CHAPTER 4: SITUATIONAL ANALYSIS OF THE SRI LANKAN IDD MARKET AND IDENTIFICATION OF CUSTOMER SEGMENTS OF IDD BUSINESS IN SRI LANKA.

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1 CHAPTER 4: SITUATIONAL ANALYSIS OF THE SRI LANKAN IDD MARKET AND IDENTIFICATION OF CUSTOMER SEGMENTS OF IDD BUSINESS IN SRI LANKA. This chapter presents the situational analysis of the Sri Lankan IDD market based on SWOT matrix developed using the data collected in chapter 3. Further this presents customer segments of IDD business in Sri Lanka. 4.1 Situational analysis of Sri Lankan IDD market IDD calls were meant only for urgent and important matters until 2003 in Sri Lanka as it was an expensive and limited service at that time. The average price of an IDD call was around 125Rs per minute. The IDD market was under the monopoly of Sri Lanka Telecom, who was the incumbent Telecom operator in Sri Lanka. Only SLT connections were available by December 2002 and IDD service was activated only for selective number of connections. Hence general public, except business and government sector had a very little access to the service. But in 2003 March Telecommunication regulatory Commission in Sri Lanka has announced the deregularisation of the International Business in Sri Lanka by providing a license called External Gateway Operator license. Initially this was provided to 33 operators in Sri Lanka for a fee of USD, enabling them to connect with international carriers to exchange voice and data. List of operators who has EGO license in Sri Lanka is depicted in appendix 4. The market was changed from monopolistic to oligopolistic nature with the entry of new licensed service providers. The competition was started when service providers realized the potential of the IDD business in Sri Lanka. IDD call charges were started to drop with the increased competition and the service availability. Both fixed and mobile telecom service providers entered into the market aggressively once they noticed that an effective IDD service would improve their overall market share. When IDD became a common service some users started to choose their telecom service provider based on the attractiveness of the IDD service. Nowadays IDD service has become a basic telecommunication requirement for users. Meantime policy makers, with other government institutes in Sri Lanka are trying to 39

2 effectively involve to the sector by introducing new policies, new tax structures and etc. A situational analysis of the IDD market is a timely effort to see the way forward of this business. SWOT analysis was selected as the situational analysis tool for this study Strengths IDD service is a very popular service in Sri Lanka such that each and every mobile and fixed telephony connection either postpaid or prepaid, is enabled with IDD service at the moment. Hence the high availability and easy access to the service can be considered as a strength, which contributes positively to the IDD business in Sri Lanka. There were 3,548,921 fixed telephony connections in Sri Lanka with IDD activated by end of quarter 3 in Number of mobile telephony connections by that time was 16,305,417. All these are IDD activated. Further 7193 public pay phone booths were also placed all over the country. Dialog and SLT operate two calling cards to make IDD calls. Hence anybody who has a requirement to make an IDD call doesn t have to wait in queues or any waiting lists. IDD is an instant, ready to use service. This level of availability and accessibility enables users to utilize the service whenever it is required. Figure 4.1: Call charges from Sri Lanka to India Average Call Charges to India Per minute Call charge (Rs) Year Source: Data collected from TRCSL and Annual reports Although a service is highly available and easily accessible it won t be popular among users if it is not priced at a reasonable level. IDD prices in Sri Lanka are maintained at such a low level where experts of the telecom industry believe it should not fall any 40

3 more for some countries. Hence the price level also can be considered as a factor to strengthen the IDD business in Sri Lanka. Figure 4.1 shows the price drop to India, which is the most dialed destination from Sri Lanka in last few years. In addition table 4.1 shows IDD call rates to top 10 countries dialed out from Sri Lanka. Table 4.1: IDD Call rates to top 10 destinations Call rate in Rs Country Per minute Fixed Mobile India 2 2 United Kingdom 3 20 United Arab Emirates Saudi Arabia Canada 3 3 Malaysia 3 3 Italy 3 20 Australia 3 15 Kuwait United States of America 3 3 Source: Data collected from TRCSL and Service providers It is evident that IDD call rates in Sri Lanka are reasonable enough to support the growth of the business. The relationship between call charges and usage can be identified by analyzing the call minutes to a particular country over last few years. Growth of IDD minutes during 2010 given in figure 4.2. It is evident that call rate is sensitive enough to trigger the growth of the usage. Figure 4.2: Growth of IDD Minutes during Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Data collected from Service providers 41

