Sri Lanka's increase in broadband usage is primarily due to the high rate of adoption of third generation (3G) mobile technologies such as HSPA and HSPA+ dongles and associated SIM cards. This trend is typical of many South Asian countries which do not have access to wide-spread copper last mile connectivity and, therefore, are reliant on wireless networks to increase access, be it to simple voice or broadband. Several factors have contributed to Sri Lanka’s success in connecting its citizenry to the internet via mobile broadband.
However, Sri Lanka needs to overcome several challenges if it is to continue to make broadband a truly mass-market product instead of the niche popularity it still enjoys.
A key challenge is that of delivering a product of adequate quality to consumers. Budget broadband/budget telecom models mean low cost and low prices; however, they also mean low quality. This is indeed the case with Sri Lankan broadband. However. the Sri Lankan mobile broadband performs better than Sri Lankan fixed broadband on various quality of service measures. When compared with the broadband of the developed world, Sri Lankan consumers get less value for their money. One reason for this inequality is false advertising (promising broadband speeds that are possible theoretically but not in reality), although a bigger issue is the infrastructure – in particular, bottlenecks in international connectivity due to high prices.
The other challenge for operators is to keep up their investments so as to move to the next technology cycle despite 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. The case studies are 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.