18 November 2012

Ethiopia: Piling Telecom Problems Call for an Ultimate Solution - Liberalisation!


Today's Ethiopia has gone a long way in creating access for basic telecom services to its over 85 million population as compared to what has been there before two decades.

Access to mobile telecommunications, once considered luxury, has increased so fast in the country that the whole world is getting astonished about it. All eyes are staring at what the expanding telecom services could add on to the economic growth scene of the nation.

Apparently, the local reality is part of a bigger continental picture. Africa has become the most interconnected region in the world with over 600 million of its people having mobile phones. The continent has directly transformed from the 'paper age' to the mobile age without going through the conventional phase of employing telex, fax and landlines, as far as the global telecom discourse goes.

All the more, both private enterprises and states are employing mobile and internet technologies to enhance access to and quality for public services. Innovation that makes use of these technologies is also booming in wide variety of sectors, from education to health care provision. Hence, life is getting better, though slowly, in the continent that once was hailed as the 'hopeless continent'.

Surely, there are still countries in the continent in which technological hope remains marginal andEthiopiais one. Dominant policy passivity over optimising the benefits of technology in economic development reduces the national hope so much so that the country toddles far behind the world.

Apparently, it has all been too political. Technicalities receive little, if any, attention in the debate.

For the ruling EPRD Fites, the focus had been on expanding access to services. Their argument, largely driven from the theory of universalisation, provides a large chunk of the responsibility to the state. Leaving the sector for private operators would deprive it of equitability, they argue.

At the base of their argument lies their perspective about technology. So much as technology is inherently denominational, the argument goes, its absorption flows with profit.

Left to the very acts of the invisible hand, as profit motive is dubbed in economic policy making, it would live to serve urbanites only. This would leave rural residents, whom the Revolutionary Democrats count on, out of the spectrum.

What seems to be missing in their argument is whether letting the sector live under the calling of the state could make it as universal as it is intended it to be. If at all, the experience of the last two decades show that such a case is not necessarily true.

Left to exist under monopoly, the sector could not grow as fast as the demand, let alone help lead the nation's economy in the direction of better competitiveness. To the dismay of the very proponents of universalisation, the whole service provision remains lopsided towards residents of urban centres. Service quality in rural areas remains dismal. It is all going against the conventional premises.

In contrast, most of the political oppositions advocate for a more open telecommunications sector. But, paradoxically, they relate poor service provision with the poor management of the sector. They settle for a lesser reason.

With increased access, which has little to do with policy rather than natural factors, the politics behind the debate has infiltrated to the fingertips of subscribers. It has become unavoidable as the existing service is marred with frequent interruption, unpredictable network coverage, costly dialling trials and unresponsive institutional setup.

Unconvincing responses from the high echelons of power, including a latest comment by Prime Minister Hailemariam Desalegn that related poor service provision with construction of high rising buildings, worsen the pain of subscribers even more.

Apparently, only few of the faces of such a service could be attributed to factors other than the ultimate monopolistic leverage provided to ethio telecom. At the base of it, of course, lies the long overdue universalistion argument of the EPRDFites.

If reality dictates, it seems that the sectoral challenges have reached to their boiling point to demand for a transformational decision. And there is little for the EPRDFites to be complacent about making such a decision.

Access to mobile phones in the country stands at 21pc, a dismal standing compared to the little over 50pc average for sub-Saharan Africa. The figure for access to mobile internet is even more bleakly with total users standing at 2.44 million. Accounting for the 221,000 internet users and the 805,000 fixed line subscribers would make the equation no better. It is only up to this point that their universalisation agenda could push the sector.

The regulation of the sector is no better. The institutions with the mandate to oversee the sector, including the rather dormant Ethiopian Telecommunications Agency (ETA) and the flabby Ministry of Communications & Information Technology (MoCIT), are equally complacent about their duties. They do little than procedural works.

Bearing the burden of such a rampant complacency is the end customer that has no say on the workings of the system. Equally affected by the systemic inefficacy is the sprinting economy of the nation.

Whereas most countries are optimising the powers of Information & Communications Technology (ICT) to enhance the competitiveness of their economies in the global market place, Ethiopia is doing little about it. Its economy is rather suffering from a not-helpful policy rigidity, inefficiency pandemic, institutional complacency and regulatory inability. Lacking in all of these facets of the sector is competition.

At stake is, then, the future of the nation and its people. And the only way out to make the future prospective is to liberalise the sector.

Liberalising the sector would bring the essential ingredients of competition within the system. It would infuse an inherent systemic incentive that could promote innovation and flexibility.

Such a system would also bring change to the workings of the regulators as it would dismantle the structural causes of passivity and complacency. By diversifying interests, it would incubate responsibility and transparency. A similar incentive for regulatory innovation would also be realised with liberalisation.

These changes would benefit the consumer a lot. Competition would certainly reduce cost and enhance service quality by initiating innovation.

It would also drain inefficiency, promote introduction of new services, accelerate outreach, and expand market size. Sitting at the heart of all these changes would be the very forces of economies of scale.

All indications are that it is time to change the track of the sector for better. And the right track, if seen through the prism of reality, is liberalisation.

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