4 Few Trends in Telecommunication sector in Sri Lanka contribute to strengthen the IDD business in the country. The growth of mobile and fixed telephony subscribers in the country signals a very healthy environment for the IDD business. The growth of mobile and fixed subscribers is shown in figure 4.3. Figure 4.3: Growth of fixed and mobile telephony subscriber base 25,000,000 No of Subscribers 20,000,000 15,000,000 10,000,000 5,000,000 Mobile Fixed Cumulative Sep Year Source: TRCSL The growth of the telephony subscriber base is reflected by the growth of international call revenue. In line with telecom penetration, international voice business has also grown around % per year. IDD revenue seems to be growing proportionally with the growth of telephony subscribers according to the graph shown in figure 4.4 which was developed based on data collected from IDD service providers. Figure 4.4: Growth of international call revenue in Sri Lanka Growth Of International Call Revenue Revenue (Bn) Year Source: TRCSL 42

5 Growth of fixed telephony connections has slow down since 2008 while mobile telephony sector is still growing. This is another encouraging signal for the IDD business. There was a perception among users that IDD calls are meant to dial from a fixed telephone. This may be a result of the long time practice of users during the time that SLT was the only IDD service provider in the country. Mobile operators like Dialog and Etisalat tried to change this perception even through television commercials. This practice was not helpful for the growth of the IDD business in any aspect. Users delayed their IDD calls until they go back home as it was to be made using their fixed line. Anyhow growth of the mobile subscribers at a higher rate with the change of the perception of users would be helpful for the growth of the usage of IDD calls. A trend of moving international callers to mobile phones from fixed lines is reflected by the trend of IDD revenue lines illustrated in figure 4.5. Figure 4.5: Trend of International Call revenue. International Call revenue Revenue(Bn) Year Mobitel & Dialog SLT Source: TRCSL While international call revenue is growing year on year, the same generated through fixed telephones has been reduced Weaknesses While there are several strengths helping the rapid growth of the industry, few weaknesses within the industry are causing resistance to the momentum. The fierce price war among service providers in this industry is considered as one of the major weakness. At the moment IDD call charges have been reduced to a level where there 43

6 is no difference in call rate to some international destinations and local destinations. This hinges the amount of investments in new technologies by service providers. Service providers are not interested in investing in new technologies with the profitability maintained at the existing price levels. The pressure on the service providers with this price war demonstrates with the statement made by Mr. Duminda Ratnayaka, CEO of Etisalat Lanka, as he says Prices were coming down at a crazy rate and the competition was anything but healthy. First off, there are already too many players for a population of 20 million. The size of the market does not offer the economies of scale that say India does, which is why it can sustain very low call rates. What matters more is that operators offer services at rates which deliver healthy returns on investment (LMD,2010) The behavior of customers who are in bottom of the pyramid is another weakness in the industry. Only 10 to 15 percent of IDD calls made to Middle East are answered by the called party. The major component of this segment is the unskilled migrants working in Middle East region. A missed call would be enough to fulfill their daily communication requirement and they use it for passing the message that they are in touch with the other party. The overall answer to seizure ratios to Middle East countries are given in table 4.2. This creates a problem for service providers as they are getting revenues only for 10% of their network usage to Middle East region. This hinges capacity upgrades to this region where a large number of IDD calls are made. In fact the revenue receiving from IDD calls to this region is low even though the number of attempts and network usage is very high. This situation leads to a shortage of the supply of service and may create hiccups on the momentum of the business growth. Table 4.2: Answer to Seizure Ratio to Middle East Countries Destination Answer to Seizure Ratio Jordan Mobile 9 Kuwait Mobile 12 Lebanon Mobile 14 Qatar Mobile 5 Saudi Arabia Mobile 9 United Arab Emirates Mobile 10 Source: Data collected from Service providers 44

