8:39 AM Oct 4, 1995
TELECOM CAN'T BE LEFT TO FREE MARKET FORCESGeneva 3 Oct (Chakravarthi Raghavan) -- With its fundamental impact on society and given the immense historical North-South imbalances, Telecommunications cannot be simply treated as one commercial sector of the economy and left to the forces of the free market, but have to be part of a general public debate on development policies, South African President Nelson Mandela told government and industry leaders Tuesday. Mandela who was addressing the opening of Telecom 95 -- the seventh world Telecom exhibition, a major commercial event, held in Geneva periodically under the auspices of the International Telecommunications Union (ITU) -- spoke of the growing technology and information and communication gap, and other North-South inequalities and the need for eliminating them. The Mandela remarks at the opening session, and the blunter words of some developing country ministers and high official representatives at the parallel forum was a response to the efforts of the United States and the major industrialized countries, and the push from the World Bank and the WTO, for liberalization and opening up of markets of developing countries to the giant TNCs of North America and Europe, under the ongoing WTO negotiations in basic telecommunication services, due to be completed by next March. Several Third World ministers made clear that they were not ready yet to throw open their markets for the giant foreign TNCs, and the need not only for joint ventures, but ventures that would ensure benefits for the home country as well as foreign investors. Besides Mandela, participating and speaking at the opening or the various forum events around it were WTO Director-General Renato Ruggiero, the EU Commission President Jacques Santer -- all of whom underlined the importance of liberalisation of telecommunications services for efficiency and development. Ruggiero and Santer also referred to the importance of competition and measures against abuse of market power -- though their views about competition and guarding consumers against abuse of market power appeared to be rooted in the current market theory that oligopolistic competition or competition in markets among a few equally sized firms in the current state of "global capitalism" brings about the efficiency and consumer benefits that myriads of producers and sellers were envisaged under Adam Smith theories. The opening session, as much of the talk about communications these days, saw much hype about the Super highway, internet and web and other marvels. But these also served to underscore the gap between information rich North and information poor South that Mandela spoke. While estimates of those having internet-web access range from a high 30 million to a more recent sobering 3 million, some non-official estimates suggest that perhaps about 100,000 from the South have such access. Besides computers and modem and other hardware, web access for example require use of broad-band channels -- and those seeking such access pay many times more, since they or their country PTTs have to pay for both the up and down-links of satellite channel access. While liberalization, and handing over their domestic sectors to the giant communication TNCs, may bring down the costs of such international communication charges, it will be at the expense of abilities of Third World countries and their PTTs to provide basic access (telephone and telecommunications) to their populations in urban and even more in the rural areas. Mandela began his speech with the value of information and communication, and how its denial as an instrument of repression as in South Africa, evoked inventive and innovative ways of circumventing it. Mandela who spent nearly a generation as prisoner on Robbin Island under the Apartheid regime recalled how he and others there searched refuse bins for discarded sheets of newspapers used by warders to wrap their sandwiches to get information and ingenious ways they smuggled their messages outside. Mandela gave this example to make the point that not even the most repressive regime could stop human beings from finding ways of communicating and obtaining information and this applied in equal measure to the information revolution sweeping the globe nor could it be rolled back. "Nevertheless," the South African President said, "one gulf will not be easily bridged -- the division between the information and information poor... if more than half the world is denied access to means of communications, the people of developing countries will not be fully part of the modern world. In the 21st century, capacity to communication will almost certainly be a key human right. "Eliminating the distinction between information rich and information poor countries is also critical to eliminating economic and other inequalities between North and South, and to improving the quality of life of all humanity... "The present reality is that the technology gap between the developed and developing nations is actually widening. Most of the world has no experience of what readily accessible communications can do for society and economy. Given the fundamental impact of telecommunications on society and the immense historical imbalances, telecommunications issues must become part of the general public debate on development policies. Telecommunications cannot be simply treated as one commercial sector of the economy, to be left to the forces of the free market." South Africa, he said, believed that the concept of 'universal service' in domestic telecommunications should be extended to the international plane. The obligation of governments to bring services to the rural and poorer areas of their countries should, with the globalization of telecommunications, apply to the world at large and the industrialized nations should understand the necessity and democratic right of the poorer countries to gain access to the information superhighway. This needed increased international cooperation which must give high priority must be given to linking neighbours across borders, thus overcoming the legacy of colonial development which left many of them linked to their neighbours via Europe. If developing countries were to make effective use of the chance to join the super-highway, there was need for special effort to build human resources and a massive investment in education, transfer of skills -- all of which also needed increased international cooperation. Many Third World countries faced difficulties in raising capital for their existing telecom operators and there was pressure on their governments to throw open their doors to international competition. But this, Mandela said, needed great care lest their local services find themselves unable to compete with powerful international operators. The most creative solution would be establishment of partnerships of operators in developing countries with international companies and consortia -- mutually benefiting the Northern investors and their Southern partners. Another major problem for governments of the South was how to create incentives for telecom operators to supply unprofitable services -- for e.g. services to rural areas or the urban poor. Some international developments, more particularly the moves towards liberalization, were reducing cost of international calls, and forcing national operators to reduce tariffs to compete, but thus diverting funds from their less economic areas. The effects on national services of international accounting rates should therefore be taken into account in negotiating these rates and the way the revenues are shared, Mandela stressed noting that traditionally this had been done in such a way as to bring a substantial transfer of funds to developing countries. The EU Commission President, Jacques Santer, made a plea to the telecom industry chiefs gathered at the exhibit to "take a broader view" of their business responsibilities, and not merely look at the bottom line (of profits). Helping improve worldwide communication and transferring communication and information technology to developing countries, Santer argued, would help spread democracy and freedom, he argued. WTO chief Ruggiero urged the industry representatives to press their governments to try hard and conclude the multilateral negotiations on basic telecommunications under the WTO by the April 1996 deadline, and bring about liberalization through a multilateral accord that would preserve the principle of most-favoured-nation non-discriminatory approach. The negotiations, he said, were not only about securing market opening commitments from as many countries as possible, but also about the telecom regulatory environment. These last, he said, included safeguards on interconnection rights and ways to prevent the abuse of market power -- commitments which would be indispensable to realise full benefits of liberalization. Santer for his part referred to the proliferation of new merger projects, alliances and joint ventures in Europe in this area, and said the EC Commission was looking carefully at its competition decisions to ensure that they did not handicap European companies competing in the global market. But as far as the Global Information market was concerned, he saw little evidence of any "global attempt to coordinate competition policy". Nevertheless this issue had to be addressed through basic rules, since "otherwise, the over-powerful today could become the super global monopolies of tomorrow". But the views of Santer and Ruggiero seemed to focus on competition policies to enable the foreign suppliers to compete in various markets with domestic enterprises. They did not seem to address or even be aware of the problems faced by developing countries, namely, the restrictive business practices of powerful oligopolistic competitors in the global market and, so far, the refusal of the major trading powers to assume some obligation and responsibility that their TNCs, on whose behalf they negotiate in WTO to get market access, do not abuse their market power. Discussions on this at the annual meetings in UNCTAD over the UNCTAD negotiated Restrictive Business Practices code have shown opposition of the industrial countries to put any teeth into the code which would oblige them to police the RBPs of their enterprises in other export markets, but operating from their own home bases.