INET Conferences




Other Conferences

[INET'98] [ Up ][Prev][Next]

The Most Regulated Service in Developing Countries

Rosa M. DELGADO <>
Société Internationale de Télécommunications Aéronautique


The Internet, a fast growing computer network, is enabling millions of people to improve their standard of living by becoming better informed to be able to participate in decision-making. The thirst of information in developing nations is pushing decision makers towards identifying key sources of critical data and supplying these data via the Internet.

The Internet is a key to competition, deregulation, economic growth, social change and high productivity. One of the conditions for telecommunications liberalization leading to fully competitive telecom markets is that market entry should be subject to as few barriers as possible. On the other hand, it is clear that some level of regulation is necessary to prevent power abuse by incumbents and to ensure the provision of a universal service.

However, the main barriers to the Internet's expansion in developing countries remain the lack of reliable telecommunications infrastructure, competitive regulatory policies, affordable communications, adequate equipment and awareness of potential benefits.


1. Introduction

The origins of the Internet can be traced to the 1960s when the Department of Defense of the United States decided to fund the development of a data network that would allow networked computers to communicate efficiently. Thirty years later, the Internet is still most widely used in the United States. Although the 1990s have been marked by the Internet's explosive globalization, the large majority of hosts still reside in the industrialized nations.

Advances in data networks and telematics in the last decade have revolutionized the Net. The Internet, a data network that can easily carry voice, still relies on a voice network which is struggling to carry data. Today, voice-over IP poses a serious threat for national operators whose largest revenues traditionally come from long-distance rather than domestic services. With the introduction of a global personal mobile satellite service, the distinction between a domestic and international system is becoming less and less relevant.

2. Initial status

In most developing countries the Internet was initially introduced in the form of electronic mail facilities within a framework of legality, with the vast majority of these initiatives being spearheaded by international organizations and academic institutions.

3. Current status

In most countries of the African continent, telecoms which hold telecommunications monopolies are in the process of introducing the Internet by providing both backbone and Internet services with a restricted private sector participation. As a result, most countries are connected to the Internet with a very low bandwidth and rate of host penetration.

Some emerging countries have overcome some of these barriers. For example, most Latin American countries have adopted the public-private model to expand Internet connectivity despite the existence of cumbersome state-owned telecommunications operators. This model has been complemented by an intense awareness of the economic benefits of electronic networking.

A constraint shared by most developing countries is that telecom laws have not been adapted to up-to-date technologies. Decision makers are not always aware that poor legislation could lead countries to a point of stagnation. In the past, legislation was established along the lines in force in the colonial countries. It is clear that legislation needs to be updated and know-how in this field is urgently required. In this context the use of outsourcing experts from emerging countries that have already acquired the same type of experience should be explored on the basis of south-to-south collaboration.

Government fears of losing control of services traditionally exploited by the state are leading to an over-regulation of the Internet. Licenses to operate play an important role in this respect because rather than facilitating the tasks of operators and Internet service providers (ISPs), they actually constitute the main barrier to the provision of competitive services.

4. Regulatory framework

Over the years, the Internet has grown within a relatively regulation-free environment. Most of the regulatory activity was concentrated on defining standards and protocols necessary to operate the network. However, as electronic commerce increases on the Net, the development of a regulatory framework has become critical in several sectors.

The following issues are most likely to be subject to regulation:

  • Internet available to public;
  • Backbone access (promote connectivity or leave it to the market);
  • Naming and addressing administration;
  • Standards and routing administration;
  • Voice/encryption/cryptography;
  • Information services (whose content may be subject to control, such as in the case of pornography or politics);
  • ISP licensing (market-driven activity or monopoly basis);
  • Tariffs; and
  • Other issues, including dial-up access, voice, ISDN, leased lines, cable TV, wireless, LEO satellites, and ATM.

5. Facts

Most developing countries have retained monopolies over the public telephony services, network infrastructure, and international operations. Globalization and socioeconomic conditions are pressuring the monopolistic approach to face the challenge of the removal of all monopoly barriers in countries with the least developed infrastructure.

However, on the pretext of protecting public interests, the Internet has been curtailed and sometimes even disabled. On the pretext of preventing access to "undesirable" information, governments in the less-developed world are over-regulating the Internet. "Undesirable" information frequently means information considered as obscene and pornographic, but also includes criticism of governments and human rights attacks.

