On your marks, get ready, steady........... whoops! 

By Mel Gunasekera and Shafraz Farook

My action will best speak for itself - R. D. Somasiri, DG Telecommunications Regulatory Commission.

Innovation and revolution. Two words that can probably best describe Sri Lanka's growth in the telecommunications sector.

Fired by a change even more far reaching than the harnessing of electrical power a century ago, the transformation of telecommunications networks, brought about mainly by a marriage with computers, is 

simultaneously driving down the cost of communicating and driving up the amount of information that can be exchanged. 

We are a pussycat playerand we welcome competition - Lalith de Mel, Chairman Sri Lanka Telecom.

Where once people had to go to a particular place - a post office, a neighbour's telephone - to communicate, now communications come to them, in the form of a pager, a mobile telephone or a laptop with a phone jack. And where once greater distance made communications progressively more expensive and complicated, now distance is increasingly irrelevant.

But it is not yet clear where all this will lead. For about a century after the first telephone landed in Sri Lanka, the telephone network became more and more extensive, but not much more sophisticated. Only in the past two decades have three great innovations - the fax, the mobile telephone and the Internet - demonstrated that the network can be used to create new mass-market products that change the way people live and work.

Investors are jittery about the regulatory environment - Hugo Cederschiold, CEO Suntel.

Many more such novelties probably lie ahead, for telecommunications is at the centre of the most intense innovation that any industry has ever seen.

But the innovations themselves are only the first step. 

Like many countries, in Sri Lanka, the dominant fixed telephone service is still a public sector monopoly. By August 2002, the monopoly will, in theory, have been swept away.

But the three players - Sri Lanka Telecom (SLT), Suntel and Lanka Bell - are gearing themselves to face the challenge.

Funding programme

SLT

The dominant operator SLT, is in the midst of a Rs. 13.6 bn expansion plan to modernise the existing infrastructure to meet latent demand, says Lalith de Mel, SLT's new Chairman. The capital expenditure programme, which rose from Rs. 13.3 bn in 1998, peaked at Rs. 15 bn last year and the company hopes to spend Rs. 13.5 bn this year and a further Rs. 11 bn in 2001. 

Nearly half of this year's funding will come from internally generated cash (43 percent), the rest via concessionary ODA loans, syndicated loans and a Rs. 1 bn to Rs. 1.5 bn debenture. Funds from internal cash flows are projected to improve to 100 percent in 2001.

Our capital rasing efforts are in danger due to the present regulatory situation - Vijay Watson, CEO Lanka Bell.

"SLT presently has sufficient capacity to satisfy existing demand and in some areas like Havelock Town, we have reached saturation levels," he said. "We are now concentrating on building up a first class network and rolling out our network into the rural areas."

However, the pace of expansion is flexible as SLT is able to meet the projected demand by spending far less than the amount planned for at least the next two years.

As part of its expansion programme, SLT's first fibre optic cable ring project covering the Central Province is presently underway. SLT hopes this will provide high quality of service for enhanced telephony services, ISDN facilities, data communication services, other new products and increase redundancy between major traffic centers. 

Since privatisation, SLT has dramatically improved the speed of line rollout. Last year alone, 132,000 new connections were provided compared to 72,457 in 1997. Average waiting time, which stretched far back as 10 years, has declined to less than one year. While some areas have reached saturation, others like Mattakkuliya are fast reaching that stage and SLT can now connect a line within five working days or less in the metro areas, says de Mel. 

I hope the secondary market can function well to sustain the issue- Ravi Abeysuriya, CEO DCR Lanka.

By re-locating equipment to high usage areas and increased line provisioning, the one time low call completion rates, are now hovering around 40 percent.

The fault reporting service is in the process of being upgraded. Meanwhile, SLT is getting closer to fault reporting targets. Faults per 100 lines per month touched 13 percent - getting closer to the 10 percent target. Fault clearance rate improved to 52 percent within 24 hours, but still remains below the 60 percent metro target. By controlling around 64 percent of the total voice market share (unofficial estimates), SLT records 585,000 subscribers as at 1999.

