Sami al-Basheer al-Morshid is the current director of the Telecommunication Development Bureau at the International Telecommunications Union (ITU), the United Nations agency that works with governments and the private sector to advance information and communications technology (ICT) worldwide. With more than 23 years experience in the regional and global telecommunications industry, al-Morshid has held several high-level posts within governments and the private sector, including the position of chief of the regional office for Arab states at the ITU. In August he sat down with Executive to offer his insights on the regional ICT sector and how countries in the region should reform the sector in order to meet global standards.
E Liberalization in regional markets has been slow to come about. Many governments in the region still view their existing telecommunications operators as cash-cows and this has resulted in prohibitive pricing and bad planning models. Do you see this changing, taking into account that the financial crisis is making governments more conservative in general?
This is what we are trying to do at the ITU by organizing the global symposium for regulators, which will be held in Lebanon. Regulators from all over the world [will] come [together] in one place and exchange ideas, adopt best practices [and talk about] where it worked and where it didn’t, how much regulation is needed and how much involvement from the government is enough. It’s funny that we are talking about this at a time when we have a financial crisis, where even the most open market countries like the US and the UK are coming back and erecting [trade] barriers and adopting protectionism. We hope this will not happen in telecom, because we feel, and we have studies to prove it, that the ICT sector is the least affected by the financial crisis. It is going to be affected but it is the least affected. Some experts go even further and think this is the sector that is going to solve the problem of the whole world, even the financial problem. In short, yes, we feel there are steps being taken by governments themselves and through regional and multilateral forums like the ITU. We are trying to find the right balance in terms of a regulatory framework where you don’t have it completely free, but at the same time you have a balance [between government and regulator].
E When you start talking to governments about independent regulators, do alarm bells start going off as governments fear they will lose a major source of income?
That has been true until recent years. Many developing countries, including the Arab countries, thought [infrastructure and telecommunications were] a goldmine for the government’s budget. The good news is that when these governments realized this [the advantages of liberalization] and partially opened their markets, they had better services, more affordable prices and more output even in terms of government budgets. Because most developing countries, including Arabic countries, own the infrastructure, when you talk about the regulatory framework in Saudi Arabia or the United Arab Emirates, you find that 70 to 80 percent of the shares of these incumbent companies are still owned by the government.
But the good thing is they are working on a commercial basis. With only 30 percent of the shares of, for example, Etisalat or Saudi Telecom created, all of this improvement is in services. Can you imagine how it would be if you increase this [private] share of the market? I promote a gradual approach in this aspect. There is no single government in the world that opens up directly. Even the UK and France took a long time to do that. We try to talk a lot about the global village and open competition.
E In light of what you just said, how do Arab countries measure up to other developing nations?
The Arab countries are doing much better than a lot of developing countries. If we are talking about the Gulf countries, penetration rates for mobile [service] are over 100 percent. You have middle income countries like Egypt, Syria, Lebanon and others and you have the least developed counties, such as Yemen and Djibouti, where we have the biggest problem.
E So there really is an oil divide and that line is clearly drawn. Wouldn’t this logically mean that the middle to lower income economies would want to embrace liberalization faster, for commercial means at least? But this is not happening. Is it just because of the politics of poorer countries or are there other reasons?
In my personal opinion this is a misperception. The least developed counties in the region have financial problems and they are struggling. Although it is logical that they should open up, at the same time, it is a matter of administration and management, where they are so preoccupied with food, agriculture and security which is [the] number one [priority]. Iraq is a good example of a rich country where unfortunately the services are terrible, especially in fixed and broadband. It’s simply because they have other priorities. Security and stability are number one, [because] you don’t only attract direct investment but you also have the security to really have the confidence to open up the system. If you are hungry you don’t have time for luxury, although [ICT] is not a luxury anymore — it’s a basic need.
E What is the biggest concern for governments when they look at the private sector?
There are many things they look at. In some countries it’s for security reasons, and in others its competition for business. Who gets the largest piece of the cake? Is it my internal and domestic investors [and] how much I can guarantee them this? It’s about how the government can make sure that the whole population gets the benefits of this privatization and not only a rich businessman or individual who can take over the whole thing. That’s why you see that when most government offer their tenders after they open up, they have a consortium where they say, for instance, 30 percent [ownership] has to be from within and this has to be comprised of five or six unions from within the country. This is to avoid having one person or company control the sector. This is wise and has been done beautifully in some countries. Some countries are still reluctant to open up. We are working closely with them to encourage them to do so by giving them advice and training some of their people. The good news is that this is high on the agenda. In Syria we are expecting this to happen anytime.
E How about Lebanon’s regulator? There have been suggestions that the regulator is not independent of the government.
Lebanon has a regulator. I don’t know how independent the regulator is now but from what I see from the Lebanese government, they are heading toward that. Lebanon has a special situation. You remember that Lebanon was the first country to introduce mobile [and it had] the highest penetration in the Arab region. Security and regional conflicts affected the sector and this is understandable. This is a rich sector if you have the right transparent, independent rules and regulations — [then] the money is no problem, the money is there. But you have to make sure that it is transparent, it’s open and it’s fair competition, and those countries which have succeeded to do that have taken off in the right direction.
