Telecom, media and ICT should be off limits to political intervention

India has too many mobile operators in too many circles, yet the M&A and spectrum reallocation rules are so complicated that the market is not able to consolidate in the way that customers need it to

Image: Seree Tansrisawat / Shutterstock.com

We are in danger of returning to an age where political intervention in the market is getting more pervasive. Essential infrastructure such as telecommunications, media and Information and Communication Technology (ICT) are national assets which need to be made available and affordable to everyone, all the time. To achieve that, governments have to regulate and legislate where needed. But the rest needs to be left alone.

Today, almost every government in Asia is failing in this aspect, in one respect or another. Few can claim to have come close to an ‘enlightened’ pattern of intervention in telecom, media and ICT.  The UK is one exception to this: It has a competitive ICT market, even-handed policies that encourage local and foreign investment, a liberal environment for mergers & acquisitions (M&As) and strong financial markets that can facilitate it. Crucially the UK’s telecommunications regulator, OfCom, has an unremitting dedication to understanding and protecting consumer interests with firmness and transparency, backed by the power of law to impose weighty sanctions.

In Asia, Singapore is possibly the most integrated, with the Infocomm Development Authority of Singapore (IDA) overseeing ICT regulation and policy, as well as setting digital vision and strategy. Other countries such as Malaysia, Indonesia, Philippines, Sri Lanka and India continue to struggle between what to focus on and what to leave to the market. For example:

• The Philippines is about to see the entry of a third mobile operator, yet the regulator is strangely silent on matters such as reducing today’s very high interconnection charges, which will make it harder for the new entrant to win over customers.
• India has too many mobile operators in too many circles, yet the M&A and spectrum reallocation rules are so complicated that the market is not able to consolidate in the way that customers need it to. Sri Lanka, too, is struggling to set the right competition policy for a small market with six operators.
• Bangladesh’s politicians have recently blocked Viber, WhatsApp and Twitter feeds in an attempt to muzzle public discourse that threatens the government. Due to the absence of a stable policy framework backed by law, the ruling party is getting away with it.

There are a few key steps the government must ensure for the industry:

• Build a fair and authoritative regulatory framework: This is where it starts and most countries in Asia fail here. For the past fifteen years India has kept its industry regulator, Trai, neutered from real power and at arm’s length from media and broadcasting. As a result, ICT, telecom and media regulation in India continue to be haphazardly coordinated and Trai lacks the power to ensure it is taken seriously. In too many areas the Department of Telecommunications (DoT) takes the final call, leaving too much to politicians’ whims.
• Ensure that industry policy is up to date, and understood by major stakeholders: This sounds obvious, but countries such as Bangladesh, Sri Lanka, Philippines and Indonesia do not have an updated telecommunications sector policy, nor a vision that sets out the national goals for digital or ICT. India does, but it is so complicated that most people don’t understand it, leaving investors to often act at risk.
• Ensure there is a frequent flow of helpful information: OfCom does a great job of informing the British public of what’s going on by publishing a quarterly review and a comprehensive annual industry report.  Most countries do not put enough effort or investment into this. All over Asia, regulators collect significant fees from licensees, but little of the funding has built the capability to provide good industry information.  Data is critical because it informs customers and investors, and keeps operators honest.
• Work out the network and cyber security roadmap: To give network and cyber security proper focus, politicians need to sit down and work out the roadmap: What, by when and how much?  In today’s world of fast-moving technological change, there is no ‘right’ national security policy, but a race to keep up with changing needs. Most Asian countries do not have such a consensus view, and as a result politicians intervene ad hoc when they need to, rather like the ruling party in Bangladesh.

These are the things we definitely don’t want politicians to be doing in 2016:

• Meddling in issuing licences or spectrum auctions when in need of funds: India has become a master at this, linking explicitly the proceeds from spectrum auctions to closing gaps in the public deficit. Spectrum auctions should take place in planned timetables, making available the spectrum the industry needs, at fair prices which encourage long-term investment.
• Not to just stand and watch when the market is failing: Myanmar recently adopted a policy which unlocked months of stalemate in the telecom industry, as new operators who wanted fibre could not agree to fair terms and prices with those who had it to sell. After the government intervened, matters improved and it took political will to do it. The Philippines has to learn from this, as a third entrant enters in 2016, to ensure it has access to infrastructure owned by the two incumbents at fair prices, and to make sure the government is not captured by the incumbents.
• No white elephants please: Politicians love announcing grand schemes that will solve everyone’s problems.  India’s and Australia’s erstwhile national broadband plans of putting fibre all over remote villages and the outback were examples of the state’s largesse surpassing what the economy can wear.  Both these programmes have been trimmed and are now more practical. Other potential white elephants are always around though, such as Digital India and Digital Malaysia—two programmes which must be backed up by action-oriented plans to be really successful.

The thoughts and opinions shared here are of the author.