Despite introducing itemised billing in Colombo, a new central billings complaints number and a faults repair service, SLT continues to be inundated with billing complaints, low call completion rates and faults, thus giving its archrivals the WLLs (Wireless Local Loop operators) a strong competitive advantage.

Suntel

Since commencing operations in 1996, the company has poured in US$ 100 mn towards building up its network. This year, Suntel plans to raise Rs. 3 bn to Rs. 3.5 bn to expand its network and meet its mandatory target of 100,000 subscribers islandwide by the end of this year. 

The funding will come from a Rs. 1 bn debenture (jointly guaranteed by the International Finance Corporation and the National Development Bank), a syndicated loan from the local banks (partially guaranteed by the IFC) and equity funding, says Hugo Cederschiold, CEO Suntel.

Being the larger of the WLL's, Suntel controls around 10 percent (unofficial estimates) of the fixed voice market share. Since inception, Suntel's aggressive marketing strategy has been targeted at high volume corporate clients with tailor-made solutions. SLT is also feeling the heat from Suntel in the area of data communications. Presently Suntel has a 60,000 subscriber base.

Lanka Bell

Being the youngest of the two operators, Lanka Bell joined the fray in June 1996. Presently controlling around five percent (unofficial estimates) of the fixed voice market, the company invested US$ 150 mn in expensive technology. Burdened with a high level of foreign debt, Lanka Bell suffered heavy losses since inception and was at one point looking for a strategic investor. Under the leadership of Vijendran Watson, the present Managing Director, Lanka Bell made a turnaround last year.

Compared to a Rs. 50 mn loss in November 1998, Lanka Bell showed a positive monthly EBITDA (Earnings Before Interest Tax Depreciation and Amortisation) of Rs. 14 mn. Lanka Bell expects to report its first positive EBITDA of around Rs. 70 mn for the 1999/2000 financial year, says Watson.

Monthly recurring revenue increased by 41 percent since November 1998, while the monthly operating expenditure decreased by 58 percent in the same period. The management was localised with the removal of 35 expatriate staff and the debts have now been re-structured.

This month, Lanka Bell got the green light from shareholders and creditors to re-structure its capital. GTE, one of its debtors, has agreed to become a shareholder and equipment supplier Nortel will increase its present stake of six percent. Part of the supplier credit will be converted to long-term loans, the creditors will also receive US$ 13 mn in cash. Major shareholder Transmarco is also at hand to inject US$ 61 mn. Lanka Bell presently has 38,000 subscribers. With the fastest data rate, 'Bell' phones are popular among heavy fax and internet users.

Legal battles

As the government strips away the rules that have protected SLT, they are beginning to realise that their task does not end there. Without well designed regulation, competition may falter.

The WLL's are asking for a level playing field. Over the past few months they have been embroiled in a battle with SLT, accusing the latter of being an unfair competitor.

Take the case of the interconnection agreement set out by the Telecommunications Regulatory Commission (TRC) in November 1998. 

Prior to the determination, SLT, Lanka Bell, and Suntel were unable to come to a mutual agreement. The TRC then flew in an alternate dispute resolution (ADR) team to break the gridlock. With the ADR mission also failing, TRC issued the directive, which forced SLT to share part of its lucrative incoming call revenue with the WLL operators and offer local call interconnecting charges for WLL local calls. 

The directive brought in howls of protest from all three operators - a sign perhaps that the directive was fair. 

While WLL operators lodged their protest and continued to toe the regulators line, SLT took the issue to court.

The interconnection agreement replaced the 'sender keeps all' with a mutual compensation arrangement for domestic calls.

SLT and WLL operators will receive interconnection fees for local and national calls terminated on their network based on a tariff structure determined by the TRC.

Local calls by SLT subscribers to WLL subscribers in the same service area will be charged at local and not national call tariffs.

WLL operators will remit 80 percent of their collections for international calls originated by them to SLT.

Though SLT will retain all revenues generated from incoming international traffic that terminate on the WLL operators networks, SLT must pay Rs. 9.50 per minute to the WLL operators as a 'national extension fee'.

