Report

15 Prospects for the Telecommunication
Sector under SAFTA 1
INTRODUCTION
The dynamism of global telecommunications markets
is widely attributed to rapid technological development
and an increasingly liberal policy environment. Over
the last few years many Asian economies including,
SAFTA countries, have begun a process of telecom
liberalisation which has resulted in significant expansion
of telecom networks in these economies. While
the timing of telecom reform and liberalisation differs
among SAFTA countries, there are certain commonalities
in the reform process. All countries have introduced
competition in the provision of telecommunication
services that has resulted in dramatic reduction in the
pricing of these services. Further, introduction of
competition in a sector once considered a natural
monopoly has necessitated setting up of an independent
regulator.
Another striking similarity among all SAFTA
countries (except Bhutan, who is not a member of the
WTO) is the nature of the commitments made in
telecommunication services under the GATS. The
scheduled commitments of these countries in the
telecommunications sector have been rather moderate
when compared to the commitments made by certain
other WTO members and even when compared to the
applicable regime in each country.
The Uruguay Round, for the first time, brought
services into the multilateral trading system. The GATS,
which came into force in January 1995, established
rules and disciplines governing trade in services. The
Agreement aims at progressive liberalisation of trade
in services through successive rounds of negotiations.
One of the few sectors in which progress was possible
under the Uruguay Round was telecommunication. The
slow progress of multilateral liberalisation has
prompted several countries – both developed and
developing, to enter into bilateral/regional agreements
in order to increase the pace of liberalisation. SAFTA
is one such regional block.
Factors such as similar regulatory regimes, trade
complementarities, economies of scale in regional
services integration and network externalities have
encouraged countries to opt for the bilateral/regional
routes (Hockman and Braga 1997, Rajan and Sen
2002). A unique feature of the post-Uruguay Round
agreements or the ‘New Age FTAs’ is that they not only
liberalise trade in goods but also trade in services, investment
and trade facilitation among others. Telecommunications,
inter-alia, has been a popular services sector
on which efforts to liberalise have concentrated. Other
sectors are transport, finance, and IT (Mukherjee and
Ahuja 2006).
The objective of this chapter is to compare the
commitments made by SAFTA countries in the telecom
sector and to juxtapose those commitments against the
applicable regime. It discusses the recent trends and
developments in the telecommunication sectors in the
SAFTA countries and identifies areas of further reform.
The structure of the paper is as follows: The first section
discusses the coverage of telecommunication sector
under the GATS. The second section analyses the
developments in the telecom sector in the seven
countries. The third section evaluates multilateral
liberalisation in the sector. The fourth section discusses
domestic liberalisation and compares it to the WTO
commitments for each country. The last section draws
the main conclusions.
COVERAGE OF THE SECTOR
The telecommunication sector covers a wide range of
services. The Annex on Telecommunications in the
GATS defines ‘telecommunications’ as the transmission
1
The chapter is based on the report authored by Rajat Kathuria.