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178 QUANTIFICATION OF BENEFITS FROM ECONOMIC COOPERATION IN SOUTH ASIA<br />
it is unlikely that SAFTA countries will seek multilateral<br />
concessions in the telecom sector in response to improving<br />
the quality of their commitments in telecom. India’s<br />
interests lie in ITes and movement of natural persons,<br />
Pakistan’s and Sri Lanka’s in textiles and apparels etc.<br />
SAFTA members may, therefore seek offsetting concessions<br />
in other sectors in multilateral negotiations in<br />
response to say, binding their regime at the current levels<br />
when negotiations get underway again.<br />
One possible explanation for the meager level of<br />
commitments made by SAFTA countries in telecom<br />
under the multilateral framework is provided by Fink<br />
et al. They note that the failure to complete the<br />
negotiations before the end of the Uruguay Round<br />
effectively turned basic telecommunications into a<br />
single-sector negotiation. As a result countries with no<br />
export interests in telecommunications (for example,<br />
SAFTA countries, among others) committed to the<br />
policy status quo rather than to new liberalisation. In<br />
fact, certain countries bound to less than the status quo,<br />
with respect to certain aspect of their regimes. India<br />
did this with foreign equity participation.<br />
While the GATS commitments have been frozen at<br />
the status quo, unilateral liberalisation has progressed<br />
in each of these countries at varying pace to engineer a<br />
radical transformation of the sector in the respective<br />
countries. Table 15.9 provides summary indicators for<br />
the telecom sector. However, apart from Maldives, no<br />
other country is close to achieving telecoms penetration<br />
observed in the advanced countries. For example,<br />
mobile teledensity has breached 100% in most of<br />
Western Europe, and these countries are now focusing<br />
on delivering high speed digital data services through<br />
next generation networks (NGN).<br />
Thus, while telecom sector has progressed in each<br />
of the countries, there is still a lot of development that<br />
Table 15.9 Summary Indicators in SAFTA<br />
S. Country Popula- Tele- Mobile Tele<br />
No. tion (in Density (Lines Rev/<br />
million) Fixed per GDP<br />
(Lines 100)<br />
per 100)<br />
1. India 1110 5 20 2.1<br />
2. Bangladesh 144 1 22 1.6<br />
3. Sri Lanka 20 10.4 30 2.0<br />
4. Pakistan 159 2.97 44 2.4<br />
5. Nepal 128 2.73 5.61 1.6<br />
6. Bhutan 2.33 .013 3.53 NA<br />
7. Maldives 0.33* 11.13 96 NA<br />
Source: WDR: 2008, Agriculture for Development, World Bank,<br />
WTDR, 2006 and individual regulator web sites<br />
needs to occur. Although overall telednsity has increased<br />
considerably after the introduction of competition,<br />
mounting evidence exists in countries such as India and<br />
Pakistan that penetration has been overwhelming<br />
biased in favour of urban areas. And it will still be sometime<br />
before the stalled WTO talks get underway again.<br />
Liberalisation at the multilateral level presents uncertainly,<br />
making it attractive for countries to pursue<br />
liberalisation at the plurilateral or regional level.<br />
Telecommunication is an important sector in all the<br />
US FTAs. It is an important sector covered under the<br />
Indo-Singapore Comprehensive Economic Cooperation<br />
Agreement (CECA) – the first (and so far only) bilateral<br />
agreement signed by India encompassing the service<br />
sector. Trade in services within SAFTA will be highly<br />
dependent on the growth of telecommunication<br />
network, connectivity and charges. Opportunities,<br />
therefore, exist for SAFTA countries to cooperate in<br />
this sector at the regional level. This is discussed in the<br />
next section.<br />
OPPORTUNITIES AND NEED FOR FURTHER<br />
LIBERALISATION IN THE SECTOR<br />
A truly extraordinary feature of telecommunications<br />
performance in SAFTA countries over the recent years<br />
has been the widespread diffusion of mobile telephony.<br />
In each of the countries, including the Maldives, there<br />
is currently more than one mobile operator and unlike<br />
fixed-line services, the mobile telephony segment was<br />
subject to competition from the beginning. Table 15.9<br />
above shows that mobile teledensity exceeds fixed<br />
teledensity for the entire sample and in certain cases by<br />
a sizeable amount.<br />
The exponential growth of mobile telephony can<br />
be attributed to the introduction of digital cellular technology<br />
and the opening of mobile service provision to<br />
additional operators, i.e. to a liberal policy environment.<br />
Interestingly, unlike Europe and the Americas,<br />
where mobile services are likely to be a complementary<br />
service, as most business and households already have<br />
access to the fixed network, in SAFTA mobile can be a<br />
substitute to fixed-line services, particularly in countries<br />
with long waiting lists for fixed line. In Nepal and to<br />
an extent in India and Sri Lanka, one of the factors<br />
driving cellular growth is the popularity of pre-paid<br />
plans. At the end of March 2007, 70% of Nepalese<br />
mobile subscribers were using these plans. Additions<br />
to the mobile subscriber base in other countries are<br />
also overwhelmingly on the pre paid platform.<br />
The policy environment for mobile has been more