Sri Lanka Telecom Regulatory Commission is to conduct a detailed cost audit before revising the interconnection agreement between Sri Lanka Telecom and the two wireless local loop operators.
The agreement which was to expire at the end of last month had been extended for another year after the operators failed to agree on a new interconnection agreement.
"We will be conducting a major study so that we will know the cost structure of the industry. This will provide a basis for the future pricing structure," Telecommunications Regulatory Commission Director General Rohan Samarajiva said.
Though foreign consultants would be brought in, they are expected to work with TRC officials providing them much needed training.
Meanwhile SLT has also requested an increase of domestic call charges and a reduction of international charges, in what SLT calls a tariff re-balancing exercise.
The existing interconnection agreement allows, the operator from whom the call originates, to keep all of the revenue (sender keeps all) from domestic telephone calls. All international voice traffic is routed through Sri Lanka Telecom and the wireless operators are given a 35 per cent discount.
When Suntel and Lanka Bell were originally connected to the Sri Lanka Telecom, the regulator had put the 'sender keeps all' agreement in place as Sri Lanka Telecom was not able to agree on a better revenue sharing agreement with the wireless operators. Industry sources say SLT at the time lacked the necessary equipment to track all calls to gain information on how to apportion costs between carriers.
If a wireless customer calls an SLT customer, a simple revenue sharing agreement may provide half the revenue from a call collected by the wireless operator to be paid to SLT. But it may be more complicated if trunk carriage costs are also taken into account.
"It is a good method which had been well tried out. Historically it had been a favoured method because very little information is required to enforce it, and very little information has to be passed onto competitors," Dr. Samarajiva pointed out.
A 'sender keeps all' type of agreement works best when incoming and outgoing calls from each network remains on an equal footing and calls to and from each network balances out over time.
However with Sri Lanka Telecom having more than ten times the subscriber base of the wireless operators, in practice more calls have been found to originate from the wireless operators than vice versa, industry sources say.
"When there is a structural imbalance we will deal with it, no question about it" Dr. Samarajiva said.
Meanwhile Wireless subscribers say they have difficulties in connecting with SLT phones. Wireless operators also complain that SLT is not providing sufficient connection facilities to enable their subscribers to connect to SLT quickly.
Subscribers feel that SLT should not curtail their right to talk to one of 300,000 subscribers SLT has amassed over the years as a result of being a government monopoly.
SLT meanwhile says they have given all facilities required under their contractual agreements and that they are not skimping on facilities to pressure wireless network into agreeing to a new interconnection agreement.
SLT however is an operator which has provided telecommunications island wide and to non-profitable remote regions.
Nearly 80 per cent of the total revenue of the company is said to come from a mere 20 per cent of its customers, leaving it to provide services to the balance 80 per cent of mainly customers who contribute very little revenue. The wireless operators on the other hand concentrate on built up city areas, and high revenue corporate customers.
While the battle rages among the operators the TRC says it will bring in alternative dispute resolution techniques to cool the fires.
"We are going to bring in the best possible expertise in alternative dispute resolution. This is becoming the most favoured method of telecom dispute regulation in North America," Dr. Samarajiva said.
"We must have decision processes so that the operators can get on with the task of providing telecom services and without spending their energy fighting with each other," Dr. Samarajiva added.
"Unhealthy conflicts will harm the consumers who are trying to use these services."
After considering technical aspects and legal obligations TRC is hoping
to make a decision which would be in the best interests of the country.
Management agreements of remaining government-owned plantations companies are not being renewed by the government, despite the companies fulfilling their contractual obligations, company officials said.
Chilaw and Kurunegala Plantations managed by Wayamba and L. H. Plantations management companies are part of a batch of 10 plantations companies that have been making profits since the financial year 1994. The managing agents of these companies were given the option first to buy the controlling interest at a strike price to be established by a public issue as the plantations were managed profitably.
However due to market conditions prevailing at the time the companies which went through the process were sold at only Rs 10 per share.
Later the Public Enterprise Reform Commission halted the sale of profitable companies and started offering controlling interests of loss making companies on an all-or-nothing basis. This method fetched higher prices for the shares.
Meanwhile, the managing agents of the remaining profitably-managed companies which had accepted the option to buy the controlling interest at the strike price had also furnished a Rs 5 mn bank guarantee.
Despite this, no action to divest the companies was taken in 1996 and the bank guarantees were renewed in 1997.
In November 1997, the PERC had begun negotiating with the managing agents to arrive at a sale price. Analysts say unlike tea plantations, the pricing of the mainly coconut plantations is determined by different fundamentals.
Meanwhile, the original management contracts given in 1993 were also coming to an end.
Last month the managing agents had been informed that their management contract would not be renewed, despite the companies being managed profitably for the past five years.
Last week the PERC announced the initial public offering of Hapugastenne
tea plantations at Rs. 10 per share.
The Colombo Stock Exchange will allow commercial paper to be traded on the stock market from the middle of this year.
"This will allow investors the opportunity to switch from stocks to short term debt instruments," CSE Chairman Rienzie Wijetilake said.
The recent budget gave several incentives for quoted debt instruments including a reduction in stamp duty and a waiver of capital gains on quoted debt instruments.
Though medium term debentures have been quoted in the market this would be the first time short term instruments would be traded.
Commercial paper is usually issued for three months and rolled over. Mr. Wijetilake said the paper of quoted companies would receive priority.
Central bank regulations prevent commercial banks from guaranteeing the paper of non - quoted companies. However the development banks have guaranteed the paper of non - quoted companies.
The CSE has also presented a proposal to the Central Bank to allow Treasury Bills to be traded on the CSE. But so far there has been no response.
The CSE would also be calling for applications to add at least another 3 brokers to the present 15.
The recently introduced second board of the CSE had attracted two companies, Lighthouse Hotels and Marawila Resorts, Director General Hiran Mendis said.
The CSE was also setting up a settlement guarantee fund to cover the risk of a broker not paying up buyers (due to bankruptcy) in line with a recent budget proposal which set aside Rs 150 mn for the fund and a separate compensation fund.
A subsidiary of the CSE would be established or the purpose.
The CSE has also replaced several servers in the automated trading system.
Some of the bomb affected servers had been moved to the back - up site.
The trading system is now made up of newly bought servers and servers from
the old back - up facility. A software bug which caused the system to slow
down when large numbers of orders came for a single security was also being
dealt with.
Continue to Business page 2 * Uphill task for
tea industry this year * Share certificates: freedom for plantations workers
* Businesss Bug
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