Nokia Siemens Networks

Deregulation: the win/win/win game

As economies across the world are showing, less is more when it comes to government intervention.

When Henry David Thoreau wrote, "That government is best which governs the least," the odds are pretty good that he wasn’t thinking about mobile communications. But recent evidence from this sector would certainly back his observation.

Liberalized communications laws have undoubtedly improved the standard of living today, particularly for people in emerging markets.

But a recent study, commissioned by Nokia Siemens Networks, shows that people everywhere have something to gain from deregulation.

Creating the infrastructure for mobile communications

The Connectivity Scorecard, produced by a team under the direction of Professor Leonard Waverman of the London Business School, concludes that all governments can benefit from a re-think of their regulatory policies.

Ilkka Lakaniemi, head of global political dialogues and initiatives at Nokia Siemens Networks, said, "This study is a call to arms for government and businesses. In a period of great economic uncertainty there are great benefits to be gained from the effective use of communications infrastructure.

"And as we move toward the vision of five billion people connected by 2015, policy makers and business leaders must simultaneously encourage the deployment of infrastructure and invest in the complementary assets - people - that will enable this infrastructure to be used to its maximum potential."

Connectivity is linked to economic growth

Indeed, according to the Global Mobile Tax Review 2006-2007, published by the GSMA, connectivity boosts economic activity: "In developing countries," the report states, "a 10% increase in penetration leads to a 1.2% increase in the annual growth rate in GDP."

Mobile phone use creates jobs and improves personal - and corporate - income.

Which, in turn, generate more tax revenues for governments.

The Director of the World Bank, Mohsen Khalil, has said, "We do not believe that taxation should be designed on the basis of short-term considerations - it should be designed on the basis of achieving the best long-term economic interests for the society and in a way that accelerates the extension of services to the poor.

"The indirect benefits to the economy of having affordable access to telecommunications services far outweigh any short-term benefit to the budget."

Global accessibility is the key

In the Ukraine, mobile penetration jumped from almost nothing to 70% between 1996 and 2006, and this in turn has boosted productivity by 9% a year, said Telenor's vice-president for government relations, Harriet Berg, in an article first published by Reuters in February.

And the example of Ukraine is being played out in developing, as well as mature, economies.

Easing tax and trade laws in Mauritius helped reduce the cost of international calls by 80% and of mobile calls by more than 50%. Because of this, new associated industries have begun to appear, according to Krishan Oolun of the ICT Authority of Mauritius.

Says Erkki Ormala, vice president of technology and trade policy at Nokia, "Regulators must ensure a level playing field with easy access to the market - this is key to everything else. Global experience shows that the total cost of ownership for consumers is dependent on lowering or eliminating additional costs, such as handset and infrastructure equipment import duties and taxes on services. When this prerequisite has been achieved, other issues such as adopting global network standards and technologies can be addressed."

Making life better for all stakeholders

Bigger profits and increased tax revenues should never hide the real reason for expanding communications - making life better for people in emerging markets. Connectivity enhances the quality of life for individuals as well as generating economic prosperity for businesses and governments.

José Rizek, regulatory commissioner for the Dominican Republic, asked at a recent World Trade Organization debate on government regulation of the telecommunications industry, "How do we actually bridge the digital divide? How do we bring access to those less fortunate? That's how we need to start shaping these agreements.

"These agreements have to now depart from the basic infrastructure that they helped build, and look into more how you build the services, how you build the knowledge, the intelligence, in those networks, so those networks can actually help not only bridge the digital divide, but help bring inefficiencies and inequities to an end."