Telecoms at a standstill

Two years ago the telecommunications industry in Malta was at a standstill. The government-approved monopolies took total command of the sector leaving little room for diversification and certainly not encouraging competition among the market players.

The government, however, realised that decisions taken in the early 1990s had resulted in a situation that could no longer be sustained if the country was to move ahead with developments in telecommunications. Admittedly, it was going to prove to be an uphill struggle. The major players in the field enjoyed their monopoly status and felt free to move according to their company's requirements. The government was adamant that the market should be liberalised and set the pace to make the telecoms sector a more competitive market. Two years on, we have a scenario that is slowly becoming more and more complex. The government has tried to move ahead without favouring one player or another, yet at the same time, it has continuously created for itself obstacles and problems that are forcing it to evaluate every decision taken. The new draft telecoms regulations are a case in point. At a first glance, it appears that the government has wisely set down the parameters that will lead to the development of a competitive market and ultimately towards full liberalisation of the sector in 2003.

Unfortunately, the regulations have raised the ire of the local Internet Service Providers who feel that the regulations have only consolidated the position of the market players. They have also pointed out that in its rush to lay down the new regulations, the government simply copied what was being done in other countries but not taking into consideration the fact that our economy differs enormously from that of other nations. They are also saying that the regulations are not in line with EU directives, especially those relating to market dominance.

Twelve months ago, the government was faced with a similar problem and, strangely enough, on the same issue - that of open access. Last October, Melita Cable first announced that it was launching its Internet over cable service, only to say a few days later that it had put its plans on hold "for the time being". Once again, the issue is causing problems for the government and if something is not done soon to find a lasting solution, the telecoms sector is going to remain at a standstill.

A couple of months ago, Parliament approved the setting up of a Telecommunications Authority. Despite the urgent need for such an authority, the government is still looking for the "right" candidates.

One gets the impression that despite all that has been said in favour of telecommunications and its importance to Malta, the government does not believe this area is crucial to the island's economic future.

No more taxes?

Finance Minister John Dalli last week hinted at what was in store for Malta in next November's Budget. Mr Dalli said that the focus will be

on enforcing the collection of income tax and decreasing government expenditure.

Obviously, one would have to wait until the Budget to see whether or not further taxes will be introduced, however his statement clearly shows that the government is aware that the solution to decreasing the country's widening deficit is not increasing taxes.

Fulfilling these objectives is not going to be easy and Mr Dalli all too well knows that the bulk of outstanding tax dues has to come from those who are earning much more than they declare and who somehow manage to avoid paying. In some cases, Draconian measures will have to be taken but this is the only way the government will succeed.

Reducing government expenditure will not be an easy task either. Over the past nine years the government failed to rein it its spending and the result is evident today. To make matters worse, Foreign Direct Investment has been on the decline for the past few years. The government must look at alternative methods of raising money without adding to the country's debt and Mr Dalli should perhaps examine the possibility of joining forces with the private sector to do so. The electorate, in particular the business community, will not take too kindly to more taxes, and at the end of the day such a move will only cause further damage. Solving Malta's economical problems through more taxes is a short-term solution. More enforcement, less expenditure is the only way forward.