Sri Lanka price floor for mobile calls.

July 12, 2010 (LBO) - It is not the responsibility of a regulatory agency to ensure the profitability of telecom operators. Yet, when every single operator in the country, including the incumbent who used to make profits even under inefficient government management, starts bleeding red ink, it is not possible for the government and the regulatory agency to sit on their hands.

After years of bad policy decisions and regulatory inaction that led to a crisis in the industry, finally, the government has started to act. In June, the TRC announced that the previous Sending-Network Keeps All (SKA) regime was being replaced by a mobile termination rate regime, with the termination charge being set at 50 cents a minute for a call and 15 cents for an SMS.

Then in July it announced that a floor price of 2.0 rupees will be set for all voice calls, excluding those covered by previously sold packages.

Action was needed

Sri Lanka is on the cusp of widespread Internet use. This will be driven more by mobile networks than by the fixed network or by the fading WiMAX fixed-wireless solution. Necessary preconditions are

Building out of 3G mobile networks that can be accessed using various mobile devices and by dongle-equipped computers (desktop or laptop) across the island, and

Investments in applications that people can use such as agricultural information services, m-commerce services, etc.

Both conditions require significant new...