7 Service providers in Sri Lanka should connect with telecom operators around the world to make sure IDD calls are routed and reached to the desired destination. At the moment undersea cable systems are used to interconnect with foreign operators. FLAG, SEAMEWE3 and SEAMEWE4 cable systems are used by service providers in Sri Lanka to interconnect with international operators. Service providers have to pay a large price for the bandwidth they purchase from these cable systems. A cable system should be landed in a country if they are to be used by the operators to connect with other parties in the world. The landing rights of both SEAMEWE3 and SEAMEWE4 cable systems are owned by Sri Lanka Telecom. The perception among service providers is that it s very expensive to purchase capacities from SLT. The concern is already addressed by the regulatory body in the country. Anyhow the landing charges for international bandwidth is recently reduced by Sri Lanka Telecom as a response to the pressure build up by the competitors along with TRCSL. Anyhow still it is considered as one of the barrier to grow the IDD business in Sri Lanka. Table 4.3: Charges for international Bandwidth Bandwidth Nonrecurring Charges (USD) Monthly Recurring Charges (USD) STM 1 23,000 4,600 STM 4 28,000 13,800 Source: TRCSL The table 4.3 depicts how much an operator should pay when activating international bandwidth on SEAMEWE Threats The growth of the technology is considered as stimulus for a business, but substitutes are also introduced with the advancement of the technology. During the early stages of 20 th Century people have to go for a telephone booth if they wanted to talk to somebody in other country. Later people used to make these calls using their fixed telephone and the mobile phone. The latest trend is the communication between personnel computer to personnel computer. The PC to PC communication would be more popular with the increased internet penetration and the computer literacy. 45

8 The usage of online messenger services such as Yahoo, MSN has increased dramatically among the younger generation. They are using this to communicate with their friends and family members who are in the country as well as outside the country. In addition most of the official communications are also performed through these applications. IDD service was the option to obtain a foreign expert support to local personnel, specially for technical matters. But at the moment messenger services are used heavily for this purpose. Most of these messenger services are voice enabled and pc to pc communication is totally free of charge. One good example is Skype. Applications such as Google talk, is promoted among users with attractive features such as free calls to USA and protocol enhancements. Development and promotion of this type of PC to PC communication application would be considered as killers of the IDD business. These applications are still not very much popular in Sri Lanka. Only a small segment of users are having the access to the internet. The fixed broadband penetration in the country is around 1%. An extra effort is given by service providers at the moment to grow the mobile broadband business in Sri Lanka. This is the most significant threat of IDD business today. The entry charge for mobile broadband service has come down significantly during last couple of years. It has reduced up to 3000Rs. from 10000Rs during a period of 2 years. Accordingly rental and usage fee are also reduced drastically during last couple of years. Accordingly the broadband penetration has increased exponentially in last two year period. Users are attracted to the internet with the introduction of new technologies such as HSPA. The increased internet data rate provided to the users with these new technologies has encouraged them to use internet applications as substitutes of IDD. Global Internet Protocol Virtual Private Networking Technology can be used to network few branches in different countries at a low cost. This virtual private network can use for data and voice communication among the officers in different countries. Most of the multinational companies are trying to use this technology to connect their branches all over the world. New technologies such as Multi Protocol Label Switching (MPLS) are having the capability of using these networks for data and voice communication in efficient manner. When the majority of multi-national companies in Sri Lanka start to use these technologies the usage of IDD service would be reduced. 46

9 4.1.4 Opportunities Driving forces always create opportunities for a business to grow. The more people leave for foreign employment the more their relatives use IDD to contact them. Hence the foreign employment is a great opportunity for the growth of the IDD business. Number of departures for foreign employment during past few years is depicted in figure 4.6. The rate of departures for foreign employment is held at a healthy level for maintaining a proper growth of the IDD business. Number of departures for foreign employment has shown a slight slowdown in the first quarter of 2009 but the same has recovered from this temporary setback from the second quarter of This decline was due mainly to the reduced demand for workers from overseas, as a result of the global recession. The total number of departures for foreign employment in 2009 was 247,119 compared to 250,499 departures in The probability of improving these figures during next couple of years is very high with the recovery of world economy. The government involvement to improve the opportunities for foreign employment is helpful for the IDD business. Figure 4.6: Departures for Foreign Employment. 300, , , , ,000 50, Source: Central Bank,

