Liberalizing the Telecommunications Industry-Impacts on the Asian Market (Licentiate Thesis)

Licentiate thesis, 2010

The liberalization of telecommunications seems to be an unstoppable trend. National governments, facing similar competitive pressures and rapid technological developments, have undertaken regulatory reforms such as privatization of state-owned carriers, entry relaxation and the introduction of new regulatory regime under the control of an independent regulator. This phenomenon exists in the Asian market without exception. The impact on the Asian market may differ from European experience because of economic background and lessons learned from developed countries. To answer the question of the impact of telecommunication liberalization on telecom carriers and consumers in the Asian market, this thesis employs a quantitative strategy of econometric and financial modeling based on data from secondary sources and databases. The sample included 13 countries in Asia – Brunei, Cambodia, Indonesia, Laos, Philippines, Malaysia, Myanmar, Thailand, Singapore, Vietnam, Japan, Hong Kong, and Republic of South Korea. The study period ran from 1990 until 2008. The results of the thesis reveal that the teledensity and Internet usage have experienced dramatic growth since the policy makers have permitted the creation of competition in telecom services together with the establishment of independent regulator. At the same time, liberalization has failed to solve problems of digital divide among these countries. In addition, the liberalization affects performance both of incumbent private carriers and state-owned carriers since the entrants can exert competitive pressure. Incumbent carriers need to improve technical and managerial efficiency to sustain growth momentum, while the change of the ownership structure will provide an opportunity to state-owned carriers to pay more attention to strategy and profitability. These suggest that an independent regulator and re-regulation should continue to ensure that liberalization is socially beneficial.