Report

170 QUANTIFICATION OF BENEFITS FROM ECONOMIC COOPERATION IN SOUTH ASIA
For cellular mobile it committed to four suppliers in
addition to the government owned operator. The
commitment also included the possibility of review of
regulatory principles in the future. International Long
Distance, however, remained a government monopoly
and no bypass of the network facilities owned by the
government has been permitted.
Bangladesh also submitted an MFN exemption list
to permit the government or the government-run
operator to apply differential measures, such as
accounting rates, in bilateral agreements with other
operators or countries. Bangladesh has not submitted
an offer to the WTO or at least it is not available in the
public domain.
The fact that the applicable regime is not bound
for Bangladesh, (and for that matter for all SAFTA
countries) cannot be for reasons to protect the incumbent
supplier and gradually introduce it to competition.
8 The reality on the ground is that competition
already exists, and while the commitment does not
permit bypass of government owned operator facilities,
the applicable regime in Bangladesh is vastly different.
An interconnection regime is in place and private long
distance operators can carry traffic both within and
outside the country. The reason must be therefore be
found elsewhere. Binding the applicable regime under
GATS rules out the possibility or at least makes it
difficult to backtrack on liberalisation. However, entry
restrictions in telecom are becoming increasingly
difficult to justify given technological progress and the
acknowledged benefits of competition. Therefore, the
option value of ‘backtracking’ is also unlikely to provide
the answer. The only real possibility is that Bangladesh
like other SAFTA countries will look to trade off
increased market access in telecom under GATS to
secure benefits in sectors of their comparative
advantage, such as Mode 4.
India
Prior to the liberalisation of the 1990s, the telecommunication
sector in India was under a public monopoly,
which was then considered essential due to the
public good nature of the services. In the 1990s, Indian
government gave up its monopoly and gradually
introduced competition to enhance investment, improve
productivity and the growth rate. The entry of private
and foreign players led to significant expansion in
telecommunication network, introduction of new
technologies and striking improvement in productivity.
As a consequence, India, today, has one of the largest
telecommunication networks in the world. Given the
rapid growth of the sector and huge investment potential,
the country is an attractive destination for foreign
direct investment. On its part, India needs to enhance
the growth of telecommunication sector to sustain its
global competitiveness in knowledge-based services.
Before the mid-1990s, government was the sole
provider of telecommunication services in India and
all telecommunication services were provided by the
incumbent monopoly – department of telecommunication
(DoT). The first step towards deregulation was
the announcement of the national telecommunication
policy (NTP 1994). Although NTP 94 was a major step
towards liberalisation, there were some problems in its
implementation, among them being the non existence
of an independent regulator (Kathuria 2007).
The inadequacies of NTP 94 led to the formulation
of a new, more elaborate policy – NTP 99, which tried
to infuse more competition in the sector and also
recognised the role of investment in the economy and
convergence of IT, media, telecommunication and
consumer electronics. It envisaged provision of telecom
services to all Indian villages at affordable prices and
the provision of high-level services. It led to a shift to a
system of one-time entry fee combined with revenue
sharing payments from the license fee bid system, while
duopoly rights were discontinued in order to allow for
unlimited competition. The private sector was allowed
to provide domestic long-distance services and, from
April 2002, international long distance voice services,
with no restriction on the number of participants.
In the past 15 years, telecommunication sector of
India witness major changes due to liberalisation and
technological changes. Today, there are no restrictions
on the entry of new players in basic, national long
distance (NLD), international long distance (ILD), internet
service provider (ISP) and infrastructure businesses.
Four operators are allowed in cellular mobile in each
service area. This has led to intense competition and a
downward trend in tariffs. Some of the strategies being
employed by service providers to compete in the market
are bundling, segmentation across subscriber types, customisation,
etc. Due to intense competition, many private
players found it difficult to remain financially viable.
This led to mergers and acquisitions and emergence of
few big players. India, now, has one of the largest telecommunication
networks in the world and its regulatory
regime is at par with international developments.
8
The classic infant industry type of protection.