Telecommunications reforms in China: towards an analytical framework

This paper reviews and analyzes changing telecommunications policies in China since the inception of the so-called “Open Policy”. It is argued that these changes should be understood as the results of a delicate balance between (1) government considerations (including the state's desire to provide universal coverage, control the telecommunications industry and, more recently, improve the efficiency of state-owned enterprises), (2) the call from foreigners (sometimes made through their governments) to open China's telecommunications industry and to seek profits, and (3) the overwhelming demand of the Chinese population and the business sector (including foreign firms operating in China) to have freer and more rapid movement of information. Over time, the interplay of these forces has led to the liberalization of China's telecommunications industry. These moves towards liberalization took place in four stages. During stages one (Pre-1994) and two (1994–1997), only half-hearted reforms were introduced to separate government administration from business enterprises and to foster very weak domestic competition. During stage three (1998–1999), there were reforms to the regulatory framework and measures towards liberalization. From 2000 onwards, a solid legal foundation was laid after nearly a decade of gradual reform. Moreover, there has been some remarkable organizational restructuring since June 2001.     

Telecom reforms in the EU: Prices and consumers' satisfaction

The paper shows the impact of privatization and liberalization on consumers in the telecommunication sector for 15 EU countries. Policy reforms are summarized by the OECD regulatory indicators (REGREF) that consider the extent of privatization, vertical disintegration, and market entry. After controlling for other country variables, first, a test of the impact of ownership and regulatory changes on consumer prices is given. In the second step, the Eurobarometer data on consumers' satisfaction about quality and prices of the telecommunication service are considered. The analysis confirms the importance of market regulation in reducing prices but minimizes the role played by privatization per se. Overall, the findings offer only mixed evidence, and somehow contradict, the hypothesis that all the reforms work in a similar way across the EU countries.     

The impact of trade liberalization in telecommunications services: The case of APEC countries

This paper examines the impact of liberalizing the telecommunications services sector on investment and output in the Asia-Pacific Economic Cooperation (APEC) countries by estimating a system of four structural equations that takes into account the causal relationship between national income and telecommunications infrastructure. The degree of openness to trade in telecommunications is represented by a carefully constructed index that reflects a country’s trade and investment policy in terms of market access, national treatment and regulatory principles. One interesting finding from the empirical analysis is that the effects of trade liberalization depend on the risk rating of a country. In countries with relatively high risk ratings liberalization reduces investment in telecommunications.     

Fueling investments - The effect of the Agreement on Basic Telecommunications

As international agreements come under fire from current politics, it becomes ever more important to investigate the effect of such agreements. The telecommunication sector is of special interest due to its growing importance in the digital age. International law came into play in 1998 when the Agreement on Basic Telecommunications (BTA) entered into force. It demanded far-reaching liberalization reforms and was signed and ratified by 66 countries. A difference-in-differences estimator is used to analyze if the treaty had an impact on investments in telecommunications. The analysis reveals that investments in telecommunications became significantly higher in signatory countries than in non-signatory countries after the treaty took effect.     

Korean telecom policy in global competition: implications for developing countries

United States efforts to open the Korean telecommunications market have been incessant and tenacious, to the extent that Korea is the only country to be twice designated by the US as a priority foreign country (PFC). Through major restructuring driven by the Korean government, the telecommunications infrastructure of Korea has been strengthened and expanded, and in the process has posed a threat to the US telecommunications industry. Thus, since the late 1980s, the Korean telecommunications industry has been monitored and threatened with trade sanctions by the United States Trade Representative, and all internal restructuring has been closely related to bilateral negotiations with the US, and multilateral negotiations in the Uruguay Round. Based on interviews with key Korean telecommunications personnel and analyses of public documents, this research examines the Korean telecommunications market, telecommunications policies relative to the US and WTO, and the recent economic crisis that has affected the stability of the industry. The paper also offers five major recommendations to government and industry policymakers, including a more active and positive stance toward liberalisation, the relinquishing by bureaucrats of their monopolistic power over policymaking, the securing of an open and transparent policymaking process, and, in relations with the US, and the mobilisation of regional and multilateral organisations to ensure fair competition in telecommunications.     

