The Feb/March edition of the journal Telecommunications Policy contains an article titled “Does smallness affect the success of liberalization? The case of Cyprus“. The article is very insightful in outlining why we have to pay attention to regulation. The liberalization process is complex and attempting to merely duplicate solutions from other countries without careful consideration of local conditions, will not result in desired outcomes:
The examination of liberalization in Cyprus shows that despite the NRA enforcing all regulatory measures recommended by the EU model, a very strong incumbent provider dominates in all markets. The progress of competition has been sluggish and new entrants, struggling for survival, have acquired small market shares.
The following table, from the same paper illustrates just what is meant by trying to avoid ‘one-size-fits-all’ types of policies. It’s packed with information, so you should try to take a moment to understand it. Key facts contained are the year in which liberalization started in a particular country, penetration rates for Internet under monopoly and then under competition, the number of operators in a country, and the incumbent operators share of the market 4 years after the start of the liberalization process.
(If above information is difficult to read, please click to open larger image)
The author is drawing comparison between large economies and small ones. The data reveals that small countries, under competition, did not manage to achieve high levels of internet penetration and incumbent operators managed to hold onto a large portion of the market share.
Just some things to think about as we get underway with our own efforts at liberalizing the telecommunications sector.