Then there is also the case of SLT vs. Electroteks (Pvt) Ltd. Electrotecks which was given an 'enhanced voice' licence prior to the liberalisation is being accused by SLT of 'infringing its monopoly.'

SLT alleges that Electrotecks is bypassing SLT's international gateway by bringing in international traffic via satellite terminating on WLL networks and SLT's own network. The courts refused the injunction sought by SLT against Electrotecks to prevent this activity, saying it was out of their jurisdiction and fell under the TRC. The TRC then notified all operators that 'enhanced voice' did not fall within the provisions of international telephone services. The matter is now before the Court of Appeal.

In the latest battle, SLT has been accused of blocking local interconnections of WLL operators on numerous occasions - a charge SLT denies. Suntel and Lanka Bell individually succeeded in seeking an interim injunction.

There were speculations last year, that the government brought in Lalith de Mel as SLT's new chairman to calm things down between all players. De Mel who also works as a consultant to Reckitt and Coleman UK, divides his time shuttling between London and Colombo once a fortnight, was widely perceived as a somewhat moderator at that time, industry sources said.

But the constant legal battles have left a bitter taste with the WLL operators and discouraged other potential investors into the sector.

Competing in telecom business is different from competing in cement or mosquito coils. SLT started with big advantages _ 100 percent of the local market, a familiar brand, a network that has largely been paid for, and a good cash flow. SLT also has strong relations with the government: their executives may have spent careers in and out of telecommunications ministry, or they may know a great deal about lobbying. In any industry, these would be formidable challenges for new entrants.

To add to these challenges, this business rewards size. The more people and businesses a network connects, the greater value of being plugged into it.

Without regulation to sustain competition, the telephone giant might naturally revert to a single giant. Even if the service remained competitive, the network would probably not.

So regulation is inevitable to ensure competition. But the lesson of the present legal battles shows that regulation is extremely difficult to get right. And a regulatory decision can sometimes impose big costs, like the present interconnection agreement. The fact that SLT is going for an International Public Offering (IPO) with listings in probably two other international stock exchanges does not sound good for the company, industry sources said. 

Though local investors may disregard the constant legal battles, international investors are not that generous, and it may affect its price issue, industry analysts say.

The short arm of the law

At present, the TRC's toughest tasks are licensing new services and dealing with interconnection. They have to decide whom to licence and on what conditions. Will the government tend to favour particular technology, a type or service or commitment to giving rural connections etc.

Even harder questions arise with interconnection. A telephone is virtually useless unless it can reach the 18+ million of people out there. So the new entrant has to be able to interconnect with the main national network - which means doing a deal with SLT. 

If regulation is difficult for developed countries, it is desperately harder for less developed countries. Part of the problem is cultural: not many countries have good antitrust regulations or are used to the idea of regulating to promote competition rather than to restrain it - and Sri Lanka too is undergoing similar difficulties. 

With rapid technological changes and intense competition, the regulator's role becomes increasingly important to ensure a level playing field.

The TRC was once hailed as a strong independent regulator under the previous Director General of Telecom (DGT). During the previous DGT's tenure, the TRC created waves by putting a lot of effort to increase its public awareness, educating public of their rights and implementing the rules of the present Act. But the effectiveness of the present DGT, R D Somasiri remains to be seen. Though he is technically competent for the job, his 'publicity shy' image, has meant the watchdog is less and less in the news and the industry has already accused him of being a 'toothless regulator.' 

After much persuasion, DGT Somasiri said, people are entitled to their own opinions. "I believe that there is no basis to form such an opinion. I have acted and will continue to act in the best interests of the country. Regulators world-wide are generally not popular due to the nature of their job. My actions will best speak for itself."

All the same, the government is keen to encourage competition and to promote foreign investment both of which will help bring the telephone to more rural people.

Marketing strategies

WLL

The WLL's have a competitive edge over SLT by way of effective innovative marketing strategies, good customer service, speed and efficient billing. Analyst estimate, loosing the monopoly in 2002 will hamper SLT's international revenues, as the capital outlay for an international gateway is low. 

