Unfortunately mobiles don’t yet provide cheap access to the internet etc. which would significantly help education in the poorest areas (they’d get to read all these blogs for one thing).

Strangely the second licence for a fixed system has yet to be taken up. Seems like private enterprise doesn’t see much of a future for landline services here.

RM

2) Selling before universal access? I can’t think of any (other than SA perhaps)in Africa with anything close to universal access to mobiles yet at least half of them have competetive markets.

Owen replies: Tim – on universal access – my instinct is no doubt the same as yours: competitive firms are more likely to offer affordable telephone access than state monopolies, so if we care about increasing access, we should deregulate and liberalise, and we’ll get an expansion of access as we have seen with mobile phones.

But the politics of this can be very difficult. Indeed, I suspect that in some countries (though I have nothing to base this on) competitive mobile phone markets are politically acceptable precisely because governments retain a policy commitment to universal access for fixed line telephony.

My point is only that the politics of deregulation, competition and commercialisation are very different in an environment without universal access than it was when we did it (let us not forget how recent that was) when pretty much every household that wanted it had access to a phone line.

On foreign currency: rational or not, many governments are reluctant to give up important sources of foriegn currency and to have to buy it on foreign exchanges themselves, especially when currency markets are thin and volatile.

Equally unsurprisingly (but perhaps less newsworthily), the same study finds that the level of GDP per capita in a country is by far the most important determinant of mobile penetration. Unfortunately, the poorer countries who will then tend to have lower levels of mobile penetration will also tend to be more dependent on the revenues from taxing mobiles. So I’d agree with your prescription of funding short-term revenue shortfalls with aid, with the proviso that this aid is targeted at the countries who really need it rather than at those with the juiciest telecoms markets.

The Economist has published yet another article on the impact of taxation on mobile-phone adoption, and issue we have highlighted before (1, 2).As prices fall, another barrier to adoption becomes more apparent: the taxes on mobile phones in many develo…

They can simply sell off their State owned monopolies and use that to plug the revenue gap until the supply side reforms increase revenue in the longer term. Why not? After all, we did.

At least three reasons, Tim:

1. The State-owned telephone monopolies bring in both government revenues (sometimes a substantial share of Government revenue) and scarce foreign currency (for terminating incoming international calls). Selling the golden goose for a one-off lump-sum payment is not attractive if you are going to have bills to pay next year.

2. The monopolies are profitable while they are just that: monopolies. What we need is more competition, not (just) a change of ownership. It is not clear that they would have market value if they were sold off into a liberalized market. The lump sum for a sale into a competitive market would be lower than the value of the expected future revenues of the monopoly.

3. We sold our telecomms company only after we had achieved universal access. As far as I know, no country has sold its phone business before achieving close to universal access (I’d be interested to know if there are any examples of this). I personally would go ahead and sell anyway, and impose a universal access obligation on the buyer; but it is politically much harder to do.

Owen has a piece up about mobile telecoms in Africa. Essentially, everyone knows that reducing taxation on them is a good idea but they need the money now and so we should fund the change by plugging the gap in

If I actually believed that this were true, that all Finance Ministers knew this, I’d be a lot happier. Are you really suggesting that every person in such a post worldwide (Gordon Brown?) knows in his bones that supply side reforms are the solution and that it is only the difficulty of getting from here to there that prevents it?

Owen replies: I can’t say that all do. But most do, yes.