Assessing the WTO agreements on China's telecommunications regulatory reform and industrial liberalization

By drawing on new institutional economics, this paper contends that the “rules-of-law” specified by the World Trade Organization (WTO), as an exogenous institution for the member states, will theoretically influence its members’ domestic telecommunications regulatory institutions, but that the actual effects will be different and will depend on the institutional endowments of host countries and their institutional stances. Empirically, this paper examines the impact of China's prospective membership status in the WTO on its telecommunications regulatory reform and industrial liberalization and explores the institutional barriers preventing China from fully implementing the WTO Agreements in this sector.     

European policies and regulation

This article describes the three main objectives of the European Community's programme of regulatory reform in the telecommunication sector: liberalization, the separation of regulatory and operational functions, and the realization of scale economies. Particular attention is paid to the new Directive on Open Network Provision.     

Wireline deregulation: The Canadian experience

Changes in the state of telephony markets paved the way for significant regulatory and legislative reforms in the telecommunications sector in the 1990s. In Canada, the 1993 Telecommunications Act was enacted to promote the emergence of competitors in a market that had until then been dominated by regional monopolies. This paper examines the Canadian telecommunications regulatory framework and analyzes the regulatory privileges given to new entrants at the expense of former telecommunications monopolies. Such regulations, which were meant to induce competition, ended up hurting consumers and distorting the market process. This paper also shows how the Canadian government recently eliminated many of those regulations by seizing control of the policy agenda from the telecommunications regulator.     

Global political economy of technology standardization: A case of the Korean mobile telecommunications market

This paper examines empirical cases of standardization in the Korean mobile market as vehicles for approaching the broader political and institutional context of standardization in telecommunications. A consideration of Korean standardization in the mobile telecommunications market is particularly interesting because it reveals how the state's political interests influence standards decisions, which are primarily driven by market and technological changes in telecommunications. Judged from the social construction of technology perspective which sheds light not only on technology itself but also on political, social and economic interests that surround transformations in technology, this paper highlights power relations among the major actors that have made technology standards decisions in Korea regarding second (2G) and third-generation (3G) mobile telephony. The paper also attempts to show how the Korean government has dealt with the diverse interests of various market actors while pursuing its own policy agenda.     

Telecommunications reform and efficiency performance: Do good institutions matter?

Until recently, most studies investigating telecommunication reforms performance have failed to incorporate the importance of institutions into the empirical analysis. This study highlights the importance of institutional governance on telecommunications efficiency and provides empirical results for the impact of institutions on reform outcomes. It provides significant evidence that the institutional environment in which reform progress takes place is an important determinant for successful reform. This study uses the stochastic distance function approach to capture the role of institutions in explaining efficiency differences across 70 countries. The empirical analysis reveals that policy stability in the form of substantive checks and balances on executive power is the most important aspect for successful reform. Independently, legal integrity improves telecommunications efficiency through privatization, while greater freedom from corruption influences the effectiveness of a regulatory body.     

A tale of two reforms: Telecommunications reforms in Mexico

The telecommunications industry in most parts of the world experienced a round of market-led reforms in the early 1990s. After a period of sustained development in the sector numerous countries are moving toward government-led network deployments. Even though it may appear as if the pendulum swung back to the previous 1990s period of government-led development, this paper argues persistent regional disparities in access and adoption of new technologies generated a need for public action in the second reform. By analyzing the Mexican case and comparing the policy choices in each one of the reforms, this paper sheds light on how particular policy decisions in the first reform generated inefficient market solutions and were key in creating a perception of the need for stronger public action. In both reforms, the policymaking process was carried out by a small elite that negotiated its contents behind closed doors. Paradoxically, within the transition to democracy, in the second reform, the leaders of the major political parties established a closed-door agreement. Even though the 2013 telecommunications reform improved the status quo, it did not decrease market concentration and, once again, we face low levels of investment and high levels of digital exclusion. By reconstructing the policy decision process in each reform, this paper argues that the closed-door policy choices taken, which were the result of the interaction of political actors with their own agenda and interests, hampered the most efficient solutions.     

