OH, EAST IS EAST, AND WEST IS WEST, AND NEVER THE TWAIN SHALL MEET: EXCEPT IN TELECOMMUNICATIONS ?

1
OH, EAST IS EAST, AND WEST IS WEST, AND NEVER
THE TWAIN SHALL MEET EXCEPT IN
TELECOMMUNICATIONS ?  

• A COMPARISON OF MAIN POLICIES AND REGULATORY
  ISSUES OF LIBERALISATION AND RESTRUCTURING OF THE
  TELECOMMUNICATIONS INDUSTRIES IN AN EU AND AN
  ASIAN COUNTRY.
• Sonya Liew LL.B (Hons), LL.M. (Distinction)
  University of Strathclyde
• Dr. Janina Heisz, LL.M. University of Hanover

2
The Differences of East West

• German Social Statistics and Economy
• Social
• population 82.5 million (75.2 million German
  citizens, 7.3 million residents with foreign
  citizenship)
• Economy
• Export-oriented economy (export value of 661,613
  million Euro), strong international economic
  position (third rank in terms of total economic
  ouput), favorable inflation rate (0,6), stable
  society
• Currently lowest growth rate within EU (0.2 in
  2002, in 2003 decrease of GNP of 0.1)
• Unemployment rate at 11.2 (June 2004)

3

• Malaysian Social Statistics and Economy

• Social Backdrop
• South East Asian country aiming to be a developed
  country
• Multicultural with population made up of Malay,
  Chinese, Indian and indigenous people
• Population of Malaysia is in region of 23.5
  million people
• Economy
• Progression from a provider of raw material to a
  multi sector economy.
• Ringgit pegged at RM 3.80 to USD 1.00
• Unemployment rate is about 3.4

4
German TelecommunicationsGeneral

• 2003 54.35 bn fixed line telephone channels
  (27.8 bn analogue 11.43 million ISDN basic
  accesses 123,300 ISDN primary rate accesses)
  4.5 million DSL accesses via copper line 107,000
  public phones
• 64.8 million mobile telephone users
• UMTS four mobile network operators first
  services since February resp. 2004 (mobile
  phone)
• 50 of the German population use the internet
  (75 of the users access net by narrowband)
  increased use of WLAN (25 companies, 1,200
  publicly accessible hotspots, numerous non-profit
  regional projects)
• VoIP 8 companies offer services, continuing
  regulatory debate
• Regulator (RegTP) took up work in 1998

5
German TelecommunicationsMarket Situation

• Market dominance of Deutsche Telekom (43 direct
  and indirect state ownership) fixed telephony
  channels market share 94.3, broadband market
  share 89
• 2,194 competitors, 525 companies with
  unrestricted network/voice telephony license 343
  companies offering fixed line voice telephony,
  investment of foreign companies on large scale
  strategic partnerships between incumbent and
  competitors (mobile)
• Incumbent strategies optional tariffs (bundled
  tariffs)
• Various business models call by call and/or
  preselection, direct access over own carrier or
  access networks, resale
• Employment competitors rise until 2001 (62,600
  employees), 2003 53,600 employees Deutsche
  Telekom 1998 179,000 employees, 2003 173,300
  employees

6
Malaysian Telecommunications

• 2002 Fixed lines figures 4,669,900
• Mobile telephone lines 9,241,400
• About 7.841 million Internet users
• Major players in the industry
• Telekom Malaysia incumbent
• Maxis
• Digi
• 3G licenses awarded to Maxis and Telekom
• Entire telecommunications industry governed by
  the Malaysian Communications and Multimedia
  Commission.

