In a statement outlining its views on the government’s proposed LKR200,000 (USD1,310) per month tax on cellular towers in the 2018 budget, representatives of Sri Lanka’s mobile industry have called for the plan to be halted amid concerns it could force operators to close towers in unprofitable areas, discouraging internet coverage expansion – a tenet of the government’s IT strategy. In a statement titled ‘Mobile Telecommunication Industry View on Proposed Cellular Tower Levy’, industry representatives have banded together to argue that the levy will have a detrimental impact on the sector’s development. ‘If the government persisted with the measure, towers in rural areas could be reduced, eventually slowing down the internet penetration in the country, which is currently at about 38%,’ the statement reads.
The full statement follows:
Mobile Telecommunication Industry View on Proposed Cellular Tower Levy
In the wake of this year’s Budget Proposals, to implement a Cellular Tower Levy of LKR200,000 per month per tower, payable by the mobile operators, we as the mobile telecommunication industry wish to highlight the below points for the information and observation of the public and all our stakeholders in Sri Lanka.
For more than two decades Sri Lanka’s mobile industry had been a key contributor to the economy of Sri Lanka delivering 100% population penetration of mobile services at some of the lowest tariffs in the world.
• Firstly, it is vital to note that three out of the five mobile operators are still loss making. This loss-making situation of smaller operators is further deepened by their attempt to extend mobile services to under populated rural areas
• Over the past two decades the Telecom sector has been the major contributor in terms of ‘Realized Foreign Direct Investments’ to Sri Lanka. Implementation of the proposed levy on towers would result in great losses to three major international investors, resulting in their possible exit from the market
• As stated by the Treasury, nearly 6,750 towers are used by the five mobile operators to support the needs of a population of 20 million. However, each tower can only support the equipment of two – three operators due to tower loading constraints
• All mobile operators under the direction of the Telecommunications Regulatory Commission of Sri Lanka (TRCSL)are already obliged to share towers before any approval is given for a new tower in a designated area. As such, very few new towers have been built over the last few years
• The latest mobile internet technologies offering 3G and 4G services, operate on higher frequencies such as 1800MHz/2100MHz. Such technologies will necessitate even more towers to cover the population compared to GSM voice on 900MHz. At present, each of the five mobile operators offer services on 900MHz, 1800MHz and 2100MHz frequencies. Thus, a radio transmitter for each of these frequencies by each operator has to be installed on these towers. This would have implications on a tower’s loading capabilities, thereby constraining the ability to share a tower
• It is also vital to note that each frequency per tower can only support a few thousand mobile subscribers’ usage. Therefore, simple mathematics determines how many towers will be required to support the entire population
• A tower is extremely costly to build and operate. It costs more than LKR10 million to build a tower and LKR115,000 a month to maintain the tower (Including electricity, security, site rent etc.). As such operators would naturally be extremely conscious in building unnecessary towers. (The proposed LKR200,000 tower levy will increase the monthly operational cost from LKR115,000 to LKR315,000 – an increase of 174%)
• All operators already have a large number of loss making towers in the rural areas. These losses will be significantly augmented if the proposed levy were to be implemented, making them economically unviable to sustain. As a result, mobile operators will be compelled to decommission a large number of unprofitable towers and reluctantly deprive customers of service particularly in the rural underdeveloped areas
• With regard to the environmental and health hazard concerns raised, the mobile industry complies with all local and international environmental and health standards such as World Health Organization (WHO), Central Environment Authority (CEA) and GSMA standards. In addition, telecom operators have installed advanced lightning protection systems in all their towers to protect expensive telecom equipment on site and the locality against lightening damage
• Internet penetration in Sri Lanka currently stands at only 38%. The fastest and most cost-effective way to increase national internet penetration is wirelessly through mobile towers. The proposed Cellular Tower Levy would only decelerate the growth of internet penetration in Sri Lanka by curtailing further investment in 4G and future 5G technologies, thereby depriving a large number of the population’s access to internet services, which is an essential service.