Already, rival operator, Suntel may have an added advantage if an international gateway is available. Suntel's parent company Telia, being a very large European operator may be able to direct a significant amount of international traffic to Suntel. 

However, the present norm for international traffic exchange is one of returns. For instance, if SLT sends 80 percent of Sri Lanka's traffic to an international carrier. The international carrier should in return, channel 80 percent of traffic that's heading to Sri Lanka through SLT. International traffic will then be directed towards local operators on a commercial/cost basis, industry source say. 

Despite increasing demand from the outstations, SLT is following a strategy of servicing commercially viable locations. SLT estimates each new connection costs US$ 1000.

Presently SLT uses wireless technology in the 800 Mhz band to give connections to certain urban and rural areas. SLT also says its installation fees presently do not cover the cost of access line provisions.

However, the WLL operators are more efficient due to their smaller size. 

The fixed line operators also face stiff competition from cellular operators. Cellular operators commenced business prior to WLL operators. During the initial stages, waiting lists were a mile long, and people purchase cellular phones for their domestic use. The situation still exists in rural areas where cellular coverage is available and fixed line operators have waiting lists. 

Revenues

Domestic Revenues

With privatisation the government permitted SLT to raise its tariffs. The tariff hike was met by howls of protest, and this year SLT will seek a 20 percent hike followed by another two 15 percent hikes in 2001-2002. 

SLT chairman says the tariff hike should be sufficient for the company to break even. "Tariff balancing also depends on volumes of business. The cost is the basic infrastructure. In our case the local cost base is by no means covered. The more you go into undeveloped areas the more you bear the cost without compensating it with revenue," he said.

However, tariff rebalancing is aimed at making the domestic business sustainable on its own revenues by eliminating subsidies from international service. 

SLT's domestic call revenues rose from 28 percent in 1998 to 37 percent in 1999.

Please see Table 2

Total revenues reached Rs. 19,476 mn in 1999, spurred by increase in domestic tariffs and rapid line provision. International revenues increased at a slower rate, as international tariffs were reduced while volumes increased. International revenues are predicted to decline from 2001. 

EBITDA has increased rapidly to over Rs. 11 bn in 1999 from Rs. 10,155 mn in 1998, DCR Lanka credit analysis report states. Increasing competition from WLL and cellular operators could restrain EBITDA going forward. EBITDA margin is encouraging and has stabilised around the 59 percent level reflecting improved labour productivity, the effort to control costs and growing revenues. 

EBITDA interest cover is 3.9 times and projected coverage is moderate for the next two years due to rising interest expense. Pre-tax coverage is projected to improve gradually as interest expense decreases from 2001. These credit protection measures have improved from 1998 lows caused by heavy borrowing to finance capital expenditure, the report said. 

International Revenues

SLT is in the process of a tariff rebalancing exercise to off set the risk of high dependence on international revenues and declining settlement rates. 

SLT generates a lucrative revenue from out going calls, interconnection and international settlement for incoming calls terminated on SLT's network. 

Since 1997 international call and interconnection revenues have remained at around 16 percent of SLT's total revenues. 

Outgoing international volumes have accelerated with an increase in the number of IDD subscribers and lower out going call charges.

Hence the proportion of international to domestic revenues has tumbled, while total revenues have shot up. 

The tariff rebalancing exercise came after the US based Federal Communications Commission (FCC) pressured US carriers to reduce their settlement deficits and give cheaper international calls to US consumers. FCC's proposal for 'benchmark' accounting rates drew worldwide criticism but comes into operation this year. In the case of Sri Lanka, starting January 2003, SLT needs to achieve the benchmark level of US$ 0.23 settlement rate in five years. Equal annual percentage reductions are required, which means a 25.4 percent reduction. This is applied to all accounting rates between Sri Lanka and elsewhere.

