneficial for the fixed operators than the mobile operators. At the recently concluded Broadband TV Connect Asia 2016, LTE Industry Development Director of Huawei, Goran Berntson stated that WTTx will be the ideal solution to provide instant broadband connectivity. He has pointed out that with the latest 4.5G technologies such as Massive MIMO and Massive Carrier Aggregation, achieving the downlink speeds over 1 Gbps will no longer be a dream and using high-end Customer Premises Equipment (CPE) end users can enjoy further excitement through 4K IPTV as well as Virtual Reality Gaming. WTTx offers competitive or even higher speeds than FTTx with a high ROI. Also, WTTx offers 80% lower deployment costs and 90% less deployment time, with plug and play functionality (Srivastava, 2015). Further, adopting WTTx will provide a breathing space for the fixed operators who can slowly but steadily expand their fibre foot print in due course.
In summary, I would like to emphasize that country’s broadband penetration will enhance further in upcoming years and there is a huge market segment which is still untouched. Competition in the market is required for the development of the telecommunication sector but if it is not controlled properly the “Rat Race” might end up with crashing down of the market with all operators. In this context, the regulator has a big role to play to prevent the adverse impact of the over-competition.
When moving further, the fixed line operators may have a better chance of succeeding if they adopt the right technologies in right time and address the market requirement created by the newer concepts such as Smart Homes, Internet of Things (IoT), etc. Government strategies and the budget proposals will also have a significant impact on this sector’s performance. FTTx and LTE with WTTx and Project Loon will surely increase the broadband penetration at a higher rate than today. That will pave the path for country’s vision to become a services hub of being positioned at strategically important location in the middle of the Indian Ocean.