The Cost of Your Internet Data

Ah yes internet data. We all wish we had more of it. We all wish it works fast every second of the day. But like quite a few of us, you are likely to curse yourself and your telecom operator at the end of each month as you purchase add-on data. Yes, internet is a precious resource, one that might not be easy on your pocket sometimes. But have you ever wondered how much internet actually costs you?

When it comes to technologies like 4G, costs usually involve a variety of considerations such as infrastructure, maintenance, bandwidth, and distribution. The first few years of deployment includes further costs like the investment of setting up the required infrastructure. These costs reduce over time as more people switch to the newer technology. This is the same story even for technologies like 5G, where the initial years involve significant investment to set up infrastructure and for testing.

All the above costs are accounted for when it comes to the pricing of any broadband package in Sri Lanka. But if you take the standard 4G services in the Sri Lankan market you would see that different telecom operators offer packages at varying prices. If you break these down to a “cost per GB” basis, you will notice further variation.

The cost per GB breakdown

Before we dig in, we should point out that night time internet data is not taken into account as it is technically free. As Oshada Senanayake, Director General at the Telecommunications Regulations Commission of Sri Lanka (TRCSL) mentions, “The night time data component is offered based on the low utilization of networks on off peak time segments and is not charged for by service providers.”

It’s also important to note the concept of economies of scale. Simply put, the more of a product is produced, the cheaper it becomes. Meaning the more data you consume, the lower the cost per GB should be for you. This is something we see with Dialog’s broadband packages.

Dialog’s case shows the cost per GB dips noticeably from the 15 GB to the 30 GB mark. Following packages remains largely consistent with minor fluctuations. However, Dialog recently updated its packages with increased quota. Following the higher quota, the reduction in the effective cost per GB becomes more apparent.

Hutch on the other hand has only a few internet packages on offer. Its packages start with 10 GB and goes up to 60 GB (anytime data). But these packages still reflect a similar pricing structure. Cost per GB on Hutch is the lowest at LKR 33.32 at 60 GB.

Meanwhile, Sri Lanka Telecom (SLT) has one of the steepest drops in the industry. SLT by far has the most extensive broadband package offerings, ranging from 11 GB to 1,250 GB (anytime data). As you can see below, the cost per GB on SLT’s packages start off at LKR 67.27 and dips to LKR 41.39 at the 36 GB quota. But then the per GB pricing starts to fluctuate, rising to LKR 52.29 at the 170 GB quota and dropping again to LKR 46.40 at 1,250 GB.  Mind you, Sri Lanka Telecom is not the only one.

Mobitel’s packages also outlines a similar pricing strategy. The pricing structure follows a gradual drop as the allocated quota increases, followed by a fluctuating per GB pricing after the 25 GB mark. However, Yasiru Abeygunawardana, Senior Manager for Data, Devices & Enterprise Strategy at Mobitel states the above calculations does not paint an accurate picture. He points to Mobitel’s use of sublines on some of its bigger packages.

For clarity, sublines in this context refers to multiple users for post-paid internet data connections. Say you subscribe to Mobitel’s “Zoom 1790” package which offers 60 GB of total data. This package offers three free sublines. Which means that up to 3 users will be able to use the 60 GB quota from the same connection. It’s like multiple SIMs for the same package. Mobitel offers sublines for packages ranging from 30 GB to 160 GB (anytime data).

Thereby, the number of sublines offered under each package needs to be divided by the above cost per GB numbers for Mobitel. Taking the included sublines into account, the effective pricing changes as shown below.

The consideration for sublines does indeed drop the effective cost per GB per SIM considerably. However, this would only be true if subscribers utilise all sublines for each package. As it stands, sublines are optional for every user and actual cost per GB would only be as low as how many sublines are used.

All in all, each operator may have a varying cost per GB. But the economies of scale should still apply to 4G broadband. However, Sri Lanka Telecom’s and Mobitel’s pricing remain exceptions to this rule.

Unlimited internet and net neutrality

Then there is unlimited internet. Currently, both Mobitel and Hutch offer unlimited internet data packages both at an LKR 2,999 and LKR 3,999 pricing. But unlimited internet in general has been offered to users in the form of selective packages. On the outside, it’s a cheaper alternative for users looking for specific services. As such, your effective cost per GB is likely to be low. But unfortunately, this goes into net neutrality territory and that’s not a good precedent.

You might be wondering what net neutrality has to do with how much you are paying for your internet connection. Even though net neutrality in Sri Lanka died years ago, the effects still resonate in how telecom operators offer services.

Take SLT’s Unlimited Entertainment offer, or Dialog’s Unlimited Facebook package. By favouring selected services, telecom operators are offering an unfair advantage to these services. One can argue that given the crazy times of coronavirus, affordable packages for specific services like Zoom and Netflix is a necessity. Its a fair point. After all, 30 GB worth of Zoom and MS Teams for a mere LKR 195 (SLT) is a steal for someone following meetings/lectures almost daily.

But by violating net neutrality we are letting the telecom operators call the shots for digital services. This bleeds into how operators set pricing for internet data. So, while you enjoy select services at concessionary rates today, it could very well go the other way tomorrow.

The not-so-straightforward cost of internet data

Sri Lanka might have one of the lowest data rates in the region. But that does not mean every Sri Lankan receives that benefit. Over the past few years, Sri Lanka has made significant progress in terms of providing island-wide 4G coverage. But accessibility is a different matter altogether. As per March 2020 TRC statistics, 64.2% of mobile subscriptions are not even on 3G/4G. That is over 20 million mobile connections.

According to Oshada, the TRC has discovered 2,000 “dark spots” with weak signals across the island. He went on to state that 80% of the 152 Grama Niladari Divisions lack broadband coverage. Moreover, there is also a 10.2% tax on internet services. This tax gets added to the telecom operator’s selling price of data to the consumer.

Thereby, the more rural communities may not find the concept of 4G broadband feasible. According to a 2019 report by LIRNEasia, only 47% of users have a smartphone where 46% use basic phones. The primary reasons why consumers opt not to upgrade to a smartphone is either the lack of an apparent need or that smartphones are too expensive.

The report also states that 25% of internet users believe that the cost of data is a limiting factor in daily usage. It goes on to mention that 60% of the population find the cost of 1 GB unaffordable. In the backdrop of coronavirus, this situation has only amplified. The education system has turned to online teaching to move forward. But not every student has the required resources to follow along. According to LIRNEasia, only 34% of households with children under 18 years have access to the internet.

New technology is on the way, but what about the majority?

With 5G on the way, the cost structure might get further complicated for the average consumer. Why? Because for a certain period, telecom operators will be required to maintain 2G, 3G, 4G and 5G bandwidths across the island. The cost of maintaining these bandwidths in part may be borne by the average consumer. At least until more users move on to the newer technologies. This is one reason why telcos continue to push users to upgrade to 4G SIMs.

But even so, the LIRNEasia 2019 report further states that among the non-users of internet, 61% are not sure what the internet is and 20% is not interested. This indicates that even with the current level of progress, there still needs to be significant level of awareness created among the general populace.

Therefore, the answer to the question how much your internet data really costs, is not a straightforward one. Yes, you could point to the cost per GB. But that only offers one side of the coin. The other side of the coin raises questions around affordability among the more rural communities. Even as technology continues to grow, communities find it challenging to keep up with the pace. So right now we are only left with more questions than answers.