The most obvious and dramatic effect of this scenario is a large drop in SLT's net settlement revenue from US$ 72 mn in 1997 down to US$ 25 mn in 2002. Overall, SLT's international income is expected to be nearly halved from US$ 109 mn down to US$ 56 mn - despite a healthy continuing traffic growth.

International tariffs are usually formulated on a margin over settlement rates so tariffs will suffer downward pressure in the future. 

Net inpayments from all carriers received were Rs. 4,636 mn in 1997 and Rs 5,255 mn in 1998 reflecting increased traffic volumes. The decline in international inpayments will leave SLT exposed to some degree of foreign currency risk in the future, says DCR Lanka in their credit analysis report (see box story). Foreign currency debt outstanding is mainly related to existing projects but the net international in-payments coverage on repayments due on these loans will deteriorate with the end of the monopoly, they said.

Being private companies, we are unable to give the WLL's revenue targets. However, there have been speculations that WLL's turnover growth is disproportionately higher than their capital expenditure, because the WLL's have been using 'irregular methods' to transfer international voice traffic. Though the WLL operators deny the charges, we are unable to ascertain them, since their financial reports are not available for public scrutiny.

Future outlook 

WLL operators

Lanka Bell's Vijay Watson says the present uncertainty in the regulatory environment has to be cleared. "Our capital raising efforts are in danger due to the present regulatory situation. There is no way people will put their money when there is a risk at stake," he warns.

His fellow operator Hugo Cederschiold expresses similar sentiments. "Investors are jittery about the regulatory environment. Even if they have the mind to invest they wont do it."

Both operators say things were beginning to settle down, after the initial anguish over the interconnection agreement died down. The three operators got on with their job of rolling out their respective networks, which opened the door for investors to think of looking at the sector once again - that's until the allegation of call blocking began last December shattering the fragile tranquillity that prevailed since July last year. 

The situation of distrust has surfaced once again and Cederschiold says it will be difficult to keep investors as they have burnt their fingers once again.

"It's a pity because in this part of the world, the telecom industry is not hard hit by low recession. Sri Lanka has only two percent of telephones, whereas normally in this type of markets its 10 percent," Cederschiold says.

"There is a demand and a pie that can be shared by all. The market needs good healthy competition to grow," he adds.

Meanwhile, both operators racing ahead to meet its 100,000 subscriber mark in 28 switching centres by end 2000, as stipulated in their licence agreement. Their licence also stipulates that that call completion rates to be continuously above 50 percent. 

As an incentive, if each operator is successful to connect minimum 100,000 subscribers, then their duopoly will be extended for a further five year period. 

If each operator fails, they face a penalty fee of Rs. 5 mn for each secondary area having less than ten connections. 

If each operator fails to connect 40,000 subscribers by end 2000, he will have to pay a Rs. 100 mn fine.

However, the targets may pose a problem, since the 28 switching areas include the north and east. To overcome this hurdle, the TRC last year said they would take a connection in a rural area to equate ten metro connections.

The WLL operators argue otherwise. "Each base station needs 1000 connections at least. If you are specifying certain conditions in the licence, then they also have to give us a conducive condition to operate," Hugo Cederschiold says.

SLT

Meanwhile, SLT is busy with their expansion programme.

SLT's Lalith de Mel says, key expansion projects to increase capacity will cost them around Rs. 15 bn of the total planned Rs. 24 bn in the next two years and include areas like:

* Rehabilitating the Jaffna exchange

* Horana Area Telecom Improvement Project

* Regional Telecommunications Development Project I (OECF III-RTDP I) & Project II (OECF III - RTDP II)

* Telecommunication Network Expansion Project in Co lombo Metro Area Package I (OECF IV) & Package II (OECF V)

* Trincomalee Expansion Project

* 150K Suppliers Credit Project (Colombo Package)

* Gampaha Area Improvement Project

* Expansion of Trunk Transmission Network Project

* Rural Telecommunication Network Development in Galle District - Phase I

* Optical fibre ring between Padduka - Welikada.

On the international telecom infrastructure area, SLT added a third gateway (located in Welikada, Rajagiriya) last year, to enable them to cope with them increase capacity for larger volumes of international voice and data traffic expected as the international rates tumble.

