The government last week wrote to the two wireless local loop operators (WLL) informing them that it was imposing a 18 percent import duty and a 15 percent Value Added Tax on CDMA (Code Division Multiple Access) customer premises equipment.
The import duty is effective immediately and is applicable on all units sold since CDMA services were launched mid last year.
Since CDMA services were launched in mid 2005, both Suntel and Lanka Bell have sold an over an estimated 200,000 connections.
The two operators, as Sri Lanka's Board of Investment approved business, enjoy tax and duty holidays for their investment here, which is also applicable to customer premises equipment or the phone unit used by customers until the announcement late last week.
"The import duties on CDMA handsets are not fair. Mobile handsets using the same technology comes in duty free. We need a level playing field," Suntel's Chief Executive Jerry Huxtable told reporters on Tuesday.
Cut Rates
Telecommunications Regulatory Commission Director General Kanchana Ratwatte meanwhile said he would not want to "…put an additional burden on the consumer."
Ratwatte has been lobbying the three fixed line operators to cut charges on CDMA connections on the grounds that the wireless technology was very much cheaper than using copper lines or the other wireless technologies so far used by Suntel and Lanka Bell.
The regulator also issued a directive to fixed line giant Sri Lanka Telecom to cut its CDMA connection charges, at over Rs. 18,000 - currently the highest among the three operators.
Sri Lanka Telecom however argues that is liable for tax and duty on its imports as it does not have BOI concessions.
Subsidies Service
Industry watchers estimate that the shift to CDMA would have reduced cost per phone line to under US$ 200, from an earlier average of over US$ 1000 per line.
Operators earlier subsidized the cost per line, recovering their investment though monthly rentals and call tariffs.
Industry watchers argue that now with cost per line below US$ 200, operators do not need to subsidise CDMA service, thus reducing the cost of a new phone connection.
-Shafraz Farook: shafraz@vanguardlk.com
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