“Privatizing cell phone service is equal to issuing license to print money”

Hiwot Robert, London/UK/ 

“Privatizing cell phone service is equal to issuing license to print money” 
Meles Zenawi, Addis Zemen Amharic daily Government Newspaper- 66th year number 150, Wednesday, February 7, 2007 /Wednesday  Tir 30, 1999 Ethiopian Calandar/ 

In this age of technological revolution and rapidly evolving world, to hear from a leader of 77 million people such a comment is not just surprising, it rather is sickening. What is more surprising, or bluntly spoken very sickening, is the fact entrepreneurs or the Ethiopian Chamber of Commerce didn’t react so far to this comment made boldly and shamelessly. Most importantly, it’s not clear to me that the telecom belongs to the government. The government should regulate it rather than owning it. Perhaps it is possible to monopolize everything, including the coffee shops and the night clubs; but the long term expense is much, much higher than the immediate gain. We have seen this during the Derg regime. Telecom simply is infrastructure just like road. It plays a key and decisive role to the other economic sectors. Telecom should not at all be regarded as a source of revenue. The government can obtain more revenue by privatizing it. The Ethiopian Telecom Corporation’s annual profit after tax on the average is 450-500 Million Ethiopian Birr. The government can easily obtain three or four times higher than this amount from license fee, profit tax and other charges if telecom is privatized.  

The absurd TPLF regime, so called EPRDF, that I imagine here is only slightly more absurd than the Derg regime, which had exercised even greater control over the telecom. The Derg regime came up with a quasi socialistic and quasi “religious” justification for its absurd policy on telecom i.e. “economic humanitarianism”. The TPLF regime is demonstrating greater absurdity when its leader openly and shamelessly said, “privatizing the cell phone service is as good as licensing private investors to print money”. I understand many find themselves in a difficult position to decide on what they can attribute this to. The only reason unwary person may speculate could be typical feudalistic covetousness. But the reason goes far beyond that. The TPLF regime considers privatizing the telecom as an act tantamount to abdicating from political power. I am sure many still remember that TPLF banned SMS /text message/ service during the 2005 post election political crisis. The TPLF regime could do this for it had absolute control on the telecom service. If there were second and third mobile service providers, I don’t think it would be that easy to block such services the private company provides on the basis of a binding and lawfully made contractual arrangement. If this example sounds too weird for words, think of it this way as well: The TPLF regime has infested the ETC technical personnel with spies assigned to tap telephones and record conversations, including tête-à-tête /petty chit-chat/, of individuals who are under hot pursuit by the TPLF regime. The TPLF regime cannot enjoy such free access if the cell phone is privatized. The TPLF regime, therefore, is more to perpetuating its oppressive parochial regime than bringing in economic development. Spurred by changes in technology, the abysmal performance of the incumbent telecom service provider /ETC/, and prodding by The World Bank and other international organizations, the TPLF regime was forced to set up the now sham regulatory institution /ETA/ in the mid 1990s. As demonstrated everywhere competition appreciably decreases the price of a local call. Privatization combined with the existence of a separate regulator is associated with increases in connection capacity and labor efficiency, and substantially mitigates the negative correlation with mainlines. These are broadly consistent with conventional wisdom: competition is the most effective agent of change, privatization without regulation may not improve service, and regulation is especially important when privatizing a monopoly incumbent. Here the question is why did the TPLF regime established a separate regulatory body if it has no intention of privatizing the telecom and adamantly believes telecommunications are a natural monopoly? The answer is very simple. It was just to please the World Bank and other financial agencies that are still pumping money into the pockets of TPLF leaders. PERIOD. The other question is why the TPLF regime is hanging on to its archaic policy on telecommunications since the monopoly telecommunications firm could not effectively provide telecom services? Why the TPLF regime still insists on the state telecommunications monopoly since ETC fell short of meeting needs, as evidenced by persistent large unmet demand for telephone connections, call traffic congestion, poor service quality and reliability, limited territorial coverage, and above all demonstrated willingness of business men to pay far higher prices to obtain service? Why TPLF still insists on telecommunications monopoly despite the users pressures to bypass the system by building their own facilities. I hope many Ethiopians know very well about what happened three years ago. Some three years ago, about a dozen or so business men joined hands with TPLF cadres and built their own facilities using VSAT /Very Small Apperture Terminal/. These business men and the TPLF cadres contacted telecom companies abroad and let their facility be used as a call termination point for incoming international calls. TPLF claimed to have tracked them down. The then CEO of ETC unfairly dismissed and criminal charges were pressed. It was lately discovered the architects of this plan were hard core TPLF cadres and the wife of Meles Zenawi. The whole case died there and then. The then CEO of ETC fled the country and he is now in the USA . Such illegal activities actually had to be controlled by the regulatory body. How was ETA established? 

Until the mid-1990s, the sole government owned telecom service provider /ETC/ had simply to obey the so called “fairness doctrine” in its relation with its customers for it was both regulator and service provider. After the establishment of the regulatory body, better known as ETA, many expected a real change and progress. Unfortunately, ETC, the sole government owned service provider, became the de facto regulatory body by default even after the establishment of ETA. Aside from bottling up debate on its incompetence in discharging its regulatory function, what the sham regulatory body /ETA/ really excelled at was blocking the expansion of new technologies. It stalled the emergence of such feasible technologies like paging, tele medicine, tele conference, GPRS,  what not. Ethiopian Telecom Agency/ETA/ could play such destructive and anti technology and development role because of basically two reasons: 1. ETA is being headed by a political cadre, not a professional. 2. Lack of competence, professionalism and integrity among the policy makers i.e. Ministry of Transport and Communication and its staff members, in particular those who assume key positions. It is now universally accepted truth that technology alone can’t bring a reliable telecom service to entrepreneurs and consumers. More competition–not less–charts the path to abundance and better service.

The writer can be reached for comment at:  hrobert2005@yahoo.com 

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Published in: on March 29, 2007 at 9:55 pm  Leave a Comment  

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