And what about the north and east? SLT has a virtual monopoly in the north and east, mostly because it has been in existence for over a century. 

De Mel says its difficult to put infrastructure in these areas, considering the present situation. 

"We are managing as best as we can, but if you want to build a new exchange things are difficult. We need to move men and material there to work, which is difficult now," he said. 

However, the ongoing civil war has not sheltered SLT from terrorist attacks. Re-construction work over the past two years cost around Rs. 35 mn. Presently SLT's equipment in the war zone areas are not insured against terrorism, as premiums exceed the cost of damage.

De Mel says, "SLT is big enough to be able to take a hit."

Asked about NTT's plans for Sri Lanka, he says with NTT's strong regional presence, there is opportunity to create a hub or still better be a hub in the region.

"By this I mean, we can be a central point to disseminate information. There may be a way to bring certain information by satellite to a certain point and then send it, it may be possible and economically viable. These are some of the things, which will have to be looked at, at a certain time and what type of collaboration can be put together," he said. 

De Mel says, given a chance, SLT would like to increase its present 40 percent stake in cellular operator Mobitel. "It makes sense for Mobitel and us, as we would be the best partner for Mobitel." 

He doesn't think SLT's licence precludes them from increasing their stake. "What we require are strong telecommunication companies. Another point to remember is that we have a strong telecommunications partner by way of NTT. To create a strong telecommunication network with NTT on one side and the government on the other, is good for the infrastructure development of this country. It is not like there is one private group dominating the infrastructure of the country. So if you have a strong government business I really don't see a cause for concern. That's what people forget that the government is still a major shareholder in the company. What you need to have is a strong viable infrastructure network not one that will collapse and not support the development of the country." 

Plans for Mobitel's IPO have been put on hold. Presently, Telstra, Mobitel's Australian partner, is in the process of being privatised. He reckons once the Telstra's new management is ready, they will make their views known about Mobitel's future.

Asked how SLT plans to defend its monopoly while technology is advancing by leaps and bounds, de Mel replies, "we have nothing to do to defend the monopoly. The fact that technology making it difficult to defend monopolies is pure nonsense."

For instance there is enough technology today if you have the money to set up a new radio station tomorrow. The question is whether you have a licence to operate a station or not. As far as we are concerned, the government had a monopoly on international telephony which was passed on to SLT. The fact that some unauthorised person can bring voice into the country does not alter the scenario. The fact that you can do something does not mean you are entitled to do so, he emphasised. 

He says the government made a wise decision to keep the monopoly over international voice. "It was a very wise decision because SLT at that time had to generate a significant amount of revenue to build its infrastructure. 

From a national point of view, you have to build the infrastructure. SLT has also followed a very conservative dividend policy and in 1998 we paid out Rs. 950 mn as dividends." 

Refuting his rivals allegations that SLT is an unfair player, de Mel says "quite to the contrary we are a pussycat player in the market. We are not aggressive in our marketing efforts and we welcome competition." He reckons that in the future, voice traffic will still play a dominant role, despite a growth in data.
 

Regulator

The most pressing problem facing the regulator at present are the constant court room battles between all three players. 

The writ application taken out by SLT against the TRC's interconnection determination is in the final appeal stage. A resolution is expected soon, as we understand the government is keen to resolve the interconnection dispute prior to SLT's IPO this year.

SLT's case against Electrotecks is also expected to be resolved in the coming weeks. The regulator is tipped to rule in favour of SLT, sources say. The watchdog would take the stand that though Electrotecks has an enhanced voice licence, it cannot interconnect with WLL operators. WLL operators are only licenced to interconnect international traffic through SLT. Hence, interconnecting with an 'enhance voice' is illegal and it violates WLL's licence conditions. 

Then there is also the 'call blocking' allegations which have ended up in court. Sources say that SLT resorted to block calls in an attempt to bar illegal calls coming via third parties. Besides the legal cases, the regulator appointed a committee to look into the matter.

