Liberalisation - A holistic approach use required

A holistic approach must be taken to address the issue of liberalisation in Malta. Numerous factors must be taken into consideration and the country must decide which way it wants to go and what targets have to be reached.

Many are in favour of liberalisation and past experience in other countries shows that, despite the hiccups, liberalisation is the only way forward.

The Minister for Telecommunications, Censu Galea, stressed the need for a holistic approach to liberalisation, and admitted the low level of activity in the Internet sector was simply due to the fact that local companies were not operating in a fully liberalised market.

He emphasised on the need for a regulatory framework to ensure that the government's aims are reached in a legal environment - and all this to occur through healthy discussions between the State and the private sector.

"This is not a tall order, as it may seem... with goodwill from all and an open mind we will be able to reach these goals in the not too distant future," Mr Galea said.

However, too much time has already been lost, analysts say, and certain decisions taken in a rushed manner have only increased the anomalies and uncertainties in the sector.

Quoting approximate figures for the local Internet accessibility, Mr Galea said that Malta was very low down the list at four per cent, or 15,000 account holders. Compared to the rest of Europe at 30 per cent, Malta is undoubtedly lagging behind

Mr Galea said that even though prices may have come down lately, they are still considered expensive and not within reach of everybody's pocket.

It is an internationally accepted fact that liberalisation generates competition since it brings in new players, new initiatives and newer technologies. Liberalisation causes the lowering of prices and very often gives more value for money.

He pointed out that countries the size of Malta may face a situation where they cannot reap the total benefits of liberalisation. This occurs because market penetration may be so limited that it does not justify a hefty investment.

Having an unlimited number of players in one particular field is not only unlikely but also economically impossible. He warned that the authorities have to keep watch against the risk that, if the number of key players providing communications services is very small, these enterprises do not form some sort of cartel to limit the benefits of competition.

"The passage from the present monopolistic situation to the liberalised State has to be managed well," Minister Galea said. "Otherwise we could end up in a more confused situation rather than in a really competitive atmosphere." The role of the government in the telecommunications market has been questioned by many. Mr Galea said governments are little by little shedding their role of market operators and passing this role to the private sector.

He made it clear this does not mean that the governments are shedding their responsibilities. Governments are taking the role of regulators to protect the citizens from any unfair competition or excessive dominant positions by few operators.

In this scenario, it is extremely important that the private sector is pro-active rather than wait for the government to take the first step.