7
German Telecommunications Agenda

• National and European initiatives to promote
  broadband penetration
• Possibly promotion of mobile broadband
  technologies (50 of the German population must
  be reached by the end of 2005)
• VoIP
• eGovernment plan Bund Online 2005, which
  corresponds with the European eEurope 2005
  initiative

8
Malaysian Telecommunications Agenda

• Bridging the digital divide between the rural and
  urban areas
• National Broadband Plan targeted 50 of
  Malaysian household broadband penetration by 2007
• Schoolnet Project wireless satellite
  technology 7,085 rural schools 8,321 urban
  schools
• Unbundling local loop Malaysia has not yet
  unbundled its local loop

9
German Legal Culture

• Democratic, federal, social state governed by the
  rule of law
• Shaped by constitutional law, influenced by law
  of European Union and international law
• Civil law system
• Member of the European Monetary Union

10
Malaysian Legal Culture

• British influence on the Malaysian legal system
• Judiciary, executive and legislative components
• Judiciary consists of Magistrate Courts,
  Sessions Courts, High Court, Court of Appeal and
  Federal Court
• All laws are either codified into statutes or are
  in case law (usually referred to as Common Law)

11
German Regulatory Framework

• First legal stage of breaking monopoly in 1989
• Telecommunications Act 1996 establishment of
  RegTP, chamber proceedings, sector specific
  ex-ante and ex-post price control, regulatory
  proceedings regarding the abuse of significant
  market power, interconnection proceedings,
  allocation of frequencies, consumer protection,
  specific data protection clauses
• Decisions of RegTP subject to judicial review
  before administrative courts
• Telecommunications Act 2004 abolition of
  licensing regime, reduction of sector-specific
  regulation, changes in access and rate
  regulation, restriction of rate approval
  procedures, consolidation of general control of
  anti-competitive practises, shortening of
  judicial proceedings, upcoming change of
  jurisdiction, modification of surveillance
  obligation

12
Malaysian Regulatory Framework

• The Communications and Multimedia Act 1998 (CMA)
• The Malaysian Communications and Multimedia
  Commission Act 1998 (MCMCA) provides for a body
  to regulate the telecoms industry and convergence
  of communications and multimedia industry in
  Malaysia. This body is known as the Malaysian
  Communication and Multimedia Commission (MCMC)
• Some of the regulatory functions of MCMC are
• Awarding licences
• Assessing and managing telecoms spectrums
• Registering certifying agencies for
  communication equipments
• The MCMC also oversees the different forums which
  encourages self regulation - Consumer, Content,
  Access and Technical Forums

13
German Telecoms problems

• Anti-competitive market behaviour of the
  incumbent
• Legal problems under Telecommunications Act 1996
  
• Cases regarding discriminatory proceeding not
  opened/lengthy investigations before proceedings
  were initiated
• Lack of transparency of the regulators
  proceedings
• Lack of RegTP to remedy violations
• Lengthy judicial revision of regulatory
  decisions
• Delay of court decisions by interim
  proceedings regarding trade secrets of the
  incumbent and RegTPs obligation to submit entire
  files
• General economic slowdown
• Negative climate for investments due to
  comparatively high state involvement in the
  incumbent (43) and slow transposition of the EU
  framework into national law (lack of a clear
  legal framework), specific problems (UMTS
  rollout)

14
Malaysian Telecoms problems

• Untested waters
• Not many cases have been put before the
  courts. Encourage self regulation.
• Teething problems for the 3G rollout
• Market may not be ready for 3G. Current
  handsets are still 2G or 2.5G.
• A maturing and uninterested market
• Penetration rate is at 73 of the population
  between 15 and 64 year olds. Urbanites have
  more spending power although not the majority
  of consumers.
• Reluctance of the incumbent to unbundle the
  local loop
• Protracted legal recourse system

15
Differences of East West

• Similarities
• Policy goals enhancing competition, efficiency
  and protection of consumers
• Similar obstacles of liberalization
• However
• Different socio-economic settings
• Different history of restructuring and
  liberalisation
• Different telecommunications market structures
• Different governing policies
• Different paces in tackling the problems of
  market restructuring

16
Possibilities For A Way Forward

• Conclusions
• Consistent concept of regulation
• Efficient regulatory tools
• Monitoring the progress of liberalization
• Creation of mechanisms to better and more
  swiftly adapt to changes
• Abbreviate regulatory and legal proceedings