Legal issues apart, the 1994 national telecommunications policy is being revamped. The present policy sets down broad objectives to provide telecommunications facilities to all at cost based tariffs, provide universal service, eliminate waiting lists and provide quality service. 

Some of the key initiatives taken to achieve these objectives include issuing licenses for WLL services, SLT's privatisation of SLT, tariff rebalancing targets and the new interconnect structure. The competition for fixed telephones was introduced in early 1996, after licensing two operators, to provide fixed local access services using wireless local loop technology. 

The new policy is tipped to advocate further liberalisation and convergence within the industry. Universal access is to be encouraged by economic incentives and clear quality standards will be set.
The TRC is in the process of formulating draft policy directives that will be presented to the Minister this year. 

The TRC Act is also to be revamped.

Among the other changes, the Caller Party Pays (CPP) decision is also expected this month. Whatever the outcome, it is bound to have an effect on fixed line operators. 

The national numbering plan is also expected to come out at the end of next year. The numbering plan would give subscribers an eight digit number. In return subscribers get the freedom to switch between any operator (be it mobile or fixed) without the confusion of letting the outside world know each time you change your telecom operator.

As a preclude to this ambitious venture, detail billing for all subscribers was made mandatory and SLT is in the process of issuing detail bills in an ad hoc basis. However, SLT indicates that they are unwilling to implement the numbering scheme until their international monopoly ends in 2002. The TRC however, says the plan is still on schedule, but progress has been hampered by the various litigation issues that are taking place at present.

Although the regulatory change may be slow, the speed of technical transformation that's coming our way is breathtaking. As a result, activities that were strictly for nerds one year ago (like voice telephone calls over the Internet) became hot commercial prospects 12 months later, and is presently in use, in a low key level. Technologies like cellular phones that once upon a time started as a businessman's luxury, is quickly caught on to become a mass-market gadget.

What about the uncertainties? Wireless and data sum up the two main uncertainties. Ten years from now, it seems probable that wireless will have become the main channel for voice conversations, as people come to think of the telephone as a personal, portable gadget rather than a static object which they share with others in a fixed place. 

Moreover, wireless, including satellite telephony, will eventually be the main guarantee that everybody has a choice of telephone service.

What is Amadeus?

Amadeus Global Distribution System (GDS) is a leading information technology company serving the marketing and distribution needs of the travel industry. Amadeus provides a worldwide neutral booking system for travel professionals on airlines, hotels, car rental companies, and other travel service providers. 

Today, over 201,373 travel agencies and airlines sales office terminals are connected to the Amadeus central system worldwide.

Amadeus displays flight schedules of over 735 airlines, facilitates reservations in over 480 airlines, allows room reservations at over 53,000 hotel properties and 300 hotel chains, provides access to car rentals at over 20,500 locations through 54 car rental companies around the world.

Amadeus is a truly international company, active throughout the world with 32 per cent of the world market share. Its unique approach to partnership gives it the competitive edge for a strong market presence both globally and also locally. Amadeus continues to strengthen its position of the global leader in the GDSs of the world.

Amadeus, began its operations in the Indian sub-continent in September 1994 with installations in Mumbai and New Delhi. Since then substantial in-roads have been made in different parts of the sub-continent and today there are 20 offices servicing over 1547 travel agents with more than 2226 terminal installations in 49 cities. Amadeus has strategically expanded its network in the Indian sub-continent to cover India, Nepal, Sri Lanka and Bangladesh.

Amadeus was the first GDS to begin operations in Sri Lanka in 1997 and has since provided a reliable system as well as a range of user-friendly products and solutions. With an office at the Galadari - Colombo, Dennis Fonseka heads the Amadeus Lanka team. Over 74 travel agency connections with 117 terminal installations are using the Amadeus System in Sri Lanka.

Amadeus Lanka advantage

Amadeus Lanka offers travel agents in Sri Lanka extensive and comprehensive training programmes free of cost at the Amadeus training centre, in addition to regular on-site training provided by the Amadeus experts. On-line support is available to all Amadeus users in the form of a Colombo Help Desk. The service is available six days a week and supported by the 24 hours Indian sub-continent Help Desk in New Delhi.