Inequalities of opportunity in the access and use of telecommunication services in Togo

The liberalization of the telecommunications sector in Togo aimed at ensuring access to a better quality of telecommunication services at affordable prices to everyone. While the liberalization policy has increased competition in the sector and reduced significantly telecommunication services prices charged to costumers, statistics on the access and use of telecommunication services in Togo reveal disparities with respect to individuals' socio-economic characteristics which could be an indication of the existence of inequalities of opportunities in the access and use of these services.This paper investigates the inequalities of opportunity in the access and use of telecommunication services in Togo using a parametric approach. The results of estimations indicate that, inequalities of opportunities are larger for men and the elderly than respectively women and youths and are more pronounced in urban areas and regions such as the Plateaux and Savanna regions. Moreover, the circumstance variables such as the ‘place of residence’ and the ‘region’ are the key variables in explaining the inequalities of opportunities in the access and use of telecommunication services in Togo. So, policies toward reducing inequalities of opportunity in the access and use of telecommunication services in Togo should be designed with regards to men, the elderly, and people living in urban areas and regions such as the Plateaux and Savanna regions.     

Competitive dynamics in Polish telecommunications, 1990–2000: growth,regulation, and privatization of an infrastructural multi-network

This paper analyzes the relationship between governmental regulatory policies and competitive dynamics amongst private operators and the national monopolist, TP SA, in three network segments of the Polish telecommunications sector. Special attention is paid to the evolution of organizational strategies in a regulatory environment characterized by constant strategic indecision and reorientations of national policy makers. The paper finds that regulatory/competition coevolution has taken diverse forms in the three network subsegments, with asymmetric duopoly operating in the local fixed network, hidden competition at work in the long-distance fixed network, and oligopolistic technology-driven competition characterizing the high-growth cellular network. The conclusion reached is that Polish telecommunications to date has been stuck in a broad stage of pre-competitive market maneuverings by domestic and international capital, in preparation for privatization of the national operator and for full liberalization as part of EU integration.     

Spectrum auctions in a thin market: The Korean case

In 2010, the Korean government adopted spectrum auctions and introduced a market mechanism into spectrum management. However, the government has often been confronted with conflicts between diverse policy goals of spectrum auctions. A thin spectrum market, where only three incumbent MNOs bid for spectrum, has led to concerns that the government may fail to maximize revenues.Based on the past experiences in Korea, this paper examines the Korean government's choice of auction rules in the face of conflicting policy goals. This paper also recommends that the government implement the following regulatory reforms and consider the auction related measures to deepen its spectrum market or increase the number of bidders: (i) relaxation of foreign ownership restrictions, (ii) introduction of regional or site-specific spectrum licenses, and (iii) modification of auction formats. Spectrum markets tend to be thin in many countries, and the Korean experience may offer implications for those countries when they implement spectrum auctions.     

Telecommunications policy in Turkey: Dismantling barriers to growth

Modern telecommunications technology is now widely seen as a critical driver in economic development. However, the issues involved in the rapid deployment of this technology are complex and frequently highly controversial. While some issues are technical, the most difficult ones involve changing an institutional framework originally designed for different times and different technologies. The process of changing this framework necessarily involves disruptive change for existing infrastructure and service providers as well as substantial benefits for the economy at large. This paper, based on an extensive series of interviews in Turkey in 2005 as well as published sources, seeks to discuss these issues in light of Turkey's progress to date in taking advantage of advanced available telecommunications technology and the myriad productivity-enhancing services that are associated with it.An important element in developing a more competitive and dynamic sector has been Turkey's long-standing desire to become a member of the European Union (EU). This has encouraged changes in the telecommunications regulatory regime following the guidelines set out in Chapter 19 of the EU “acquis” for candidate members. Nonetheless, substantial further efforts are needed to complete and implement the desired regulatory framework, particularly as it affects the former government monopoly carrier, Turk Telekom and the cable companies. A further limiting factor in recent years has been an overall investment climate characterized by a high level of uncertainty for most investors, regardless of size or nationality.Policy recommendations to help accelerate the deployment of telecommunications technology include a clear reaffirmation of the government's priorities for the sector, a reduction in the level of regulatory uncertainty, strengthening the Board and Staff of the Telecommunications Authority, and reviewing policies to broaden the scope and decrease the cost of telecommunication licenses.     

When do family firms have an advantage in transitioning economies? Toward a dynamic institution‐based view

We advance a dynamic institution‐based view of the firm that extends the theory's current focus on scope of pro‐market reforms (degree of market liberalization in a given year) to consider how speed of reforms (rate of market liberalization achieved over time) affects the performance of firms from transitioning economies. Utilizing a sample of public firms from Chinese provinces with varying reform speeds, we find that while scope of reforms positively impacts firm performance, speed of reforms detracts from firm performance. We further find that while family firms have an advantage in gradually reforming provinces, non‐family firms have an advantage in rapidly reforming provinces. Thus, we extend the institution‐based view across time (speed of reforms) and firms (family vs. non‐family firms). Copyright © 2014 John Wiley & Sons, Ltd.     

