Development-friendly regulatory policies

The stance taken by a nation's telecommunications regulator has a big impact on the vibrancy of the communications ecosystem of the country. The policies the regulator adopts will have a strong bearing on the types of systems deployed, their affordability, and the take-up rate of services in that country. Some policymakers are more concerned with protecting the incumbent telecom provider, perhaps because the incumbent is a sister organization and is part of the government. Another reason could be that the incumbent is providing jobs to a large number of people and there could be political unrest if competition causes a large number of people to lose their jobs. In such cases, the policymaker might adopt policies that limit competition to the incumbent such as restricting the number of players and imposing terms that disadvantage other players with respect to the incumbent. With globalization, such practices have come under increasing scrutiny by world bodies such as the World Trade Organization (WTO). But irrespective of WTO, policymakers should have seen by now enough examples of how nations moving away from a 'pro-incumbent approach' and taking the path of market competition, have met with tremendous success.

The telecommunications regulator is in a position to determine the degree of competition in the market through the number of licenses issued and the license conditions, such as the minimum quality of service for coverage, network up-time, fault response times, and any Universal Service Provision (USP) that may be imposed. All of these conditions affect the quantum of investment needed by the operator and ultimately the profitability of the service. However, given that mobile operators are among the most profitable companies around the world, there seems to be little danger that regulators are being too strict with their licensing requirements today even though mobile operators have been required to come out with very large sums of up-front money to roll out their networks.

For market competition to work there must be mechanisms to limit the market power of the incumbent. These include clear rules for local loop unbundling, establishing and enforcing Reference Interconnect Offers (RIO), transparent rules for radio spectrum allocation, and vigilance against practices that can unfairly lock in consumers such as leveraging on handset subsidies to lock down handsets or impose an unreasonably long contractual period. Other measures include introducing rules to permit number portability when a subscriber moves from one provider to another. In certain markets taxes can be a drag on development. By removing handset taxes and subscriber registration taxes, India and China, for example, have made the service much more affordable, which has given their markets a tremendous boost.

Besides creating an environment for market forces to work, policymakers need to consider issues that affect society in general. Asian societies tend to be more conservative than Western societies, which means that applications such as adult content, chat line services and gambling, which are very popular in the West, cannot be so readily deployed in Asia Pacific. If these applications were permitted, they could give rise to certain social ills and there could be vigorous objections from certain segments of society. Many regulators in Asian countries have chosen to prohibit such services.

The telecommunications regulator should also ensure that subscriber privacy is protected at all times through strict rules against unlawful tapping of phone conversations and disclosure of a subscriber's location information and personal information such as his or her home address, calling habits and circle of contacts.

Some forward-looking policymakers see their role to be larger than simply regulating for market competition: they take it upon themselves to stimulate the development of the telecommunications industry in their country. Some of the actions they have taken include the development of human resources through education and training, nurturing indigenous equipment and service providers, encouraging research and development of communication technologies to reduce dependency on external providers, and facilitating infrastructure-based competition in their country.