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Why mobile phone companies must be listed in the Stock Exchange
Share Shah
Cellular and digital technology has enhanced the scope of wireless telephony with access to every individual. The ramifications are so overt that little needs to be said about the advantages. But unfortunately our regulatory understanding has remained many paces behind the good that can reach the people.
Under the laws inherited from the British, telephone, radio broadcast and even television broadcast has for long been considered a monopoly. Because under the ancient laws the sovereign owns all the land including the air we breathe. Thus the government for many reasons must control sound waves generated by our voices. Unlike USA, which regulated the licensing of radio stations through spectrum management, the subcontinent and many commonwealth nations till recently totally banned radio broadcasting in the private sector.
The world over the general tradition was that telephone is a natural monopoly as there are natural efficiencies from allowing a single firm to provide the service. At least that was the belief in USA while other governments in many countries preferred to retain it in the public sector.
But in the USA which was more tuned to free enterprise their answer was to give telephone companies a lawful monopoly and but then regulate them very closely. In other countries telecommunications remained totally under the control of government, which only issues broadcasting permissions for maritime uses and never for commercial broadcast.
For decades-national telecommunication agencies or authorities remained highly regulated organization until the 1980s for various technological reasons. While all this began from the wireless concept but because of technological convergence, the distinctions between services based on the delivery technology used gradually broke down. For instance today there are firms in the USA that act like broadcasters but transmit by wire. Cable television companies are actually common carriers, but transmit on radio, e.g., cellular carriers. This convergence had has begun to undermine any coherence that ever existed in the US regulatory structure thus leading to further deregulation and pressure on other nations to change.
The premises underlying universal service are simple and relatively uncontroversial: everyone benefits if everyone else is on the network. It does one no good to have a telephone if the person that one is trying to reach does not have a telephone. Moreover, there is a social justice element to universal service. Access to basic telecommunications services is viewed as a necessity. In the USA it was believed that lack of such access could undermine the very notion of upward mobility. The Grameen concept of the wide dispersion of mobile phones is no different.
Paying for universal service also has traditionally been relatively simple. In a world of regulated monopolies, it is easy to require, as a condition of its monopoly, that the incumbent provide service to all segments of society. Also, as a regulated monopoly, it is relatively easy to spread the cost of universal service among all ratepayers. The local and long distance cost structures be such those long distance customers have been bearing most of the burden of subsidizing universal service.
Deregulation of telecom industry is a very recent phenomenon. Unfortunately management and licensing did not take place in Bangladesh as it did in the USA. Many changes that came about were not really through consistent regulatory structure or rule based but through the sovereign rights of the government in power to award licenses to some. The first cellular company was given the permission not on the basis of some standard procedure but through sovereign authority. Later awards were more systematic and based on a tender procedure. At long last there was recognition of regulations and under the Telecommunications Act, 2000 the Bangladesh Telecommunications Regulatory Commission (BTRC) was established.
With this change one should expect that competition be introduced into the market by having more service providers. There should no longer be a guarantee to any competitor that it will have the customers to support universal service subsidies and there no longer will be a monopolist dependent upon the states for protection of its monopoly. Thus, the only way to keep universal service support flowing is to require all market participants to contribute a pro rata share of the pie. But unfortunately this is not appearing to happen. One of the foremost tasks of the new Commission should be directed towards consumer protection particularly what today is felt by the public that they are being duped by an unholy price fixing alliance of the mobile telephone operators. Since we do not have anti-cartel laws, BTRC should have its own rules of conduct to ensure that the consumers get the benefit of competition and are free to choose new vendors.
The other facts are the change of management of two mobile phone companies. One only hears of what happened through innuendo. The public, which supports these companies, does not know. The transaction remains hidden in the files of the regulators. Why should the public be deprived from a stake in such companies is a matter of conjecture. The cake is becoming bigger and bigger so should the stake of the people. One may read with great interest the last week's takeover bid by Vodafone, a British based company to buy Hutch Easser, (Hutch is owned by Hong Kong billionaire Li Ka-shing and has 67 per cent stake while Essar Group, is the local partner with about 7 per cent), the fourth largest cell company in India for a price tag of $ 11 billion. Under Indian law foreign companies cannot have over 74 percent equity. India is definitely a big market with expected growth forecast of 500 million users by 2010 adding 5 to 6 million each year. Proportionately we also have a fair market size, which is also growing fast.
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World Bank's graft crusade
exaggerated, critics say
Emad Mekay in Washington
Publicising a self-styled crusade against corruption, the World Bank says it is successfully stepping up its campaign against graft, probing more than 400 cases over the last two years alone and barring dozens of companies and individuals from future World Bank contracts. But critics doubt the scope of the claims.
Watchdog groups cite conflicts of interest in the WB's core mission, and the Washington-based lender's keenness to brush up its image.
