Freeing up the exclusivity
Apr 8, 2008, 11:51

Protecting companies or industries through exclusive licenses and regulations has its own economic benefits. However, as the experiences worldwide indicate, there is widespread support for monopoly powers to be curbed in favour of free and competitive markets with increased and equitable distribution of services, lower costs, and higher customer satisfaction.

The Interim Government recognizes the benefits of free markets and, in the short period since taking over the reigns of governance, it has speeded up the deregulation process for what was once exclusive industries, beginning with the telecommunications sector. Samuela Loanakadavu of the Department of Information takes a look at how the Government’s plans are rolling out.

The provision of telecommunication services by monopoly operators is a universal phenomenon and Fiji is no exception. The monopolistic nature of the telecommunications industry is mostly apparent in smaller economies where regulators are one and the same as the operators. However, global liberalization, promoting competition, separating regulators from operators and the lightning pace of developments in information and communications technology are quickly changing the scenario in the telecommunications industries.

As a small island nation, Fiji has a reliable and efficient telecom system with access to the Southern Cross Cable that links the country with some of its major trading partners like New Zealand and Australia and to a lesser extent, Hawaii and North America. Its telecom industry comprised primarily of three monopolies, all of which were protected through exclusive licenses as far as 2014. These organizations have, over the years, enjoyed Government patronage, market power and to some extent a handsome monopoly economic profit.

However, this arrangement has now changed firstly with the Interim Government passing a new Telecommunications Bill in November 2007. The Bill, essentially, heralds the deregulation of the country’s monopolistic industries.

Following the passing of the Bill, the Government lead by Interim Prime Minister Commodore Ratu Voreqe Bainimarama signed in February a settlement deed with the managements of Fiji International Telecommunications Ltd (FINTEL), Telecom Fiji Limited and Vodafone Fiji Limited. The signing effectively means that these companies no longer have exclusive licenses. Importantly, it also means that more players could now enter the industry and that consumers nation-wide could eagerly anticipate significantly improved telecommunications services which, hopefully, would be provided at lower costs.

Prime Minister Bainimarama said the Interim Government is faced with the mammoth challenge of undoing years of bureaucracy, inefficiencies, blatantly wrong mindsets which are all impediments to making our economy more robust, efficient and investor-friendly.

He said the move by the Interim Government to deregulate the telecom market is expected to have a direct and very positive impact on Fiji’s economy.

“It provides the trajectory to economic growth and increased employment opportunities. Government aims to ensure that those living in rural areas and in the islands have access to services enjoyed by those living in towns and cities. It will also have an enormous impact on the cost of doing business as companies will be able to enjoy the same competitive prices that their overseas counterparts have when making international phone calls,” the Prime Minister said.

The liberalization of the local telecommunication market was spearheaded by the then Minister for Commerce, Industry, Investment and Communications, Taito Waradi. The idea was later translated into the promulgation of the new Telecommunication Bill. In his submissions to Cabinet, Mr Waradi said everyone will benefit from the deregulation of the industry – from the business community right through to the people in the villages and settlements spanning the outer islands and the interior.

The first part of the process involved the setting up of the Telecom Authority of Fiji (TAF) that is now tasked with implementing the Act and monitoring developments within the industry. Cabinet had agreed to a $1.3 million supplementary budget to the Department of Communications for the establishment of TAF.

The ensuing processes include, among other things, receiving what could be described as a flood of applications from interested players wanting to enter the industry. Four companies, for instance, registered their interest to join the public cellular mobile phone services of which only two new licenses were made available.

The newly appointed Minister for Communications, Tom Ricketts, announced in February that Digicel has won one of the two licenses and that another round of vetting is now in progress to determine the winning bid for the remaining license.

In the communications sector, Fiji Television Limited will soon be joined by Mai TV, which expects to start airing by mid-year.

Mr Ricketts re-affirmed Government’s position on deregulation in saying that liberalization makes companies more competitive and forces them to rationalize costs, eventually making them more efficient and productive.

“When competition grows, prices will decrease with better services and products on offer. This in turn creates employment and a much healthier economy for all to benefit from. This is the ultimate dream of the Interim Government,” Mr Ricketts said.




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