Consumer protection in the telecommunication sector: A comparative institutional analysis of five African countries

The telecommunications sector has proliferated in recent years, especially in developing countries. However, little attention has been paid to consumer protection issues. As more people get connected to telecommunication networks and competition becomes increasingly fierce, it becomes essential to revamp institutions that ensure consumer protection in the telecommunication markets. This paper analyses the current status of institutions that protect consumers in the telecommunications sector in five African countries from the perspective of three pillars of sound institutional design. The findings indicate that while all cases analysed herein have some form of institution that upholds consumer protection, in most cases, such protection is limited to mobile communications. Furthermore, in most cases, there are only general sanction provisions that are either too weak to bind service providers or that leave overly discretionary powers to regulatory agencies, which can lead to corrupt practices, hence weakening consumer protection. This paper describes current affairs with regard to consumer protection in the telecom industry, identifies its weaknesses, and proposes areas of improvement to attain a healthier telecommunications sector.     

Political and economic processes in the privatization of the Korea telecommunications industry: A case study of Korea Telecom, 1987–2003

The Korean government completed its privatization of Korea Telecom (KT) in May 2002. Privatization was undertaken at a gradual pace at first mainly because the Korean government did not want to hand over its managerial power to the privatized telecommunications service company, although it announced its plan in 1987. However, the inauguration of the World Trade Organization (WTO) system and the Korean economic crisis of 1997 forced the government to accelerate its full privatization plan. During this process, several main players such as the Korean government, transnational corporations, international organizations, and large domestic conglomerates played important roles. The full privatization of KT is the result of the political, social, and economic demands of these players.     

Regulatory factors influencing Internet access in Australia and China: a comparative analysis

Internet access is determined by a combination of a widely available telecommunication infrastructure and affordability of Internet services, which are closely related to government policies (IT Group. (1999). Like other countries, both Australia and China have considered the Internet a powerful tool for national development economically and socially. As Internet growth becomes more and more significant, it becomes important to address the extent to which the underlying communication policies influence current growth rates.This paper provides a comparative review of policy approaches to regulating the Internet in both China and Australia. This study aims to identify the regulatory factors affecting Internet access in terms of availability and affordability, especially those factors which encourage the creation of a policy and regulatory environment favourable to the development of Internet infrastructure and access.This paper examines the linkages between regulatory regimes, market environments and Internet access in both China and Australia. The preliminary result suggests that government policies governing the telecommunications service market and promoting information infrastructure have a significant impact on the affordability and availability of Internet access. The most significant factor is the level of competition permitted in the telecommunication sector. It has become clear that further regulatory initiatives such as deregulatory mechanisms and interconnection regimes are needed to establish a more competitive environment for Internet access in both countries, and more particularly in China.     

The public incumbent's defeat in mobile competition: Implications for the sequencing of telecommunications reform

Within a mere 5 years of market competition, the mobile communications sector in Taiwan has exceeded a 100% penetration rate, currently ranking near the top of the world. In an even more stunning development, the public incumbent, Chunghwa Telecom, has handed the leadership status to a market entrant, Taiwan Cellular Corp., despite phenomenal mobile communications growth. This paper explores the factors that hamstrung Chunghwa Telecom in competition against its rival entrants. Our econometric analysis substantiates the fact that handset subsidies are the most effective instrument for mobile firms to gain market share. Chunghwa Telecom, due to its public ownership status, was nevertheless prohibited at first from adopting such a marketing strategy.The empirical results provided in this paper indeed pinpoint the importance of the sequencing of reform mandates in developing telecommunications: a prolonged privatization could help to promote competition in the industry. Public ownership makes Chunghwa Telecom vulnerable to political intervention and operational inefficiency, which is a barricade to performance and competitiveness for the not-yet-privatized company in a liberalized market. Taiwan's case presents an interesting deviation from conventional development theories, while it deserves scrutiny as it paves a shortcut to successful implementation of telecommunication reform in a timely fashion.