About regulations

I enjoy reading the papers on Sunday and I hope you do too. I don’t refer to any paper in particular but to being informed about what is going on, what people’s opinions are and what different insights exist in society. And today we enjoy the luxury to read several papers, contrary to a number of years ago, indicating a lowering of the regulatory threshold as far as the media are concerned. The opening up of this market segment clearly shows what competition does as the papers strive to improve their quality and create their own niche or market segment. There are papers in Amharic and in English, papers focusing on the private sector and others more on politics. In addition, companies become strategic in their advertising as they try to reach their potential clients through their media of choice.
Last week, one topic in particular caught my attention as it appeared in several papers. It was about ETC achieving a milestone in connecting to the world by means of underground glass fibre cables, with the promise of much faster and better telecommunication connections as compared to the current satellite technology. Many of us are looking forward to being able to take advantage of such modern technologies as we are still dialling up to search for information on the internet with a speed of anything between zero and 54 kilobytes per second. I remember the announcement of broadband sometime ago with similar promises but at home it didn’t make a difference yet as my telephone line continues to dangle in the wind and between the trees. A friend of mine told me that his telephone line was cut last week by construction workers next door as it was in their way. And returning to the papers of last week again, I read a few letters to the editor by disgusted customers bitterly complaining about the quality and inconsistency of their telephone and internet connections.
And so we see an interesting contrast between what ETC management considers to be big progress in their products and services and what ETC customers experience as the total lack of the same.
This failure to satisfy customers is directly a result of the fact that ETC is the sole service provider in the sector. Deregulating the sector would immediately open the market for other firms and force competitors to offer better service and quality at competitive prices. This can be observed all around the globe and closer to home in neighbouring countries. The reasons to maintain a sector like telecommunications in a monopoly could be motivated by a fear that business will be lost the moment others enter the market. This may however not necessarily be the case. As most countries and industries around the world move towards deregulation and open up their markets to even foreign competitors, there must be some positive logic behind this all. Countries allow for more international entries into previously prohibited markets and thus stimulate global growth.
Similarly, such deregulation has had major repercussions in the international airlines industry. New agreements are signed between nations, giving more access to international airlines, causing some airlines to seek links with former competitors. Allowing other carriers to land in Addis Abeba will probably bring more business to Ethiopian Airlines instead of less as they are now also able to open a new sector and compete using strategies like more luggage allowance, convenient times of arrival etc. Joining an alliance of airlines may bring even more business again, sharing code systems, frequent flyer programs, ground services and common lounge facilities for example.
Back to the telecommunication industry again, it is worth mentioning that with deregulation sweeping around the world and resulting in most countries selling off their stakes in state monopolies, telecommunication companies suddenly have access to many more markets than before. Telecommunication markets are rapidly expanding in many countries. Such market openings even create many new opportunities for formerly government owned monopolies as they enter stock markets and are encouraged to pursue opportunities abroad.
Where de-regulation does not take place, the market remains closed to competitors, the service providers keep being focused on the local market only and they are in a position to keep charging high prices for relatively poor services. And the customer continues to pay too high a price for services that are not worth that much as there is no choice. This may look like a win-loose situation, whereby the company enjoying the monopoly keeps making a profit and the customer who doesn’t have a choice pays too much. In the end however it will be loose-loose situation as it will be almost impossible to catch up with companies that have been positioning themselves in the global markets for a long time and have developed much advanced technologies in order to remain ahead of the competition.
In East Africa, that includes Kenya, Uganda and Tanzania, one can now buy SIM cards that work in all three countries. No need to have several cards or subscriptions. Globalization is happening all around us and one day we will have no option but to join as we will not be able to beat them.