Telecom regulator mulls cutting termination rates

• Floats White Paper exploring possibility of reducing rates
• Since its introduction in 2010, 50 cents per minute charged on off-net calls
• Reduction in termination rates could directly benefit consumer- Airtel CEO
• Telecom analyst says can be done immediately as it’s revenue neutral to govt.

The Telecommunications and Regulatory Commission of Sri Lanka (TRCSL) has recently floated a White Paper on the telecom sector termination rate regime—which was introduced in 2010 to explore the possibility of reducing rates, Mirror Business learns. 

The termination rate regime, which replaced the sending-network keeps all (SKA) regime, comes into play when calls are being made or SMSs are being sent between two different mobile networks. 

For example, when a customer of service provider A calls a customer of service provider B, while the service provider A will charge its customer per minute for his/her call, service provider B will charge service provider A a fee for terminating the call on its network.

Hence, this termination fee forms part of service provider A’s cost of facilitating a call to its customer.

Since its introduction in 2010 and up to now, 50 cents per minute is charged on off-net calls and 15 cents per SMS.  According to Bharti Airtel Lanka MD/CEO Jinesh Hegde, a reduction in termination rates could directly benefit the consumer. 

“Reducing of this rate is directly beneficial to the consumer. This was introduced a decade ago and it needs to be revised now,” Hegde told Mirror Business during a recent interview. 
He also revealed that the actual cost of call termination currently stands less than 3 to 4 cents a minute. 

A telecom sector analyst Mirror Business talked to pointed out that a reduction to termination rates can be brought in immediately without much hassle as it is revenue neutral for the government. In the latter part of last year, floor rates imposed on call charges since July 2010 were removed “to promote cost optimisation and assist the industry to expand their market share,” according to Telecom and Digital Infrastructure Minister Harin Fernando.  

The removal of floor rates has resulted in operators coming up with very competitive voice packages, benefitting the customers. 

Sri Lanka’s smartphone penetration is growing over 50 percent year-on-year and the current mobile broadband penetration is estimated at 30 to 35 percent, indicating ample growth space for mobile network operators. Sri Lanka currently has four mobile operators, down from five due to the merger between Hutch and Etisalat.