The Amadeus Lanka technical team also offers technical support to all its travel agents thereby ensuring minimum downtime in case of breakdowns. They are further supported by a Sales and Marketing team that understands and caters to regional market needs.

Amadeus products

The Amadeus GDS offers its users a comprehensive product portfolio, incorporating the central system data base and reservation tools. Amadeus ProMinim, the Amadeus operating system, used by all Amadeus agents is userfriendly windows-based streamlined application for travel reservation. This application reduces time spent in marking a reservation by as much as 60 per cent.

Delmege opens first paint depot in Galle

Delmege Forsyth & Co. (Paints) Pvt. Ltd. inaugurated their first paint distribution depot in Galle. The mayor of Galle, Mr. Lional Premasiri presided over the opening ceremony. The depot will service paint outlets in the Southern province.

Mr. Premasiri said at the inauguration: "We welcome the initiative of Delmege Forsyth in opening a depot in Galle. We hope that traders will adapt to the challenges of a competitive business environment". The inauguration ceremony was followed by a luncheon at the Lighthouse Hotel in Galle.

The opening of the depot is a part of the restructuring process of the company's distribution system to ensure that paint dealers receive that best services, inventories are optimally managed and a cost efficiency is enhanced. Delmege Forsyth & Co Paints' new partner Asian Paints has successfully implemented this system in several countries and is confident that it will benefit dealers immensely in Sri Lanka too.

S. Mohandas, Chief Executive, Delmege Forsyth & Co. Paints Ltd. said, "The response from dealers to this new system of distribution has been very encouraging. We believe that we will not only be able to serve dealers better but we will also be able to enhance profitability of all our business partners".

Some of the country's leading paint brands, Crown and Permoglaze are manufactured and marketed by Delmege Forsyth & Co (Paints) Pvt. Ltd. Also available under these brands are a full range of emulsions, enamel paints, floor paints, wood finishes and auto paints.

Plan demise no surprise 

Cargo 2000's decision after nearly three years to jettison its ambitious 'master operating plan' and become a standards certification agency has come as no surprise to air freight insiders, writes Roger Hailey. 

"Since when have a group of 35 airlines and freight forwarders been able to decide anything? This is not a surprise, it was always on the cards," said one airline observer who wished to remain anonymous. 

However, Lufthansa Cargo boss Wilhelm Althen had already cast doubt on Cargo 2000, the alliance between airlines and forwarders which planned to offer integrator service standards for air freight. 

In an interview with Lloyd's List, the soon-to-retire Mr. Althen said that a mix-match of cargo and passenger-focused airlines, plus a reluctance to invest huge amounts in computer systems, are a major drawback of Cargo 2000. 

He prophesied: "In my view Cargo 2000 is necessary for standardisation. I do not believe that Cargo 2000 can be a solution to create something like an integrator network for the airlines. "As long as you have all airlines and most of the forwarders in that institution it will not work and it will not work for one very simple reason. 

"You still have two groups of airlines. You have belly carriers concentrating on its contribution only for passenger services. They don't really care about where quality is produced for the ground investment, they just want to have enough in the bellies. 

"And then there is the other group with a strong focus on cargo, these are the designated, cargo carriers going their own way." 

Cargo 2000 was set up in response to failing air freight delivery times when Federal Express, DHL and TNT shook up the industry. Airfreight delivery times have scarcely improved over 20 years. The average is now six days compared with 6.5 days in the late 1970s. Mr. Althen says that in Cargo 2000 "the slowest makes the pace," comparing the situation to IATA: "As long as you have to have a consensus between all the airlines, it won't work." 

He continued: "Cargo 2000 is fantastic instrument for standardising the IT role of the cargo airlines and forwarders. 

"But in Cargo 2000 there are so many airlines with a different view. At the moment we invest yearly in IT the same amount we invest in a freighter, which means up to US$200m. Nowadays investment in IT is more important than investment into capacity. You can buy the capacity but you cannot buy the IT systems.