Liberalizing basic telecommunications: The Asian experience

Abstract

The liberalization of the basic telecommunications sector in Asian countries is examined in this paper with a view to identify the elements of good policy and examine how it can be promoted through multilateral negotiations. We find that despite the move away from traditional public monopolies, most Asian governments are still unwilling to allow unrestricted entry, eliminate limits on private and foreign ownership, and establish strong independent regulators. Where comprehensive reform including privatization, competition and regulation has been implemented, there are significantly higher levels of main line availability, service quality and labor productivity. Somewhat surprisingly, there has not been much unilateral liberalization since the last round of GATS telecommunications negotiations. The new round therefore faces the challenge of not merely harvesting unilateral liberalization as in the past, but of negotiating away existing restrictions. Furthermore, since quantitative restrictions on the number of suppliers are pervasive, deepened GATS rules could help ensure the transparent and non-discriminatory allocation of licenses. There may also be a need to sharpen the regulatory principles established in the last round, and to create rules that safeguard not only the rights of foreign suppliers but also those of consumers.