The incumbent international gateway monopoly business model is past its sell-by date; governments should liberalise this market immediately and all stakeholders will benefit. This forceful assertion is the conclusion of Tom Phillips, Chief Government & Regulatory Affairs Officer to the GSM Association.
More than 70 countries still retain a monopoly of international gateway services when connecting domestic callers to international numbers. A study by the GSM Association (GSMA) calls for an end to these monopolies, citing the long-standing and clear economic and social benefits arising from competition in what is a key sector.What is more, the study, Gateway Liberalisation: Stimulating Economic Growth, in calling for the introduction of competition into the international gateways market, cites two examples - Nigeria and Kenya - where call prices actually fell by around 90% and 70% respectively when liberalisation came into being. Call volumes in Nigeria doubled. The Kenyan example is centred on mobile operator Safaricom, which received an international gateways licence in 2006 and immediately cut international call prices by 70%.
Consumers, the GSMA continues, enjoy more reliable and cheaper services after the introduction of competition, while the overall economy benefits from increased investment, job creation and export-led growth. By contrast, monopolies hold markets back. To formulate their conclusions, the GSMA looked at a sample comprising Kenya, Malta, Morocco, Nigeria, Sri Lanka, Indonesia, Egypt and Bangladesh.
Bangladesh is an example of the wrong approach; an international gateway monopoly is maintained, telecoms investment as a percentage of gross domestic product (GDP) is 70% lower and call prices are 2-3 times higher than the average for developing countries. Consequently, for Bangladesh-based businesses competing in the global market, the cost of communicating is substantially higher, putting them at a competitive disadvantage.
"Since countries first began to introduce competition into the international gateways market more than 20 years ago, the trend has gathered pace and the benefits to consumers, business and governments in an increasingly global economy, are now beyond doubt," asserts Tom Phillips, GSMA Chief Government & Regulatory Affairs Officer. "But this study shows that as many as 70 countries have yet to recognise the importance of competition in this vital gateway to international markets. In a mobile-centric world, and particularly in developing economies, monopolies throttle development and add significant costs." he added.
The study found that the old arguments used to sustain international gateway monopolies are simply no longer valid because, whether competition is outlawed or not, new technologies such as VoIP and VSAT can bypass the monopoly and can account for up to 60% of international call volumes, even though use of such technologies is often illegal. "The incumbent international gateway monopoly business model is past its sell-by date; governments should liberalise this market immediately and all stakeholders will benefit," concluded Mr Phillips.
Despite the trend it reports on, examples still exist of countries recreating monopolies. Four African countries, Benin, Central African Republic, Sierra Leone and Zimbabwe, are currently reinstating international gateway monopolies in a bid to aid the incumbent fixed-line service provider.
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