AMA: Why Is Lankan Internet Expensive?

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How do we get our data? And why does it cost so much? These are questions that’ve been bugging us for some time now. Some say we buy our data off an ISP in Singapore. Others believe every ISP in Sri Lanka has their own mystical means of communication.

We headed down to the Hutch office to speak to Asanga Ranasinghe, General Manager of IT at Hutchison Telecom. Asanga has a pretty impressive history in telecommunications – including time spent at Ericsson, Bharti Airtel, Nationlink in Central Africa and even a stint as the CTO of Equator Telecom in the Republic of Congo.

#1: Where do we get our data from? 

It’s not a question of data, but connectivity.

How this works is, operators like Sri Lanka Telecom invest in building undersea cables that carry data and communications in and out of the country. These cables connect to other cables and, you know, the rest of the Internet. It’s not that simple, but that’s the general picture.

What these operators do is, they pay to build these cables – usually in consortiums. These consortiums can have any number of operators pitching in – some have as many as 16. These operators own a stake in these cables and they generally get access to landing station where the data can enter the country. For example, the SEA-WE-ME-3 cable connects to a landing station in Mount Lavinia.

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Once the cable’s up, they then sell connectivity – we’re talking huge volumes of Mbps per month to domestic Internet Service Providers, who then sell data to customers. For Hutch, the main operator is Sri Lanka Telecom. Sri Lanka. The same is true for most other ISPs in Sri Lanka.

 #2: Why is data expensive in Sri Lanka? Is it because of SLT’s monopoly on the undersea cables?

Yes and no. For one, undersea cables and maintenance are expensive. In Sri Lanka, penetration is low, user numbers are low, population is low, so higher charges are needed to cover the costs. India and Singapore have a much higher density of usage. Historically, the ISP rates to Sri Lanka have always been high.  

At the same time, operators do pay SLT for whatever data lands in the country. Operator margins are thin: we’ve got so many players for such a small island, and we can’t really afford to increase margins because that gives everyone else a price advantage.  For redundancy, we use Bharti Airtel and Lankabell, but main capacity is still in the hands of a few. Until more cables are built, the prices aren’t going to change much.

The situation’s improving. A few years back, each Mbps per month was around $130. Now it’s down to almost half that depending on the volumes bought.

#3: Why is Singapore important? 

Routing paths. Most of the data used to be routed through Singapore: that’s usually the most efficient path to get to US-based data. However, with all the investment going on in India, more and more datacenters are going up in India – even Google is moving data from US servers to India, so quite a lot of data is headed towards India at the moment.

#4: How do you deal with the costs? 

Well, there’s lots of ways – promoting a more even network usage and all that – but technically, the most effective is caching. Caching takes you most-used data and puts it in a location that’s closer, easier and cheaper to access. Everyone does it – Google, Akamai are some really big players in the caching game.

At Hutch, we do something similar. We have algorithms that monitor HTTP headers for change and use that to intelligently track and store the most-used data on local servers. These are generally Intel-based boxes running customized Linux platforms – Squid, Cachemara, Peerapp are examples of these.

Most of the caching locally is actually YouTube. We’ve been able to save around 30% of the data consumed that way. An ideal solution would be a single cache point for all ISPs in Sri Lanka, but we haven’t been able to get everyone on the same page to do that.

#5: Will Sri Lankan Internet get cheaper anytime soon?

It might. We’ve got two cables coming up – SEA-WE-ME-5 and Dialog’s venture. That might just break the pricing monopoly and drive down costs. Right now, our ISP rates are pretty high for the South-East-Asian region.

12 COMMENTS

  1. SLT doesn’t hold any monopoly over Under Sea cables. It’s wrong. But the fact is , there is something called Landing Rights. actually the segment we are talking over here is Back-hauling from Mt Lavinia to Colombo. Almost 70 % of the operator cost of ILL goes to this Landing rights.

    There are few cables terminated to Sri Lanka, Namely SEA-ME-WE 3 and 4 , FLAG , Bharath-Lanka (BL) and Diragu cable. There is two new Cables to be operational SEA-ME-WE 5 and Bay-of-Bangal by end 2015.

    The regulator over this country can change this over night , but I believe they in fact doesn’t know what they should do.

    Another fact to be corrected is Singapore factor. It was not important either historically nor future. Most of the Data Centers are at the Europe region (Euro-IX) and Hon-Kong (HK-IX). Also almost majority of data request if for video streaming , not for Youtube, but for adult content.

  2. Lasantha’s statement is correct
    landing rights are very expensive and it adds another tax components (TRC) to the consumers, you may not notice this much since you are paying in few thousands only but we used to pay around 30 – 40k only TRC tax which could spend on additional bandwidth
    that Singapore story is half true, Singapore has most of the american cables landing and their tax is less compared to SL but now indian barathi airtel cable is playing a major role and we do not have to go to Singapore for west connectivity including europe and NA
    but SLT plays the monopoly on us with the fibre network in srilanka
    they are the only guys who has a ring in srilanka and if you want to use their link to connect to a third party isp like dialog or tata they charge more for the metro ethernet. but if you are using slt internet it is way cheaper

  3. “Why does data costs so much” is one of the questions that prompted this (informative) article. However, according to the 2013 data collected by the ITU using their basket methodology (Fixed – residential 1 GB cap min. download speed of 256 Kbps, Mobile – prepaid and postpaid handset based and computer / USB dongle based plans with 500 MB and 1 GB data caps respectively) Sri Lanka in fact performs rather well and offers some of the cheapest prices for broadband services among other economies of Asia and the Pacific.

  4. even if everything works fine, why do you guys think TRC will allow such changes to internet prices? they feed their children with our tax.

  5. Out of this topic, you guys should do some some sort of survey or something to find out which mobile provider has the best data coverage in the island. ( speed / coverage / value for money etc. )

  6. My cousin from India told that they have fiber internet all around India and he gets 260gb of data just for 1000 INR per month with 100mbps down and up.

    SLT upload speed is 500kbps… wtf? and I pay LKR.4000+ per month.

    This is just sad.

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