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The Limits of Privatization and Competition
Early efforts at telecommunications reform emphasized privatization and competition. In recent years, a more sophisticated understanding of telecomm “liberalization” has emerged. It is now recognized that privatization alone will not yield improvements in affordability and accessibility. Rather it is competition that drives down prices and spurs development, and competition must be enforced. Moreover, even properly enforced competition is not sufficient to expand access, especially for traditionally underserved areas. There is still a direct role for government, in infrastructure development, in training, and in other activities.
In July 2006, the UN Conference on Trade and Development (UNCTAD issued a report entitled “The Digital Divide Report: ICT Diffusion," with the following key conclusion:
In many countries, the introduction of privatization and competition has been coupled with the establishment of a Universal Service Fund or a Universal Service Obligation, to support the build-out of access in underserved areas. The creation of public access telecenters, including mobile kiosks, has been successful in a number of countries, not only in terms of direct access, but also in terms of e-Literacy and demand. UNCTAD recommends public investment in Internet backbones to provide neutral connection points for competing services. A full discussion of infrastructure development is beyond the scope of this Toolkit, but it must clearly be part of the planning and policy reform process surrounding e-Government.
<<Previous: Privatization, Competition, and Independent Regulation
In July 2006, the UN Conference on Trade and Development (UNCTAD issued a report entitled “The Digital Divide Report: ICT Diffusion," with the following key conclusion:
“We have hoped that national ICT policies of private sector participation, competition and effective regulation (PCR) would close the digital divide. While they have helped to reduce it slightly in certain areas, the digital divide persists, particularly among the least developed countries. Anticipated returns are insufficient to attract capital to build networks in low-income countries. While valid, PCR has limits. Pure competition does not exist in telecommunication. Duopoly is common and services are often either not available or have only a single provider in many areas within both developed and developing countries.
“If we are to close the digital divide, we must go beyond PCR policy by coupling it with proactive government planning, investment and procurement.”
In many countries, the introduction of privatization and competition has been coupled with the establishment of a Universal Service Fund or a Universal Service Obligation, to support the build-out of access in underserved areas. The creation of public access telecenters, including mobile kiosks, has been successful in a number of countries, not only in terms of direct access, but also in terms of e-Literacy and demand. UNCTAD recommends public investment in Internet backbones to provide neutral connection points for competing services. A full discussion of infrastructure development is beyond the scope of this Toolkit, but it must clearly be part of the planning and policy reform process surrounding e-Government.
<<Previous: Privatization, Competition, and Independent Regulation