Interim solution to CDMA introduction Rohan Samarajiva, Public Interest Program Unit, MERST

Objectives Ensure that the telecom needs of rural Sri Lanka are met –380,000 waiters registered with SLTL, mostly outside Colombo –Backbone is limited and makes rural connectivity very expensive –No or very poor Internet access outside Colombo

Why are objectives not being met? SLTL and fixed operators are not investing SLTL backbone is not open to others Even where mobiles are serving rural areas (e.g., 115,000 connections in North and East), costs are high due to lack of backbone facilities, requiring satellite use Costs are perceived to be higher; revenues are perceived to be inadequate

What are the solutions? Through e Sri Lanka, we have managed to get USD 50 million in IDA credit (concessionary loan) to build regional networks and extend backbone –Will be disbursed through least-cost subsidy auction open to all operators –But requires frequencies for low-cost access networks, e.g., CDMA 800 or GSM 900

What are the solutions? World Bank no longer gives funds for building backbone We got around this by combining backbone, regional networks and Vishva Gnana Kendra No business case solely with VGKs; need other services too  regional licenses

Importance of frequencies Without ready access to frequencies that allow low-cost technologies, the cost estimation will rise; causing the subsidy bids to rise; resulting in the failure of the auction or a radical scaling back Intense discussions with TRC officials have shown that GSM 900 is not available; but CDMA 800 is

Importance of frequencies CDMA 800 is used extensively in India and China –Million per month being added on CDMA 800 in India alone  cost per unit is dropping; currently ~USD 100/line

How to get CDMA 800 Mobitel currently occupies 10 MHz in 800 Band; in addition to 7.5 MHz in 1800 Band –Desperately wants GSM 900 frequencies to compete with Dialog, on level ground (cost ratio of GSM 900:1800 is 1: 1.5) If we can give them ~7.5 MHz of GSM 900; we can get them to release the 10 MHz of CDMA 800 currently used for AMPS

How to get CDMA 800 Celltel and Hutchison occupy excess GSM 900 frequencies that can be pulled back through negotiation Celltel and Hutchison are currently operating fixed cellular services that are technically in violation of their licenses –Legalizing these would be part of the negotiation

Why should fixed operators be looked after? Suntel and LB claim they have a duopoly on fixed wireless ‘till 2006 They (at least Suntel) express willingness to invest if given CDMA frequencies –Current technologies are expensive Proposal is to give 2.5 MHz of 800 CDMA each to 3 fixed operators plus RTN on administrative basis

Why an interim solution? TRC, at the insistence of fixed operators, asked for it Is fair, because interim solution was given to mobiles through a limited-participation auction for 1800 MHz frequencies in April 2003 Removes threat to RTN process Allows for freeing up of DECT and other frequencies for new uses

Precautions Mobile operators have no legal exclusivities; Why is Commission told they have grounds for a case? –India case is different; huge license fees for mobiles and exclusivities For safety’s sake, license modifications offer them considerable benefits –Fixed cellular in demarcated areas

Schedule that was proposed Involved legal advice from AG from the start Allowed for Commission to determine whether public-notice proceeding was necessary Any delay is because TRC did not respond to proposal

DateAction March 5, 2004Proposed license modifications finalized by TRC and PIPU staff; proposed auction rules finalized by TRC staff March 5-10AG’s staff considers above documents March 11Commission approves March 16-26Meetings with seven operators based on draft license modifications and draft auction rules April 6Recommendations to Commission and Economic Policy Committee of Cabinet, per EPC decision; a decision on whether to conduct a public consultation under s. 18 to be taken at this point April 23Depending on above decision, consultation begins (notice having been given prior to Avurudu) or licenses are modified under s. 18 and formal notification of auction commences

Proposal Same schedule can be kept with an end- point in May If necessary, we can move forward with “permanent solution” negotiations as well in parallel Country will benefit most from introducing CDMA 800