|
Like almost
every country, Ethiopia has a national telecommunications company,
the Ethiopian Telecommunications Corporation (ETC). It is known to
all Ethiopians throughout the country, as they depend on it to link
them to one another and to the outside world. It has near-identical
buildings in villages all over the country and offers the same
prices to all citizens.
To many,
including government officials, the ETC is an obvious demonstration
of what a government can do for its people: bringing valuable
services to many and on an equal basis. Yet this can be easily
proven to be a mirage of benevolent public service provision.
As the theory
goes, rural areas would have no chance of accessing
telecommunications services without a national provider. The lower
population density of rural areas would make the per capita cost of
investment prohibitive for the private sector, and force rural
populations to pay a premium to have the same services as urban
populations. With good reason, this argument exerts a strong pull on
governments everywhere. The same logic holds for postal services or
national healthcare.
The conclusion
of nearly every government on earth is that they must intervene. By
centralising the costs of a national communication network and
dividing the cost of its use among all users, the result is a
redistribution of revenue in support of poorer rural populations.
Everyone pays the same price, where urban residents pay more for
their service than its actual cost and rural inhabitants pay less; a
result of scale.
Particularly in
the case of large countries, the existence of a national
telecommunications provider is legitimately defended.
Is it not a
government’s responsibility to help respond to gaps where private
sectors are unlikely or incapable to act?
And so the real
question is not whether a public telecommunications corporation is
needed or wanted, but rather whether it should exist alone.
It is indeed
necessary for government to make the types of investments that the
private sector does not; things like airports, roads and
electricity. However, all governments are notorious for their
inefficient management structures. They are ruled by strict
hierarchies and do not have the necessary flexibility for rapid
reaction to fluctuations in demand for the services they provide.
As many Ethiopians can attest, the ETC is far from perfect in terms
of service delivery; it can take an eternity to get any service from
this monolith of government bureaucracy. This occurs largely because
the ETC does not have to worry about such banal things as pleasing
its customers.
Who else can
they turn to for the same services?
Economists of
all colours have marvelled at the growth of an unregulated
telecommunications sector in neighbouring Somalia. In a country
where government has been unable to impose itself for more than a
decade, Somalis have access to the world’s most competitive mobile
call rates. The cheapest international phone calls (from mobile
phones) are available in a country with no regulations or national
service provider. It is an experiment that should give any
well-meaning government cause to rethink its approach. Many have.
Since mobile
communications were introduced, the number of Ethiopians using
mobile phones has risen to match the number of landlines (phone
service) in the country. Yet barely more than a month ago, ETC
declared that it would increase the number of landlines in the
country to four million, from less than a million now, at a cost of
close to 1.5 billion dollars. It is highly unlikely that the same
choice would have been made if the ETC were obligated to appeal to
its customers by the bottom line of its profit margins.
Note also that
the ETC will very negatively impact the country’s balance of trade
with this agreement when it could instead have called foreign
companies to invest in establishing their own mobile networks, at
their own costs. Only users would pay for such an improved service,
while with this deal all Ethiopians will be made to pay for a
service that appeals to a small minority.
In most of
Africa, people can now choose among different mobile phone networks
and can compare both prices and the quality of services. Nearly all
have better choices than do Ethiopians; in fact many have better
service than North-Americans.
Yet, Ethiopians
must still drearily accept the slow machinations of the ETC.
To compare,
roads are built for the advantages they provide to all members of
society. Porsches roll on the streets of Ethiopia, along with horse
drawn carriages (gari). No one argues that only 2003 Toyota
Tercels should ever be used on streets paved by the Ethiopian Roads
Authority.
Why would not
the ETC build networks and charge others to provide services?
In truth, there
is no good reason. The only legitimate reasons to allow a monopoly
of a non-essential service sector are pride in a national treasure -
think of airlines - or to control the services it provides. In
either case, inefficiencies abound, but if the second reason
explains the ETC’s grip on the telecommunications sector then we can
all wonder what it is exactly that they do not want Ethiopians to
have.
|
