Telecommunications reforms for economic growth

Transport and Communications Minister Censu Galea addresses the Meda Telecom Project Regional Forum and speaks about Malta’s transformation of its telecommunications systems and the ensuing effect on economic growth

The topic chosen for this forum is "Telecommunications Reforms for Economic Growth: A Euro-Mediterranean Dialogue". For the next few minutes I would like to dwell a little on the Maltese perspective on the correlation between telecommunications reforms that are taking place in our respective countries and on the impact of these reforms on economic growth. The topic is particularly relevant to the Euro-Mediterranean region with its huge socio-economic disparities and the different priorities of most national governments to maintain their thrust for increased economic and social prosperity. Telecommunications are, in some respects, one of the key requisites for the attainment of this objective. For example, while some of the tangible signs such as mobile telephony and TV access are encouraging, these efforts have yet to yield desired results in relative terms, particularly when compared to the OECD average.

Having taken full cognisance of the revolution that is taking place in the field of information and communication technology and the exciting opportunities that it presents, Malta, like the rest of the world, has been gearing itself up for the challenges ahead. Foremost among these challenges is the impact of globalisation on all aspects of society and the economy brought about in large measure by the ICT revolution itself. So, in a sense we have two sides of the same coin – the challenge on the one side and the opportunity on the other. Being able to grasp the opportunity that ICT affords will go a long way towards addressing the challenge that it creates. This is the goal that we must focus on, and no doubt telecommunications reform is a key enabler in achieving it.

Although ICT knows no borders, the geographic location and the development strategies of a country are still important when it comes to tapping the potential of these media. In this respect we feel that Malta is well placed to play a prominent role in the information and communications revolution. This is not only to the benefit of the Maltese population but also for the overall prosperity of the region. Its unique geographical location between Europe and North Africa lends itself as a potential e-hubbing centre of activity for companies seeking to establish a foothold in the Euro-Mediterranean region.

It also makes for the setting up of institutions that can play an important role in enabling neighbouring countries to reap the benefits of ICT. In order to be able to play such a role we must be at the forefront of developments in the field. This is what we are striving to achieve and to this end we are dedicating the necessary resources and taking what I hope are the right measures to get us there. One such critical measure has been the reform of the telecommunications sector.

Regulatory reform is a pre-condition for market liberalisation. And thus the phenomenon of Telecoms Regulatory agencies proliferating in the past 20 years, to provide the impetus and oversight to reform. These agencies have been instrumental in the transformation of the telecommunications landscape, moving us from the state monopolies of the past, their limited offerings, often indifferent service quality and, perhaps the most unfortunate, the low level of access for the general public to such services. In Malta we have experienced this transformation over the past 10 years at first hand, the result of significant investment in telecoms infrastructure, education and complete market liberalisation.

The National Plan for the liberalisation of the telecommunications market defined in specific and coherent terms the mode and time frame in which this was to occur. An integral element of the plan was the creation of the National Regulatory Authority with the mandate to oversee the implementation of the Plan and of course regulate the sector thereafter to ensure its continued development and sustainability

This reform in the telecommunications sector has paved the way for the entry of new operators, the uptake of new technologies, the provision of new services. More importantly however it has been the catalyst for the development of new skills and the creation of numerous job opportunities. Malta can now boast of a thriving knowledge based sector in our economy which has transformed the way in which we conduct our business, deliver services and educate citizens of varying ages. This restructured and modernised telecommunications sector constitutes a solid foundation for the country’s continued economic and social development as well as promising Malta an exciting and dynamic future as a Euro-Mediterranean hub.

I have talked about the results of sector liberalisation. Allow me now to spend a few minutes to dwell on what has been the Maltese experience to enable this.

The monopoly in mobile telephony sector came to an end in September 2000 with the entry of a second mobile operator. Mobisle Communications Ltd, a subsidiary of the incumbent fixed telephony operator, Maltacom plc, operating under the brand name Go Mobile was granted a licence to provide mobile telephony services alongside Vodafone. The latter had, up until then, been the sole operator. In the short course of two years penetration has gone from less than 20 per cent to upwards of 70 per cent of the adult population. More importantly tariffs have declined by over 50 per cent.. We have more mobile subscribers than the total for fixed lines which includes both household and business. Percentage penetration of Maltese household with fixed telephones is now close to 100 per cent.

The Cable Television sector was liberalised in June last year. Approximately 98 per cent of local households have potential access to Cable TV services.

Liberalisation will reach its climax at the end of this year when the rest of the market will be open for competition. The last services to be liberalised, as of 1 January 2003 will be fixed line telephony and international gateway services. Approximately 98 per cent of households potentially have access to Cable TV services.

There are several Internet Service Providers on the island. Internet subscriptions sustained a steady growth of 56. per cent over the past year. I would clarify that the Internet market has always been a free one since its introduction in Malta in 1995. However it has flourished significantly over the past two years, partly due to Government’s policy in investing heavily in ICT education, but also thanks to new network services introduced by a more competition-oriented telecommunications sector.

We have witnessed an increase in the number of broadband internet subscribers, which has now exceeded the 10,000 mark. More than half the population has access to the Internet through their home, place of work or school. Very shortly this access will be universal. Those presently without access will be provided with an e-mail address and access facilities from local government offices, public libraries or purposely installed kiosks.

Opening up the telecommunications market has been inspired by our belief in the merits of a competitive environment that serves as the catalyst for economic and social prosperity. Liberalisation has undeniably been beneficial, not only to the operators and their workforce, but even more so to consumers – and I include economic operators in this category.

These can now realistically look forward to a choice of operators and services at competitive prices. Such a state of affairs has contradicted the sceptics among us who pronounced that liberalisation is good everywhere else but not suited to a small island economy like ours. Not only has liberalisation been a success, but the sector has also flourished and consumers have benefited. Two years ago it was unthinkable that anybody outside the higher income bracket could afford a mobile telephone or access to the Internet. Well look at us now as I have outlined before.

The various Information Society initiatives that we are undertaking, such as the promotion and development of eCommerce and the provision of eGovernment services, are also a means to enhance opportunities for economic growth. In May this year, the eCommerce Act came into force. It represents a solid legal framework for the effective take up of electronic transactions that should, in turn, serve to generate increased economic activity.

Malta has been getting ready for European membership, in the next enlargement. As a member state, it will add to the voices of countries seeking to promote the uptake of Information and Communication Technologies across the Mediterranean, where in some instances unfortunate difficulties persist in inhibiting the desired development of a thriving information and communications market. (No doubt one of the fundamental reasons for this stunted development are national policies averse to telecommunications liberalisation - a prerequisite to sustained economic growth).

The full liberalisation of the telecommunications sector in Malta will usher in a new era in telecommunications, offering Maltese consumers new possibilities whilst ensuring that Malta is at the forefront of developments in this increasingly dynamic sector. I can assure you that the Maltese Government is committed to establishing Malta as a dynamic economy that takes advantage of this unique opportunity, not only for its own well-being but also for the prosperity of the region. Malta is committed to this vision, and will work in collaboration of its Euro-med partners, towards turning this vision into a vibrant socio-economic reality.