Guyana has finally liberalised its telecoms sector… Now what? 5 considerations going forward

On 5 October, Guyana’s telecoms sector was fully liberalised and opened for competition. Although a significant achievement, we outline five considerations for Guyana as moves forward.

 

Earlier this week, on Monday, 5 October, to be exact, the Cooperative Republic of Guyana announced that the commencement orders to fully bring into force the Telecommunications Act 2016 and the Public Utilities Commission Act 2016, had been issued. Effectively, those orders would end the monopoly that still existed in key segments of the country’s telecoms sector, such as fixed telephony and international voice and data transmission, and signal the opportunity for competition in those segments.

As expected, there has been considerable excitement, thanks to Monday’s announcement. More importantly, there are high expectations that the full liberalisation of the sector will usher in “greater choices, better quality of service and lower prices for consumers, while at the same time ensuring that all operators continue to enjoy all benefits conferred under the old legislative regime” (Source:  iNews Guyana). However, and although a major milestone has been achieved, it is only the beginning. Below are some initial thoughts and considerations on Guyana’s now fully liberalised telecoms sector.

 

1.  There is still a long road ahead

It cannot be emphasised enough that the commencement orders are just an indication that Guyana has changed the trajectory of its telecoms sector. The two pieces of legislation for which the commencement orders were issued, have established the overarching policy framework for telecoms and telecoms regulation in the Republic. The work now begins to operationalise that framework, and for all of the key actors, particularly the regulator, to try to navigate the challenges and perils of developing a truly competitive environment.

 

2.  An adequately resourced regulatory machinery is crucial

With the Public Utilities Commission (PUC) Act 2016 and the Telecommunications Act 2016 now coming into effect, the PUC will be fully vested with the responsibility to regulate Guyana’s telecoms sector. However, although the PUC had regulatory and investigative functions, much of the its work – in relation to telecoms – appears to have been along the lines of consumer protection and complaints resolution.

In this new dispensation, and to be able to manage the competition that is expected to emerge in the telecoms market, and mimic competition, through regulation when competition is limited or absent, the PUC needs to be suitably equipped. Admittedly, with the PUC Act being enacted in 2016, the PUC and by extension the Government of Guyana, has had time to build the capacity of that organisation. However, the true test will soon begin, as stakeholder expectations (the telcos, the policymakers, and even consumers) will change to reflect the new environment that is being forged.

 

3.  Telecoms regulation is likely to demand a lot of resources

A key arguments for having a multi-utility regulator is the fact that resources can be shared across all of the utilities that are being regulated, which could result in improved economies of scale and greater efficiency. However, although that does occur to some degree, specialist expertise for each utility is frequently required, as there are areas for which ‘generic expertise’ may not be adequate.

One of the observations that has been made is that telecoms regulation tends to demand considerable more attention and resources than the other utilities. Some of the reasons for this include, that to some degree, the telecom market tends to be more dynamic than other utilities, and there may be multiple players across a broad range of segments, which might not be the case with other utilities. Additionally, telecoms regulation has evolved considerably over the past 25 years – not just with regard to regulatory principles, but also due to the technological advancements that have occurred, and the need for regulation to accommodate those developments.

 

4.  it is important to manage expectations

It is the universal assumption and expectation that if a sector, such as telecoms, is open to competition, that rates will drop, and consumers will have greater choice. Whilst not fully bursting that bubble, it may be prudent to consider the following.

First, liberalisation processes tend to be protracted, as extensive discussions with the incumbent are frequently required. As a result, and in the case of Guyana, the incumbent, GTT, has been able to position itself for imminent competition, by among other things, adjusting its rates and broadening its offerings, in order to get ahead of the curve.

Second, in some of the segments that had already been open to competition, such as the mobile/cellular and Internet markets, there have been considerable price drops over the years. Hence, the changes that might occur with the Telecommunications Act now coming into effect, comparatively, might be negligible.

Third, and noting that all the carriers in Guyana are private, commercial entities, it must be emphasised that a business case has to work. Companies need to make a reasonable return on their investments for their shareholders, whilst trying to balance, among other things, the spending power of consumers, their own operating costs and requirements, the cost and ease of doing business, along with the signals of their competitors in a particular market.

In summary, liberalisation does not automatically signal full competition in a market, and neither does having more than one player in a market automatically result in rock-bottom prices. In practice, the experience tends to be more nuanced, as there are a broad range of countervailing factors a play.

 

5.  The legislation may already need to be updated

Although the Telecommunication Act was passed in 2016, and now comes into effect four years later, it ought to be noted that the Telecommunications Bill was first introduced in the National Assembly in 2011 – at least nine years ago, which does not include the preparation time of the Bill. In summary, the content of the Act, may at least 10 years old!

Cognisant of how technology has evolved over the past decade, and the heightened (and almost exclusive) focus on the internet and ICT, in the intervening period, it could be argued that the Telecommunications Act 2016 could benefit from amendment. Having said this and under the Act, the Minister is empowered to make Regulations, which allows for key aspects of the Act to be fleshed out in more detail, which could to some degree, allow for a refinement of some dated principles, whilst still remaining within the construct of the primary legislation.

At the time of writing no Regulations had been made. Hence, although the Telecommunications Act provides a comprehensive framework, considerable gaps still exist, which Regulations can, and should, urgently address.

 

 

Image credit: Anonymous Account (flickr)