They say the bank has a contradictory agenda - the Washington-based lender needs to push more loans for projects in developing nations whose economies are open for investment, but its newfound role as a campaigner against corruption could deter companies from joining bank projects and slow down lending.
"The sad truth is that, when you compare the WB to others - such as Canada, which is doing nothing - it is taking a leadership role. But that isn't much to rejoice over," said Patricia Adams of Probe International, a Canadian watchdog group.
Adams, who has followed corruption cases for years, says the bank's efforts are still sorely lacking.
"If the Bank were to conduct forensic audits of all its outstanding projects - and the closed and completed projects too - to determine when the funds were 'wrongly diverted from their intended purpose of benefiting the poor,' recovered and repaid, then I will have greater confidence that it is serious about stopping corruption on its projects and is determined to send a strong message to its contract winners that it won't tolerate corruption," she told IPS.
Another group says that the WB has so far resisted calls to pass greater protections for a crucial player in the fight against corruption - its own internal whistleblowers.
"We continue to be concerned about the sincerity of management's efforts," said Beatrice Edwards of the Government Accountability Project, a Washington-based whistleblower support organisation.
"Because whistleblowers are a key element in fighting corruption, an institution that refuses to protect them, as the World Bank refuses, demonstrates clearly that it wishes to turn a blind eye to the theft and misuse of public funds," she said in an interview.
In its latest report released earlier this month, the World Bank Group's Institutional Integrity Department (INT) says it has cracked down on corrupt business practices like never before.
It says over the last two years alone, the INT investigated and closed 441 external investigations into fraud and corruption in the bank-financed projects - more than the total cases probed from 1999 to 2004, during which time it has sanctioned 338 firms and individuals.
The more recent investigation resulted in the debarment of 58 firms and 54 individuals due to fraud and corruption over the period covered in the report. The companies and individuals will no longer be eligible to work in the bank-financed projects.
With a budget of 10 million dollars a year, the INT says it examined problems like influence peddling, procurement fraud, collusion, kickbacks and bribes, the misuse of project assets, and misrepresentation of qualifications in bid submissions, among other misdeeds.
"The World Bank is the only multilateral development bank that has published the names of the firms it has sanctioned for corrupt practices - a major deterrent to wrongdoing," the report says.
These achievements, however, failed to impress many independent groups monitoring the bank.
GAP, for example, says the bank exaggerates the effectiveness of the steps that it has taken to fight corruption.
"For example, the firms debarred for corruption are typically small-scale," Edwards of GAP told IPS. "For the most part, they have been involved in petty fraud having to do with minor kickbacks."
She said that GAP analysts are working with World Bank staff members who made credible, documented disclosures involving major corporations and corruption in the bank operations.
"When these WB whistleblowers made their disclosures to INT, they were (alternatively) harassed, demoted and dismissed and blacklisted. In short, silence. One of our clients said that where corruption and the World Bank are concerned, INT is 'part of the problem'," she added. The bank insists it is doing the best it can, not only externally, but internally as well.
It reports that it completed 227 internal investigation involving staff misconduct over the past two fiscal years. Of these, INT substantiated allegations in 77 of the cases involving 78 staff members.
"The bank will continue down the path of zero tolerance toward fraud and corruption and commit itself to a 'gold standard'," said Suzanne Rich Folsom, who directs the INT, which was established in 2001 as the independent investigative arm of the WB.
The bank says it terminated or barred from rehire 22 staff members and disciplined 11 others for fraud and corruption, while also barring five staff members for sexual harassment; disciplined five for failure to comply with personal obligations; terminated from rehire seven others for conflict of interest or other violations; and punished four others for conflicts of interest.
Ever since he came to office in 2005, World Bank President Paul Wolfowitz, widely criticised for his role as a key architect of the U.S. invasion of Iraq, has been trying to make the anti-corruption crusade a signature of his tenure.
Wolfowitz announced a "long-term strategy" for using the bank's funds and expertise to help developing countries rid their governments of bribe-taking and other dishonest practices.
A key component has been the deployment of anti-corruption teams in many World Bank country offices.
Wolfowitz says he is restructuring the Bank's INT to make its authority clearer and its operations more effective. Last year, he led efforts to gather heads of other multilateral lenders like the Inter-American Bank and the African Development Bank to commit verbally to further fighting corruption.
Among other measures, the bank has also kick-started the "Voluntary Disclosure Programme", which encourages companies to admit wrongdoing in exchange for diluted or no penalties.
Critics say that the VDP programme allows "confessors" confidentiality, in turn allowing the bank to cover up its own negligence or complicity, which undermines the administration of justice in countries where it is a criminal offence to bribe a foreign official.
"[The] Voluntary Disclosure Programme doesn't accomplish this goal and indicates to me that the bank is still suffering from the same conflict of interest with the companies it awards contracts to," Adams said. "I don't have confidence that the INT is catching the big fish."
Courtesy: Inter Press Service
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