Deregulation
Deregulation, in an embryonic way, began back in 1981 when the first licence to operate a paging service was granted to a private operator. Private initiative received a huge impetus with the introduction of cellular technology. The first operator of a mobile telephone service was a private entity, in 1988. Since then, three more companies have entered the field, and the resulting competition has led to lower prices.

Private operators have also entered the area of pay-phones. In addition, there are dozens of private agencies offering telephone and facsimile services to the public.

In 1995, SLT gave up its monopoly when licences were given to two private operators to commence wireless fixed phone services. The two companies began operation in 1997, and enjoy a duopoly status. Telecom's monopoly in the area of international traffic will remain till August 2002.

Infrastructure in relation to telecommunication has also been deregulated. The laying of Optical Fibre Cables and Terrestrial Optical Fibre Cables has been opened up to the private sector.

Whilst deregulation and privatisation have gone on in many areas, in the field of communications in particular, the rapid advancement in technology has given this process a huge impetus. In many cases, even if the state wished to retain a monopoly of communications and telecommunications, it would have become increasingly difficult as technology developed.

The process of deregulation is set to advance further by August 2002.

A Model Privatisation
The privatisation of Sri Lanka Telecom has so far involved a purchase of a 35% stake by NTT in 1997, in a sum of US $ 225 million or approximately Rs. 13.5 billion.

The privatisation of SLT is looked upon by many, as a model. A model privatisation in the price that was obtained by the Government, in the strategic partner that was brought in and in the transparency of the entire process. It was also a complex privatisation since it involved a state utility with significant public involvement and strong unions. The engagements with the unions had to be intense and sustained. It had to allow them the time and space to reflect on strong perceptions they held about the role of the state in economic development.