Asian Forum on Information and Communication Technology Policies and e-Strategies, 20-22 October 2003

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Session Summary

Session IV - Regulatory Issues and Privatization

Chair: Hon. Palusalue Faapo II, Minister for Communication and Technology, Samoa
Resource Person: John Ure, Director, Telecommunications Research Project, Hong Kong University

1.	Atty. Kathleen G Heceta, Deputy Commissioner, National Telecommunications Commission, Philippines
2.	Mr. Fred Tipson, Executive Director, GDOI, Markle Foundation, New York, USA
3.	Mr. Wahaj Siraj, Convenor and CEO, Internet Service Providers Association (ISPAK), Pakistan

Note: The Roundtable was assisted by a facilitator who posed 11 "Key Questions and Issues" to all the participants.

POINTS AND ISSUES RAISED

-	The general perception is that privatization leads to better economics. The narrow definition refers to the transfer of ownership from the state to the private sector; models include full privatization (total transfer and operation) and partial privatization. The broader definition of privatization refers to the opening of the market to competition, allowing for competitive entry; Build-Transfer (BT), Build -Operate -Transfers (BOT), and Build-Transfer-Operate (BTO), outsourcing; and new entry.
-	One reason for privatization is to promote ICT development; there are economic and political reasons; or social policies - e.g. spectrum allocation for minority groups.
-	Loaded issues include tariff rebalancing, job loss, social obligation (i.e. universal service policies), and national sovereignty (implying foreign investment), and security.
-	Results of post-privatization; usually performance improvement, inconclusive econometrics for the profits. Winners are usually the telecom ministries; private sector; business users, and middle class consumers. Losers include other ministries, users making local calls, less skilled telecom workers - way to deal with this general means compensation.
-	Lessons learned show that a) political will and commitment is required for privatization and to address consumer confidence issue; b) once you privatize it is hard to undo or make changes, hence, targets must include ones that the state can not achieve alone; c) the importance of organizational structure must be emphasized - regulator structure must be independent of incumbent and government. Also, the source of funding of regulators must be neutral from government (usually from levies); d) it is better to openly address issues because change is inevitable; e) trend is towards general competition policies; d) convergence has made licensing issues more complex (medium versus content = regulations for these may not be harmonized).
-	The Philippines example shows us that even with a legalized, competitive, environment with regulatory frameworks in place, the concern revolves around trust and confidence of users.
-	Difficulties exists for nations as changes in technologies and convergence complicate processes for deregulation for governments, as national sensitivities and interests could be at stake e.g. de-regulating broadcast over the Internet into country domains (the need for cultural diversity across countries, especially in attitudes towards censorship and content issues). No one size or regulatory model fits all; we are all in unique situations; developing countries tend to follow each other but then again this may not always be such a good thing ("the blind leading the blind").
-	China demonstrates how liberalization and competition can improve efficiency, lower costs and attract capital and attract capital investment for the next phase of development, e.g. into broadband. Singapore - benefits the users overall; telecom is now much more active and competitive due to liberalization; operator and consumers are winners overall.
-	Without competition may not be fair or balanced. It helps makes the supply side more responsive to market demand.

THE WAY FORWARD: SHARED EXPERIENCES/ PROPOSED SOLUTIONS

-	In developing of policies, nations have to consider the reasons, aims and results of privatization, and the need to harmonize all these.
-	There is no single model (in the case of monopolies, state and private monopolies have both thrived, depending on the characteristics of their economies), ie China (state but competitive). Re-balance when privatizing; prices will be affected but you should be looking at the changes in marginal costs and prices.
-	There is a critical need for regulatory issues to be addressed especially the importance of establishing a clear regulatory environment i.e., to avoid regulatory risk for investors. Need to regulate the technologies, media, and content within a holistic national ICT framework.
-	Ministries and regulators have to get used to new role in terms of not being too interventionist, but also having to deal with a range of new issues such as convergence, IPRs, VoIP, etc.
-	Government licensing fees and royalties should just cover operations/administration of regulatory agency (non profit); should not become another competitive or burden on providers; levies should not go beyond the cost of regulation.
-	Tariff rebalancing - step-by-step process but the result is more competition in the local loop and ultimately lower prices as margins fall and the business focus shifts to (a) volume (access and usage) and (b) value-added services; it will attract more investment into local loop, including cellular because it becomes more competitive with fixed is no longer subsidized.
-	Service-based competition can be an important supplement to facilities based competition - diverse facilities also important because they can offer different networking capabilities, e.g. Intelligent network capabilities.

Last modified 2004-05-25 03:31 PM