Regulation of mobile cellular services has tended to be minimal. For instance, fewer than half the countries replying to an ITU questionnaire in 1999 stated that their mobile operators had universal service/access obligations or that their mobile tariffs were regulated. The relative lack of cellular regulation is partly due to the belief that fixed networks have been too regulated, stifling innovation and network growth. Since mobile has developed at a time when this belief has become commonly accepted, regulation has been limited. A related factor is that mobile cellular has typically been defined as a value-added-service, falling outside the regulatory scope of basic voice telephony. In developing countries, the lack of regulatory skills and in some cases, the absence of an independent regulator, have narrowed the latitude for encouraging mobile operators to enlarge overall accessibility to communications. The question that begs asking is whether mobile cellular has grown so fast because of limited regulation or
whether it would grow even more rapidly with greater regulation.
There is a need for some minimal degree of mobile regulation, if for no other reason than to ensure services can operate without frequency interference. One way this has traditionally been done is by limiting the number of operators. Frequency constraints, coupled with the high level of initial investment required (either because of significant licence fees, network construction expenditures or both) suggest that there are high barriers to entry and that the mobile cellular industry could never be a textbook example of a perfectly competitive market. As a result, there may be some areas where competition will not work as intended. For instance market distortions could arise, particularly in pricing, unless there is some form of regulatory oversight.
Although a slight majority of countries do not allow mobile cellular competition, their number is shrinking (see Figure 3.)
Furthermore, the number of subscribers under monopoly environments is minuscule, accounting for only one per cent of the world total.
But where competition does exist, how many operators should be allowed? Is there a significant difference between two network providers as opposed to three or more? In the case of the United Kingdom, the growth rate in the number of cellular subscribers accelerated when the number of operators licensed was expanded from two to four in the early 1990s. Nevertheless, that countrys regulator has been puzzled why, with four mobile operators, prices are still higher than in Nordic countries which have fewer operators. Conversely, is the fact that Hongkong SAR has a higher penetration than Singapore a result of introducing competition much earlier?
|Fewer than oneper cent of mobile subscribers are in
countries that do not permit competition