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Liberalization Liberalization & & The Telecommunications SectorThe Telecommunications Sector
In the CaribbeanIn the Caribbean
Presented by Regenie F. Ch. FräserPresented by Regenie F. Ch. Fräser
SECRETARY GENERAL CANTOSECRETARY GENERAL CANTO
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Specific ObjectivesSpecific Objectives
This presentation:Gives an appreciation of the global
marketplace and market reforms.Defines the liberalization of the
telecommunications market. Examines opportunities for service
providers. Suggests possible interventions for
CANTO as a Trade Association.
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Globalisation & LiberalizationGlobalisation & Liberalization
Globalisation is Globalisation is the free flow of factors of production across borders.
Trade liberalization refers to free trade.Trade liberalization refers to free trade.Market liberalization is the Market liberalization is the removal of removal of administrative and regulatory encumbrancesadministrative and regulatory encumbrances that restricted industry and commerce. The liberalization of the telecommunications market has concentrated the opening of monopolistic markets to competitive provisions of facilities and services.
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Globalisation & liberalization are Globalisation & liberalization are driven by the driven by the information revolutioninformation revolution, , dramatic dramatic improvements in improvements in telecommunicationstelecommunications, exponential , exponential increases in computing powerincreases in computing power coupled coupled with lower costs, and developments of with lower costs, and developments of electronic communications and electronic communications and information networks such as the information networks such as the Internet.Internet.
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The winners are the innovators…
The winners are the companies, industries and countries which:
1. Are at the fore-front on technology innovation (the design of equipments and tools),
2. Take advantage of technology transfer (the acquisition of appropriate knowledge and skills) and,
3. Undertake market reforms to create the enabling business environment.
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The liberalization of the telecom market
The liberalization of telecom services in the United Kingdom has had a locomotive effect on the global telecom market. There are lessons to be learnt from experiences in North, South and Central America; Asia; Africa and the Caribbean.Liberalization efforts have lead to lower prices, new telecommunications investment and enhanced service choices, access and quality. A number of developing countries have committed to open trade in telecommunications services at various levels under the General Agreements on Trade in Services (GATS).
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Faces of Liberalization…
Liberalization has taken the form of privatization, deregulation and competition. The privatization of public enterprises is often undertaken because of governments’ inability to raise needed capital for their public sector service providers. Increased competition has resulted from the breaking down of monopolies, and has significantly increased tele-density in several global markets.
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In the Caribbean…Jamaica was the first Caricom country to liberalize the telecommunications market. Since then other Caricom markets have opened up to competition. Today two providers dominate the market, the British firm, Cable and Wireless and the Irish firm, Digicel.The introduction of new technologies and a greater range of services have resulted in higher telecommunication penetration and services usage, and wider service access particularly in rural areas that traditionally lack adequate coverage.
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Investment in telecoms on the increase…
Growth is driven by direct investment in information technology and wireless
communications, and regulatory reforms. “Spending on telecommunications
equipment to increase by 5.4 percent in 2004 and then to grow at high single-digit
rates through 2007. For the 2004-07 periods, equipment spending in the five regions will expand at an estimated 7.4 percent compound annual growth rate
(CAGR), rising from $260.1 billion in 2004 to $328.1 billion in 2007”
Telecommunications Industry Association 2004 Forecast.
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The opportunities for telecommunications providers in the newly emerging Caribbean market are endless. Production, distribution and consumption are very dependent on telecommunication and computer technologies. tourism has the locomotive effect on the Caribbean economy. Tourism and related services will require easy access to telephone, Internet, email and payment and settlements services.
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…industry best practices… Industry best practices must be observed if market liberalization will be successful. Government’s policy must be clear for the telecom sector and the adoption of policies to achieve those goals. Regulation must be open and transparent to ensure accountability, transparency, equity and adequacy of coverage. The regulatory agency must have the authority and capability to police the market behavior of industry.Where some services are not competitive, the regulator must be able to prevent cross-subsidization of competitive services from monopoly service revenues.
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CANTO NEW STRATEGIC DIRECTION
To influence the development of policies and programs that affect members interestsAcquire a pro-active position in strategic and policy issues, working together with regulators and telecommunication companies
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…the role of CANTO…CANTO will continue to influence the market reforms through representation, advocacy, promotion and education.Efforts would be aimed at working governments and the regulatory agencies towards creating the enabling environment for taking advantage of new technological and market innovations.Governments would be lobbied with respect to pace of deregulation and the opening of the market. In a liberalized market, the regulatory agency must permit the supplier time get the productive and distributive structures to adjust to the new business environment, to smooth out the cost of the regulatory requirements and to build capacity for the emerging competition.
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Conclusion
Telecom service providers in the Caribbean are faced with challenging times. The market is driven by fierce competition, converging technologies and the rise in customer demand for new mobile and Internet services. Companies that do not adjust their business model will miss tremendous opportunities, or even worse, lose their position in the market.
