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Tue 14 Nov 2000 04:00 AM

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Telco deregulation spats are holding up progress

Andersen Consulting suggests that telco "deregulation" arguments miss the mark. What the region needs is constructive debate on "new regulation" frameworks.

The current black and white arguments over introducing competition in Middle East telco markets are holding up the process, argues Andersen Consulting.

Terms like “deregulation,” which suggest doing away with all regulations, are unhelpful, suggests Philippe Rixhon, head of the Communications and High-Tech Unit of Andersen Consulting Middle East. A move towards a competitive market will only be achieved in conjunction with the creation of powerful and well-run regulators, he says.

“Rather than deregulation, I prefer to look at ‘new regulation,’” Rixhon told ITP.net yesterday. “You need rules because you are moving into very sensitive areas.”

Rixhon’s comments came at the launch of a new report from Andersen Consulting:
Middle East and Northern Africa Telecommunications 2005 — Ready for the Gold Rush

, which is based on interviews with 46 senior executives, representing 29 telecommunications companies from ten countries in the Middle East and North Africa.

The report aims to get inside the minds of these senior executives to see how they expect their markets to evolve over the next five years. The “Gold Rush,” referred to in the report’s title, represents a scenario defined by Andersen Consulting that most local executives expect to evolve in the region.

In the Gold Rush scenario: “The most optimistic liberalisation forecasts have come true,” says Andersen Consulting.

If telco executives from Saudi Arabia, Kuwait, UAE, and Jordan all believe that “the most optimistic liberalisation forecasts will come true,” it begs the question, how are we going to get there over the next five years?

For Rixhon, the key is open and constructive debate, rather than the current “monopoly = evil; deregulation = good” argument.

When the current telcos argue that they are contributing to government budgets and developing the national workforce, they are right, says Rixhon.

But both the financial contribution and the commitment to employing locals can be maintained, he says. “It is just about defining new rules and having a regulator in place to enforce those rules.”

Opinions on the need for independent regulators in the region are split. Andersen Consulting’s report quotes one local government executive saying: “We need a strong regulator with enough knowledge to assure a high level and fair marketplace.” This is contrasted by a manager another telco who says: “Please allow the incumbent to sort out necessary adjustments itself, particularly cutting costs and human resources.”

Andersen Consulting then asked the hypothetical question of what a regulator’s role should be if it existed in 2005. The panel was split. 54% suggested that the regular should intervene and cooperate with incumbent telcos to achieve overall social policy goals. 46% said the regulator should pursue strict deregulation, aiming at free competition.

Andersen Consulting’s aim is to help telcos through the process of creating new regulations and regulators for their markets. The company is already working with unnamed local operators on this process, and hopes that its report will open debate among several other organisations.

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