Mobile: The Mobility Empire In SAARC

'Taxes Must Be Lowered'

The GSM Association (GSMA) has been tracking SAARC's telecom success story with a keen eye. In an exclusive interview with VOICE&DATA, Ricardo Tavares, Sr VP of Public Policy at the GSMA, shares the organization's views on what more can be done to boost telecom in the region.

Reaching the rural population remains a common challenge for operators in the SAARC region. How can they tackle this challenge?
Serving rural areas needs cost cuttings as much as possible. Governments can help that process by ensuring that their regulatory policies aren't skewed towards supporting the rollout of fixed networks. The governments that have formed universal service funds should spend this money on supporting the roll out of mobile networks rather than fixed networks, which are far more expensive to deploy and are often impractical in rural areas.

What more can be done by the SAARC countries to achieve high mobile penetration?
According to a McKinsey-GSMA study, "Wireless Unbound" countries experience significant economic and social benefits when mobile penetration reaches 20%. We are happy to note that the industry is now targeting very low-income segments of the population. For continuing growth and increasing social and economic benefits to society, taxes must be lowered, especially SIM card taxes and import duties on handsets. Also, the licensing regimes need to be clear and enforceable. We are concerned about WLL operators violating the terms of their licenses in Pakistan and Bangladesh, which discourages investment by mobile operators.

Should the SAARC countries opt for a common framework of policy and regulation?
I think most policy makers and regulators in the region look at what is happening in their neighboring countries and therefore there are mutual influences and a race to the top. It is important to create dialog among regulators in the region, and the GSMA has encouraged best practices through meetings and debates. Some convergence of policies could certainly emerge, or it is already emerging, but it is important not to force it.

Foreign investment in telecommunications is of $1,905 mn, which is 54% of all foreign investment in the country (source: SAARC Report, VOICE&DATA) attest to the success of the government's program. It is estimated that the mobile service providers will invest around $1,329 mn in 2006-07.

Lesson from Pakistan
Pakistan government did not impose any additional tax on mobile phone but kept the previous 15% general sales tax on mobile phone service and Rs 500 activation charge on new connections unchabged. Pakistani government is expecting that it will get Rs 35 bn from the mobile phone industry by doing so. This amount of revenue will come to the state coffer with the assumption that mobile phone connection will have a 150% growth in the coming fiscal year (1 July 2006-30 June 2007).

Sri Lanka-Telecom Leader
Though plagued by civil war, Sri Lanka is the most competitive telecommunication market in the SAARC region. It became the first South Asian nation to launch mobile services in 1989, five years before India did!

Today it is also the first in the region to begin 3G services. Island's biggest mobile operator, Dialog TeleKom is the first in South Asia to commercially launch 3G mobile services, giving customers the facility for high speed web browsing, video streaming, online games, music and movie downloads. Other operators like Mobitel, a subsidiary of Sri Lanka Telecom is also gearing up for 3G.

Its no surprise then that Sri Lanka's mobile phone penetration is due to peak at 38% in 2008. The island's mobile market is growing at 10 to 12 % a month. However, on the downside mobile operators are struggling to offer localized content (Sinhalese) for the majority non-English speaking population.

Deregulation means more, not less regulation
� Sultan Arfeen, chairman, Instaphone (Pakistan)

The Indian Connection
BSNL and Sri Lanka Telecom have added a new dimension to bilateral cooperation between the two nations with the launch of the Bharat-Lanka optical fiber submarine cable in October 2006. Shuhei Anan, CEO, Sri Lanka Telecom calls the cable a milestone in the SAARC region. BSNL's chairman and MD AK Sinha sees this as an opportunity to have a bilateral telecommunication link with not only Sri Lanka but also with in speeding up tourist traffic among countries like Nepal, Bangladesh and possibly Pakistan and Afghanistan.

The Road Forward
The telecom scenario in the region is poised to get more exciting as competition hots up and regulatory reforms are getting in shape to welcome next generation on mobile communication, 3G. However, the path is to be tread with caution.

Market structure, regulatory framework and technology are all evolving simultaneously making it difficult to foresee the necessary changes. Rapid improvements in reforms and policies are the need of the hour.

Meanwhile let all decision-making bodies, operators and powers-that-be, keep talking.

Malovika Rao
malovikar@cybermedia.co.in