10 A number of proactive measures were taken by the relevant authorities in 2009, to generate more employment opportunities and to create a better working environment with enhanced social benefits for Sri Lankan migrants. Such measures include the amendment of the Sri Lanka Bureau of Foreign Employment (SLBFE) Act No. 21 of 1985, for the purposes of curbing illegal practices in the industry and for preventing exploitation of migrant workers in the hands of different parties including recruitment agents. Another important policy implementation by the SLBFE during 2009 was the decentralizing of SLBFE services through the opening of Provincial offices in Badulla, Anuradhapura and Kandy. Similarly, under the Negenahira Navodaya Programme, SLBFE district centers were established in Trincomalee and Batticaloa. Further, fixing of minimum salaries especially for unskilled categories is also made during the year in order to uplift the working standards of migrant workers. Meanwhile, supervision by Sri Lanka missions was strengthened to prevent abuse at work sites. Another important action initiated by the SLBFE during the year was the organization of a comprehensive database to facilitate the various stakeholders, including migrant workers and job aspirants abroad. These measures, together with the expected welfare and promotion programs for migrant workers and enhancement of SLBFE services to the Eastern and the Northern parts of the island will have a positive impact on foreign employment in the future. The IDD business in the country would be benefited by the created inductive environment for foreign employment. Many opportunities would create as everybody leaving the country should have to be contacted from their friends and family members live in Sri Lanka. Another considerable factor for IDD business is the category of the foreign employment. The high skill level migrants are known as a knowledgeable segment and they usually tend to go for new technologies and low cost substitutes such as PC to PC communication applications. But the unskilled migrants and housemaids are still attached to fixed and mobile telephones. Figure 4.7 depicts the category wise distribution of foreign workers. It shows that around 66 percent of Sri Lankan foreign working is unskilled labors and housemaids, which creates a good opportunity for the growth of IDD business. 48

11 Figure 4.7: Category wise distribution of foreign workers. 46% 1% 3% 3% 20% 25% 2% Professional Middle level Clarical & Related Skilled Labour Semi Skilled Labour Unskilled Labour Housemaid Source: Central Bank, 2010 Foreign investment creates requirements to call outside Sri Lanka. The government of Sri Lanka is working aggressively to increase foreign direct investments in the country after the investor friendly environment created with the end of 30 years civil war. The central bank report highlights the expectation of the growth of FDI in next few years. Positive investor sentiment following the ending of the internal conflict, coupled with the recovery of global financial markets are expected to make available more foreign financial flows to the government and the private sector, including FDI, in 2010 and beyond. Further, with the easing of global liquidity constraints, both the government and the private sector would be able to raise funds at competitive rates in the international capital market. In addition, more new FDI are expected to be realized with the progress of the development work in the North and East. A higher level of FDI is expected especially in the tourism, agriculture, construction and manufacturing sectors (Central Bank, 2010). The more FDI coming to the country the more it creates reasons for calling outside the country, which means a positive contribution for the IDD business. The tourism is also capable of contributing to the growth of the IDD business. When tourists arrived they need to contact their home country for many reasons. Sri Lanka being a prime tourist destination, it is always seen more tourist arrivals from many parts of the world. The end of the internal conflict has opened up new vistas for the travel and tourism industry in Sri Lanka. This is evident through numbers as the 49

12 tourist arrivals increased by 2.1 per cent, year-on-year, despite the sharp drop during the first few months in The arrivals, which had been declining, year-on-year, at an average rate of 18.3 per cent during the first five months of 2009, increased significantly with the end of the conflict in May and grew, year-on-year, at an average rate of 20.4 per cent in the subsequent 7 month period. Adverse travel advisories issued by some countries were subsequently retracted or relaxed as the circumstances changed. The largest number of tourist arrivals was recorded from India (83,634), followed by the UK (81,594), the Maldives (31,916) and Germany (29,654) in Increases were also noted from the Middle East, France, Australia, Singapore and Malaysia. Nearly 80.0 per cent of tourists visited for holiday and pleasure, while 8.6 per cent came for business purposes (Central Bank, 2010). These data and the figure 4.8 which shows the annual tourist arrivals are showing a clear upward trend in tourism industry during the post war period. This is an encouraging signal for the growth of IDD business in the country. Figure 4.8: Annual Tourist Arrivals No of tourists 000, Year Central Bank, 2010 The Business Process Outsourcing is a sector which needs a large amount of communication between the international and local partners. Sri Lanka is considered as a country with favorable environment for the Business Process Outsourcing (BPO) and Knowledge Process Outsourcing (KPO) due to the availability of qualified and 50

13 skilled workforce, high literacy rates, strong English language skills, sound legal framework for IT development and liberalization of the international telecommunications gateway. Figure 4.9: BPO sector distribution Source: ICTA, 2006 According to the studies conducted on Sri Lankan BPO sector it has identified that the industry is predominantly export oriented with 75 percent of the companies exporting 100 percent of their services. Further it has identified that on average, BPOs spend about 22 percent of their operational costs on telecommunication services. Among essential infrastructure facilities, telecommunications services are the second most concerned facility for the BPO industry. IDD is largely used in this industry as the sector is export oriented and telecom driven. Hence the growth of this sector would create opportunities in IDD business in Sri Lanka. According to the Central bank report in 2010, despite the economic slowdown of its major market destinations like Europe and North America, this sector has showed a marginal growth of around 6.5 per cent in A study conducted in 2006 indicates that the overwhelming concern of the BPO sector is with regard to domestic civil and political stability. The most frequently cited threat to successful operations and growth is domestic instability. 51

