Change is inevitable on the Telecoms superhighway

by David Kelleher

As long as Malta continues to have a weak, misdirected and ineffective regulatory set-up, not all in the country is well, Joe Grioli, managing director of Vodafone Ltd said yesterday.

In a direct attack on the telecommunications regulatory structure, Mr Grioli said things could not be fine "if the objectives of liberalisation are bullied by extraneous forces, and have little or nothing to do with safeguarding the enhancement of consumer welfare."

Mr Grioli said he did see how the government owned or government induced monopolies could be regulated, but stressed that all the players in the field had to look ahead.

"We need to evolve. Change is inevitable, especially on the telecommunications superhighway. However, change is good for as long as well can manage it effectively, and not let it manage us," Mr Grioli said.

He questioned whether the country's telecoms liberalisation programme was being managed well enough and whether the regulator possessed the necessary powers to do so.

"What are the objectives of telecoms liberalisation in Malta? Does consumer welfare feature anywhere," he asked.

Emphasising that he was expressing his personal views, Mr Grioli that in the ideal world non-regulated monopolies, including government-owned/government-induced monopolies should not exist and the consumer should be left to reign.

"But how will government- owned or government-induced monopolies be regulated? I have no solution!" he said.

Mr Grioli questioned the role of the government as a regulator. "Yes, I believe in the role of government as the regulator for as long as the government is not a competitor in the field of business," he said.

Turning to the office of the regulator and the regulator himself, Mr Grioli said that he did not have any of his own resources other than the staff at the Wireless and Telegraphy Department, which in turn were also limited in resources.

"He (the regulator) therefore has to rely on the advice of experts that he chooses, and these normally have to come from Maltacom, of course. To my knowledge, the office of the Regulator hardly has any funds allocated to him and most of the time has to depend on what comes for free either from government or from Maltacom. Isn't this a case of Malta trying to run before it even starts to walk?" he asked.

"What is of concern to my company, however, goes beyond the issue of compensation for breach of exclusivity rights granted to Vodafone by the Maltese government just over a decade ago. We are definitely more concerned about mismanaged liberalisation in the telecommunications field in Malta," he added.

Liberalisation does not mean that regulation ends, Mr Grioli said, nor does it imply a free for all.

"The more the liberalised an economy is, the more trade barriers are pulled down, the more the need for regulatory frameworks to protect and enhance those opportunities which are created by the process of liberalisation itself," he said.

"Liberalisation does not mean that every Tom, Dick and Harry are admitted to the network or that worse still, that liberalisation loses its ultimate objective - the maintenance of real effective competition and resultant enhancement of consumer welfare," he continued.

This, he said, explains why in EU member States, liberalisation has not brought about the proliferation of telecoms operators.

The rules of the game are tough and in the final analysis, only a few, serious ones manage to strike the delicate balance between satisfying the criteria and giving the maximum benefit to the consumer.

"A tough job indeed for anyone sitting in the regulator's seat - for the responsibility of ensuring that this delicate balance is struck and therefore that liberalisation serves its purpose falls fairly and squarely on the regulator's shoulders," Mr Grioli said.

"Hence the importance for the independence of the regulator from government or private interests, and the empowerment of the regulator, legally, administratively, financially or otherwise to carry out this watchdog role effectively and in a credible manner and to the satisfaction of all - consumers, operators, potential operators and industry," he added.