BT faces tough battle in entering Asia Pacific market

By Prapti Widinugraheni

LONDON (JP): The United Kingdom's British Telecommunications (BT) Plc says it is having a tough time entering the Asia-Pacific because of the region's heavily regulated telecommunications sector.

BT's managing director for global communications, Alfred Mockett, said that while most Asia-Pacific countries tightly regulated the sector, there were some which were starting liberalization.

He said that because each country applied different telecommunications policies, BT's strategy to enter rapidly growing Asia Pacific markets was by "going local".

"Most markets are locked up tighter than drum," he said earlier this month.

He said that although the global telecommunications market was already huge -- worth more than US$650 billion today and expected to top $1 trillion by 2000 -- most of it was still closed.

At the moment BT and its United States partner, MCI, had a six percent share of the global market, but outside the U.S. and the UK, only 17 percent of the market was open to competition.

But by 2000 this could increase to 95 percent with the World Trade Organization's (WTO) liberalization agreement.

Mockett said BT was taking an opportunistic approach to entering the Asia Pacific.

"We're going to be very, very flexible in dealing with different governments in different countries of the region because there is no advantage of a Pan-Asia Pacific," he said, comparing the countries in the region with the homogeneous European Union.

"This means that if a government suddenly opens up its market, we'll be there," he said.

He said this would depend on the political and economic situation of each country and that problems were mostly likely to occur when governments aligned tariffs or when there were exchange rate changes.

BT's head of Asia-Pacific regulation, Stephe Wilkes, said that while some Asia Pacific countries had tight regulations, others had virtually no regulation.

He said there were countries which had regulations but did not enforce them or there were places where state-owned monopolies prevented regulations from being imposed.

"There are countries which pretend their market is open but in practice, it is not ... because a monopoly does most of the regulating," he said.

Wilkes said BT targeted 10 markets. These are Japan, China, Taiwan, Singapore, India, South Korea, Hong Kong, Malaysia, Australasia and South Africa.

Japan theoretically had a liberalized market but imposed restrictive foreign entry criteria and extensive pricing controls over telecommunications facilities retailers and wholesalers, he said.

China had a closed market and had taken only a few steps toward liberalization, but its possible entry to the WTO was likely to drive liberalization and provide greater leverage for the application of transparent regulations, he said.

In South Korea, a competitive market was emerging from the presently restrictive environment where there was a triopoly on international calls, a duopoly on long-distance calls and a monopoly on local calls.

Comparing Asia-Pacific with the UK, Wilkes said the UK had a fully open market for international, national and local telecommunications operators and no limit on the number of licenses.

But the UK had a strong and independent regulator -- the Office of Telecommunications -- headed by a director-general of Telecommunications who reported directly to the parliament and not to the Ministry, he said.

The UK also had transparent rules on general aspects of telecommunications.

Wilkes said the liberalization of a market should start with the establishment of strict regulations guaranteeing each player a chance to compete on a level playing field.

From there, the rules could be eased to reach a level where there was minimal control over the sector.

"Liberalization without effective regulation is meaningless," Wilkes said.