14 (ICTA, 2006). Hence the situation at present with the end of civil war would be favorable for the growth of this business in Sri Lanka where the IDD business would be benefitted too Summary of the situational analysis The IDD business in Sri Lanka is still at the growth stage with a vast range of opportunities and strengths. There are some weaknesses within the industry which all stake holders namely users, service providers and policy makers should try to eliminate for the betterment of the industry. More threats would be present with the advancement of the Technology. The SWOT matrix is developed based on the points discussed under Strengths, weaknesses, opportunities and threats. This is depicted in table 4.4. Table 4.4: SWOT Matrix for IDD business in Sri Lanka Strengths Weaknesses High availability and easy access to Fierce price war which hinges new the service. investments. Low price offered by service Attitude of users in Bottom of the providers. Pyramid Rapid growth of fixed and mobile telephony subscriber base. Users switching for mobile telephony from fixed telephony. Opportunities Threats Growth of foreign employment. Introduction of new PC to PC Rapid growth in tourism industry. communication applications such as Foreign investments Skype and Gtalk Start of BPO companies Growth of internet penetration in Sri Lanka Introduction and rapid growth of mobile broadband service Use of Global VPN technologies by MNCs Source: Information gathered through interviews, literature 4.2 Segmentation of Users in Sri Lankan IDD Market Identification of market segments is important for any business. Segments of users in a service sector could be identified based on different kinds of scenarios. According to the literature reviewed and the information gathered from experts, use of the reason of making an IDD call could be a good method to identify different segments in this 52

15 industry. This would be useful for strategy developments since segments identified using this method consists of their own unique characteristics. The main two segments identified based on the reason of making IDD calls are, 1. IDD users for Business purposes 2. IDD users for contacting family and friends in overseas. The usage pattern of the service, the amount they are willing to spend for the service and the expected service levels are different in two segments. These two segments include few sub segments which will be further discussed in this chapter IDD Users for Business Purposes This segment is on the top of the IDD business pyramid. The number of users is less and the revenue generated from the segment is high. According to the service provider statistics this segment generates around 80 percent of the revenue while the number of users is 20 percent from the whole IDD users in the country. This is the key target of the service providers due to many reasons. This sector generates higher revenue with lower network utilization. Probability of answering a business purpose call is considerably high. Hence most calls within networks are revenue generated. Average IDD bill of this segment is much higher than the other segment. It varies from few thousands to millions. Individuals from CEOs to officers who have reasons to make IDD calls are included in this segment. All users in this segment expect the reliability for a reasonable price as they cannot afford quality issues within a call. Unexpected call drops are also not tolerable. There are certain sub segments within this main segment. That is based on the nature of the business or the organization the user is attached to. Important sub segments identified by the service providers are, 1. Users working for Multinational Companies 2. Users operate in SMEs These two segments are addressed by different marketing strategies. Although the users in these two sub segments share common interests the users in SMEs are much concerned about the price for the service they render said an expert from marketing division of a service provider. 45 out of 300 responses received for IDD user questionnaire stated the use of IDD service as business purposes. This is nearly in line with the service provider s view on 53

16 the size of this segment as 15 percent of the sample belongs to the Business users segment. Figure 4.10 depicts the mode used to make IDD calls by those 45 users. Figure 4.10: Mode of making IDD calls by Business users 17% 17% 66% Mobile Fixed Both Source: Data collected through IDD user questionnaire Making calls from mobile is the most popular way of this segment with more than half of the sample is only using mobile for making IDD calls. This is mainly due to the official packages they are provided and the convenience of use. These people have to make the call irrespective of the place whenever it is required IDD Users for Contacting Family & Friends in Overseas The sector is larger in size and smaller in revenue. The theory applies for the IDD business as well. Although this segment is 80 percent of total IDD users, the revenue generated from this segment is around 20 percent. Anyhow the perception of this segment is important for all service providers as this is spread all over the country. The impact which can cause to the business from word of mouth of this segment is very strong. The view of this segment could be propagated to the business user segment easily. Service providers view is that users in this segment are interested in low prices rather than very high quality. Only a few IDD numbers present in their IDD usage profile and users always try low cost alternatives. This segment basically includes all people who are dialing outside the country to contact their family and friends in overseas. Hence users in this segment can be 54