The following tendencies are evident in some countries:

  • Restrictive access to the World Wide Web (Web): Customers who access "undesirable" information are liable and may lose the right to access the Internet via any local ISP;
  • Restrictive access to electronic mail: Customers who exchange "undesirable" information via e-mail are liable and may lose the right to access the Internet via any local ISP; and
  • Restrictive access to information: ISPs are liable for providing access to "unlawful" information. ISPs that allow users to access this type of information via the Web or e-mail could lose their license as service providers.

Therefore, how can ISPs prevent the access of "undesirable" information by customers? In order to protect themselves, ISPs are sometimes obliged to infringe user's privacy by investigating potential users when they desire access, cutting access to users who access such information, or even monitoring the e-mail system.

Other barriers to Internet expansion in developing nations include the predominance of the English language content, which limits the benefits for local non-English-speaking researchers and industries. However, the bottlenecks remain poor national network infrastructures and monopolistic regulatory policies.

6. Winning policies and programs

Measures that would speed up Internet growth include freeing the local loops of telecommunications networks from monopolies, lowering the cost for circuits leased to ISPs by the phone companies, and improving the currently unreliable and unfair Internet addressing system. Periodic price controls on network industries would offer advantages, such as more profit sharing and performance incentives for market players.

A competitive environment for ISPs, the establishment of adequate policies for electronic commerce, and the introduction of effective incentives for the provision of contents are essential measures for attracting private investment in infrastructure and in content provision. It is clear that nations that are able to attract investments will be better equipped to benefit from the emerging global information infrastructure. Last but not least, unless efficient and competitive markets drive the growth of the Internet, its evolution will be threatened.

Other programs include the need to

  • Accelerate Internet development and migration national plans;
  • Encourage governments to remove regulation barriers;
  • Reduce delivery times for licenses to operate; and
  • Simplify administration procedures.

7. Policy concerns

In some countries, operators (including ISPs) are liable for objectionable material that passes through or is stored on their equipment without their knowledge or intent. In other countries, operators are not always liable if they follow the guidelines or code of practice developed for the management of objectionable material or restricted material on their system or take reasonable steps to avoid infringements.

8. Expectations

Local communities of users in the developing countries expect an open market competition environment that will bring reliable Internet services at affordable rates. However, a rapid Internet evolution will depend mainly on financial resources available to improve poor network infrastructure and, in particular, national telecom legislation that will encourage open competitive markets. It is clear that the less regulated the Internet is, the more beneficial conditions will be for rapid development and expansion.

Information exchange between national and regional key players should facilitate the search for solutions to crucial problems in such areas as education, health, environment, and so on. The Internet offers the opportunities to make resources available to a larger group of users through health and nutrition programs. For example, 20 million people in the world are infected with the AIDS virus and 14 million of them are Africans, due to a lack of adequate health awareness programs in most African countries. Educational programs for all sectors of the population and in particular in rural areas can be made available in the local languages. The promotion of Internet connectivity at the level of research and education communities will help them leapfrog national information infrastructures and strengthen local core capacities.

Adequate regulatory issues will allow Net shoppers worldwide to use the Net to buy products, especially from informal producers who otherwise would not have access to that market. Development is not just a matter of food but also of having a stake in the future. The Internet could provide the opportunity for developing and emerging nations to generate wealth. But to remain competitive, the private sector needs the abolishment of monopolies and policy barriers and the establishment of a truly fair environment for economic competition.

9. Conclusions

  • The Internet remains the most regulated telecom service, in particular in developing countries;
  • Deregulation is vital to competition and to the future of the Internet;
  • Inefficient state-owned telecommunications monopolies, poor infrastructure, lack of relevant skills, and low computer penetration remain the main barriers to the fostering of the Internet;
  • The Internet is a tool used by some autocratic countries to control so-called undesirable activities;
  • Bureaucracy, lack of motivation, and corruption are also barriers to the Internet's evolution; and
  • Lack of resources is the result of low investment in countries that do not have an open competition environment.

10. Recommendations

  • Internet content regulation should be prohibited;
  • Internet Freedom Acts should be established with a view to resolving many of the competition bottlenecks facing the Internet today;
  • National legislation should take into consideration the local needs for promoting liberalization; and
  • Decision makers should focus on alleviating crucial problems in the spheres of education, health, environment, and trade and not on controlling the Internet.


Project Manager, International Relations - Carrier Relations
Société Internationale de Télécommunications Aéronautique (SITA)
26 chemin de Joinville - P.O. Box 31 - 1216 Geneva - Switzerland
Tel: (+41.22) 710.02.66
Fax: (+41.22) 710.01.51

[INET'98] [ Up ][Prev][Next]