Privatization, Regulation and Investment: A Case Study of the TRE and Investment in Guyana
|
The main issue of concern for the sector was interconnection. Given the nascent stage of the liberalisation of the mobile sector, it is not surprising that this is the central issue. The average assessments for this dimension are unsatisfactory (for both periods of observation – 1996-2000 and 2001-present). There was a lack of clear and detailed rules regarding regulation and this led to disputes between the incumbent and start-up companies. A further potentially troubling issue was that of spectrum allocation. While there is no real scarcity of spectrum in Guyana, in fact supply is larger than demand for most bands, however, problems may arise concerning spectrum allocation when the sector becomes more competitive.
Abstract
A sound and enabling telecom regulatory environment (TRE) is an important factor in the level of telecom investment for any country. For developing countries, such as Guyana, with generally weak regulatory institutions and underdeveloped telecom markets, the impact of the TRE on investment is often negative. This pilot study applies a methodology to assess Guyana’s TRE and the level of telecom investment in the country. This study considers Guyana’s telecom sector and the regulatory framework, the conditions within which service providers operate, assesses the TRE and its impact on the level of investment, and makes recommendations for future studies. As a complement to the study, a brief overview of the Caribbean environment is included in an appendix, thus affording a regional perspective as it relates to issues such as government telecom and/or ICT investment.
The study focuses on the period following the privatisation of the government owned and controlled Guyana Telecommunications Corporation (GTC) and the establishment of the Guyana Telephone and Telegraph Company (GT&T).
The study concludes by highlighting the fundamental problems plaguing Guyana’s TRE, such as inconsistencies between the PUC and telecommunications Acts and the GT&T license and Purchase Agreement and GT&T’s dominance of the sector, in an age when telecom sectors around the world are moving towards increased competition. To correct these fundamental problems the need for comprehensive reform of the telecom sector, especially the regulatory framework is reiterated, in addition addressing concerns regarding GT&T’s goodwill and the early end of its monopoly.
In terms of TRE impact on investment, the study concludes that while an unsatisfactory TRE certainly adds to the uncertainty of investing, an improved TRE might not necessarily result in a significant increase in investment unless firms have the financial wherewithal to do so.
Additionally, the size of the population – less than a million – and the general macroeconomic and business climate are essential factors in the equation. In other words, an improved TRE is a necessary but not a sufficient condition for a significant increase in telecom investment in Guyana.