17 divided further into few sub segments based on migrant s category. These sub segments have few unique characteristics which are not common for the whole segment. Migrants from Sri Lanka can be mainly classified as, 1. Skilled workers and professionals 2. Students 3. Unskilled workers including housemaids. It is revealed in figure 4.7 that more than 50 percent of Sri Lankan migrants are leaving country as unskilled workers or house maids. Hence this sub segment is the largest while other two share only one third of whole migrant profile in Sri Lanka. Skilled workers and professional category includes people who are leaving country after receiving permanent residency status in other countries and people who are hired by foreign companies as professionals or skilled workers. Hence the people who are contacting them also considered as an educated set of people, who are having a higher income and maintaining a higher level of living standards. Service providers place this sub-segment as average users of IDD service as the ratio in using IDD service and other means for the communication is This is mainly due to the knowledge on new technologies and higher educational level of the people in this segment. This subsegment is not reluctant to use IDD service whenever they need to contact their relatives and they also not very much bother about cost of calls. The percentage of answering an attempted IDD call is higher in this sub-segment. Hence service providers are getting a reasonable profit by serving to this sub-segment. Migration for higher studies is a common practice in Sri Lanka at present. Students have to leave overseas as they don t have enough resources and facilities in Sri Lanka to conduct their higher studies. The family members and friends who contact these students frequently are always instructed to use PC to PC communication applications. Hence the use of IDD service for communication by this sector is very low. Service providers view is that only 20 percent of this segment s communication is done through IDD service. Unskilled workers and housemaids are being contacted by a large portion of people from all parts of the country. This is the largest sub segment of IDD users. Service providers claim that there are thousands of IDD call attempts per day. The main communication method used by this segment is IDD as the access to alternative methods are minimized. Middle East region dominates as the most dialed destination of this sub segment. 90 percent of the total migrant workforce is in this region. The 55

18 distribution of foreign employment departure destinations is depicted in figure 4.11, which shows the dominance of Middle East as a foreign employment destination. Figure 4.11: Foreign Employment Departures by Destination 17% 18% 16% 18% 31% Qatar Saudi Arabia U A E Kuwait Other Source:CBSL,2010 These are the people who record the highest utilization of the network while the revenue generated is the lowest. As discussed earlier in this chapter the behavior of this segment has resulted a very low answer to seizure ratio. Most of the people are used to give only a missed call, which is a call attempt where the originating party disconnects the call after the destination phone rang once or twice. Users claim that they use this to pass the signal that they are in touch with the other party. According to service providers some users make hundreds of missed calls to their spouses in overseas, especially in Middle East region. Quite amazingly one service provider claimed there are a certain number of users who make nearly thousand un-answered call attempts to the IDD numbers of their husbands or wives. A call is charged for a customer only if it is answered by the other party. Hence service providers see their circuits are utilized at zero revenue for these calls as a complete channel is assigned for an attempted call when the IDD number is rang. In other words if a user makes a call to someone in Saudi Arabia, a channel from Sri Lankan service provider towards the operator in Saudi Arabia is allocated for the call when the telephone in Saudi Arabia is ringing. Then if the call is disconnected by the user in Sri Lanka or receiver in Saudi Arabia without answering, the service provider cannot charge anything from 56

19 the customer for the usage of that particular channel assigned for the call. This is a huge concern for the service provider. This is a unique characteristic of users in bottom of the IDD business pyramid which mainly contributed by this sub segment. A study done by Telecommunication Regulatory Commission of Sri Lanka has revealed that the majority of International callers in the above sector are made from rural areas. 88 percent of international calls in this segment are from rural areas as depicted in figure Figure 4.12: Origin of calls to unskilled workers in Middle East. 12% Rural 88% Urban Source:TRCSL,2009 This is an important characteristic of this segment because if it is studied, the other main segment, where IDD calls are made for business purposes, would be other way around Summary of IDD User Segmentation IDD users in Sri Lanka would be segmented based on the reason of making an IDD call. Two major segments could be identified as, IDD users for Business purposes and IDD users for contacting family and friends in overseas. The first segment generates higher revenue and latter is large in size. Both segments contain unique characteristics which would be helpful for service providers to draft their strategies. Sub segments within two main segments could be identified and their characteristics are also important for policy recommendations and strategy guidelines. 57