However, having reached this stage, Sri Lanka needs to overcome several challenges if it is continue on its early success and make broadband a truly mass-market product instead of the niche popularity it still enjoys.
A key challenge is that of bringing a product of adequate quality to consumers. Budget broadband/budget telecom models mean low cost and therefore low prices. But they also mean low quality. This is indeed the case with Sri Lankan broadband. While the Sri Lankan mobile broadband performs better than Sri Lankan fixed broadband various quality of service measures, when compared with the developed world Sri Lankan consumers get less value for money on broadband. Part of the reason is bad advertising (promising broadband speeds that are possible theoretically, but not in reality). But a bigger part is the infrastructure – in particular, bottlenecks in international connectivity due to high prices.
The other challenge for operators is to keep up their investments necessary to move to the next technology cycle in face of declining margins. While at least two mobile operators have announced LTE network deployments, extending these upgrades beyond the population centers will prove challenging because of revenue and margin erosions due to intense competition.
This case study is one of an initial series of seven that will contribute to the Broadband Strategies Toolkit, an online resource for policy-makers and regulators, especially in developing countries. The case studies are generously funded by the Korean Trust Fund (KTF) on Information and Communications for Development (IC4D). The KTF is a partnership between the government of the Republic of Korea and the World Bank Group whose purpose is to advance the ICT4D agenda to contribute to growth and reduce poverty in developing countries.