I was of the view that all the innovations in regulation were occurring in the developing world (or by scholars working on developing country regulation). I was wrong. It appears that very interesting work is going on at Harvard, possibly in response to the US crisis in regulation: “Weak capture” (defined as special-interest influence compromising “the capacity of regulation to enhance the public interest, but the public interest is still being served by regulation”) may be nearly ubiquitous. But where some net social benefit remains, so does the case for regulation—perhaps modified, but not abandoned. Resorting to analogy again, Carpenter and Moss suggest consulting the history of medicine: Just as physicians once believed that the only effective way to treat infection was to cut it out surgically, it is commonplace today to believe that capture can only be treated by “amputating” the offending regulation.
Regulators make decisions. Their decisions can be challenged, and often are. Thus it is important that the decisions are supported by strong evidence. In many cases, the evidence requires information. Mostly the information lies with the operators.
The telecom law has been passed, but it is incomplete and will probably require an amendment or a supplementary law within two years. The rules under the Law have been published for comment, but no information yet on their final form. The critical licences to Telenor and Ooredoo have not yet been issued. The regulatory agency is to be set up in 2015. A lot remains to be done.
The much anticipated Myanmar Telecommunications Law (Law 13 of 2013) was approved by both houses of the Myanmar Legislature and was given Presidential assent. Our analysis of the law is not yet complete, but here are some first thoughts: There is considerable and unnecessary overlap of powers and functions between the Ministry and Department. Positioning the Ministry as the authority to appeal departmental decisions may make it the de facto regulator. This goes beyond the usual concern about the Ministry also having responsibility for the incumbent operator MPT. The explicit authority given to the Ministry to clarify technical terms in the law appears to position it as a supra regulator even after the promised creation of the independent regulatory authority.
Two journalists attended our five-day course on regulation in Taungoo, Myanmar last week. Both interviewed me on the sidelines. Below is the first, from Internet Journal. I can’t read it (cute pictures though); hope you can. Interview in Bamar
The headline suggests the focus is on the capture of regulatory agencies by retired IAS officers. But it is more, a wide-ranging discourse on problems of regulatory governance. It is a pity that the arguments are harmed by sloppy blame attribution: how can TRAI be blamed for spectrum auctions, when the article itself recognizes that is in the province of the Department of Telecommunications? So how do we reverse this capture of important decision-making bodies by the bureaucracy? In 2006, the Planning Commission published a report (Approach to Regulations: Issues and Options) with some suggestions.
LIRNEasia is not known as an energy shop, but we’ve been getting into electricity issues gradually. In a week or so, LIRNEasia will be making a presentation to the Public Utility Commission of Sri Lanka on the best ways to introduce demand-side management. This NYT article shows how difficult deviating from the conventional path is and how much care has to be taken in effecting reforms in this critical area. German families are being hit by rapidly increasing electricity rates, to the point where growing numbers of them can no longer afford to pay the bill. Businesses are more and more worried that their energy costs will put them at a disadvantage to competitors in nations with lower energy costs, and some energy-intensive industries have begun to shun the country because they fear steeper costs ahead.
How can a person be responsible for, and have his punishment decided by, what others do? But this seems to be the thinking of the Chinese Communist Party. “They want to sever those relationships and make the relationship on Weibo atomized, just like relations in Chinese society, where everyone is just a solitary atom,” Mr. Hao said. In May, his microblog accounts on Sina and other Chinese services were deleted without any explanation.
Duenden Nikomborirak is a highly respected researcher. We have worked closely with her over the years. I was shocked to hear that the Thai regulatory agency had sued her (and the journalist who interviewed her) for libel. The robust debate and discussion essential for effective regulation cannot occur if researchers are sued for expressing their scholarly opinions. I am happy that the NBTC is withdrawing the case, but this is an action that should not have been taken in the first place.
It was not long ago, that we thought the Myanmar would remain asleep whilst the rest of the world (save maybe North Korea) reaped the rewards of a vibrant telecommunications sector. Even a few short years ago, the only phone connectivity was through kiosks such the one depicted in the photo, a mobile SIM could cost upwards of a few thousand dollars. But things are changing. Myanmar is opening up. Two mobile operators have been licensed.
It was tough to engage when reforms were not on the cards and Myanmar seemed happy to watch while the whole world got connected. Those days we wrote about China selling mobile service inside Myanmar and about cables that were cut. We also wrote about Cyclone Nargis and our small contributions to relief. But all that changed once the reform winds started blowing. I’ve been asked why so many blog posts on Myanmar.
The last few days, I’ve been preoccupied with the basics of regulation and sector reforms. This was because I was preparing for a regulation course we’re teaching in Naypitaw, Myanmar, for government officials who will form the core staff of the to-be-created ICT infrastructure regulatory agency. The teaching I do these days mostly assumes the basics, but that cannot be done in Myanmar, a country that is a green field in terms of regulation and reforms. In advocating for good regulation, one always searches for the stakeholders who will support your cause. Many moons ago, I used to believe that the licensees who were subject to the authority of the regulatory agency or the government would be the natural supporters of regulatory reform.
A dark cloud has appeared on the horizon of the Myanmar telecom sector in the form of a license granted to a military affiliated company. There is precedent in countries such as Iran. As long as the regulator can regulate, ownership need not be an issue. Usually the problem is the difficulty a regulator has in effectively exerting authority over the incumbent. The Myanmar incumbent is in such bad shape and the network in so undeveloped that this may not be such a huge concern.
The Lankadeepa of 22 July 2013 carried report about the Leader of the Opposition arguing that electricity tariffs be adjusted to account for the larger contribution from low-cost hydroelectric generators to the overall supply mix of the Ceylon Electricity Board. This reflects a recommendation made by LIRNEasia in its submission made at the Public Hearing on the electricity tariff: The cost models that underlie the tariff proposal are based on assumptions of levels of use that may change because of the radical redesign of the tariff structure. If demand is lower than projected, especially at the peak, it is possible that the proposed tariff will yield excessive earnings. Therefore, the approved tariff should include provisions for monitoring revenue levels and for periodic adjustments and/or the return of excess earnings to consumers. These kinds of adjustment mechanisms are not difficult to embed within tariff decisions.
Last week, Informa conducted its first Asian Telecom Regulatory Affairs conference in Singapore. As part of the event, I was asked to offer a half-day workshop on broadband. Since the issues are dramatically different in emerging and developed markets, my content focused on the former, drawing from LIRNEasia research over the years. The audience was small, but high quality. There are a couple of things I will change in the slideset as a result of the conversations in Singapore.
Now that the two mobile licenses have been issued, all eyes are on the new Telecom Law, expected to be enacted any time. The version I looked at, supposedly worked with assistance from the ITU Bangkok Office, was so bad that it was withdrawn. It appears the subsequent version is not too good: The Sections 15 and 16 of the proposed bill says the license holders must abide by the rules, regulations, orders and directives issued by the Ministry of Information and its related departments. And the Section 32 stipulates that license holders must provide services in conformity with the price rates approved by the department. According to Section 38 said the license holders are not allowed to share market, buy telecommunication appliances from unapproved suppliers or go against a certain opponent in an improper way.