June 01, 2015 (LBO) – Sri Lanka’s telecom operators should provide high speed broadband infrastructure to cope up with the emerging digital era in the world and provide more network sharing to cut operating costs, Dialog Chief Executive Hans Wijayasuriya told shareholders in the annual report.
“Structural transformation and industry profitability telecommunications operator’s world over, along with the wider industry in which they operate, today face the stark challenges of the techno-economic transformation characteristic of the emerging digital era,” Wijayasuriya told.
“Disruptive competition in this respect comes in the form of OTT (Over the Top) service providers who invade the legacy revenue field of telecommunications operators by offering Free of Cost or Near-Zero Cost communication services spanning the breadth of Voice, Messaging and Video connectivity,”.
“Disruptive business models in the emerging digital era are most often funded by advertising linked revenues and are further based on a global scale,”
“The afore-referenced paradox hinges on the fundamental that it is in fact the high speed broadband infrastructures invested in by Telecommunications Operators which enable the existence of OTT services in the first place.”
Dialog Axiata, the island’s largest mobile operator said, the new innovations in the digital era, reduced voice and text revenues to the telecom operator as well as to the government.
“It is of particular concern that today broadband pricing appears to be sub-cost and to be subsidized by Domestic and International Voice Service,” Wijayasuriya said.
“The resulting cost vs revenue formulation is both precarious and foolhardy in the context of the very real risk of voice revenue erosion ahead,”
“The impact on the national economies of country’s such as Sri Lanka could be envisaged to be particularly threatening since the OTT service providers are in the main located outside Sri Lanka and hence would not be revenue contributors to governments in their respective countries,”
“The early symptoms of such an avalanche are in fact already evidenced in Sri Lanka’s Telecommunications Sector featuring in the main the depletion of International Termination and IDD revenues, mutation of voice revenue growth and a declining trend in SMS revenues,”
“Once onset, the wave of transformation is seldom linear and could be envisaged to be exponential and hence catastrophic in consequence unless managed with proactive navigational strategies.”
He says a portfolio of strategies and policies required to guide the sector through the challenging period of Voice to Data Conversion, would no doubt need to target the restoration of margins and profitability of Data and Broadband services.
Wijayasuriya says these new innovation most often by-pass national telecommunications and media regulation and furthermore are seldom subject to taxation at a national level.
“The ‘OTT’ nature of disruptive communication services applies not only in the context of Telecommunications Infrastructures – whereby services eroding traditional revenues are provided “On Top Of” the very telecommunications infrastructure which they disrupt, but also in the context National Regulation and Sovereign jurisdictions.” Wijayasuriya said.