IN November, 2008, I wrote in this column about the non-existence of the Telecom Authority of Fiji and its consequences on the development of the telecommunication industry in Fiji, especially the regulatory mechanism. In December 2007, we saw the signing of the Master Raddison Telecom Accord in which the World Bank played a supervisory role.
Apart from the announcement of the Board of Directors and the advertising of the chief executive position of the TAF, there hasn't been any other development so far.
Recently, the economic theory of competition surfaced in the area of prices, specifically in the mobile call charges, and as usual the consumers benefit. Despite the decrease, there are still uncertainties in the industry
The World Bank was very prominent in promoting the deregulation of public utilities and facilitating regulatory mechanism from the early '90s. They had substantially researched and reported on industrial organisation throughout every region. This has led them to Fiji; another research area prospect.
The regulatory mechanism
My concern is the manner in which the state has managed the regulatory approach of this deregulation exercise. I strongly believe the State does not fully appreciate the essence of regulatory mechanism in the deregulation process of such a public utility. On the same token the World Bank has taken advantage of our ignorance and assumes that a generic model of regulatory will work in Fiji without even considering the uniqueness of our market and its operating environment.
There are a few options we could have considered. First, we enter into a transitional mode. We could have appointed a panel of experts to act as regulators in the transition time of a period of five years or so. While this idea was first introduced by the World Bank themselves, I had wondered why we did not take time to think this option through and analyse whether it would have been advantageous for us. This expert panel be given the role of facilitating the regulatory mechanism and all the aspects involved.
These are specialised areas such as tariff reviews, the economics of interconnections, spectrum management, number portability, economics of technology, business continuity plan for telecom operators and also attending to disputes, monitoring and compliance.
Secondly, is to outsource the regulatory authority to a regional regulatory regime. While there is none at the moment, I believe this is an opportune time to discuss this at the regional level as well. Dr T.K Jayaraman of the University of the South Pacific at one time brought up the idea of one currency for the Pacific. While this can be seen as too radical for some, regionalism could start from a regional regulatory regime as a lot of the Pacific Island Countries are facing similar experiences in their telecommunication industry.
The institutional factor
As we embarked on the creation of TAF, I wonder whether we had taken time to analyse the effectiveness of such institution during fine weather and during the storm. According to research, about 200 regulatory bodies have been established in some 130 countries to regulate services such as telecommunications, water, and electricity in the past decade. How well do they perform is still a debatable issue today.
The predominant factor in setting up a regulator is its independence. Some have argued that the fundamental challenge in regulatory design today is to find governance mechanisms that restrain regulatory discretion over substantive issues. Such governance issues are common to us as well, seeing the internal disagreement in the review of telecommunication price order control is a classical example.
There is always a close relationship between developing countries and political expediency.
While this might be a very general statement, research found that regulatory bodies in such economies are very fragile and face constant pressure with government exerting pressure on regulators to modify policies to their liking with an element of political responsibility as well.
From the outset, the TAF may have faced such external pressure even before it was created.
If we are thinking that mere deregulation will advance the telecommunication industry then we will be one of those that will be used as a case study of failures as far as regulatory framework is a concern.
Finally, the idea of outsourcing our regulatory framework does not take care of the independence issue but areas such as costs and other constraints such as lack of skills and intuitional incapability. In a transitional time as this, we don't necessarily need a fully fledged TAF, however, a panel of experts or a regional regulatory regime would suffice.
For institutional factors, we need to foresee the viability or the vulnerability of such an institution.
The regulatory success depends entirely on its compatibility to individual an country's regulatory commitment and governance mechanism.
I think the challenge is that we need to design a model that is legitimate, competent, and independent with capable staff to manage critical areas that are part of the regulatory process. But the good news is that we are not the only one that have regulated our telecommunication or public utilities, there are many case studies out there we can learn from. Once we are successful in the telecommunication industry, we will be able to replicate some aspects of this model in the water and electricity sector.
* Lekima Nalaukai is the Assistant Manager Business Development for Fiji International Telecommunication Ltd.
* The views expressed here are exclusively those of the author and are published by this newspaper on that sole understanding.
* His views may not reflect those of his employers.
