# _Fixed-line: policy_

Despite this common overall trend in policy, the approach to sector reform and the progress of reform have differed markedly among Asian economies. In fact, it is possible to find almost every combination and sequence of changes in policy in the region. This is illustrated in Figure 1, which depicts the reform path of 13 major Asian economies in the 1990s.3 Countries such as China, India and Korea, for example, have introduced competition in selected fixed-line market segments, while the incumbent operator was under full public ownership. Others have first privatized their state-owned monopolies and deferred the introduction of competition to a future date-sometimes through explicit exclusivity periods granted to private investors. This group of countries includes Hong Kong, Indonesia, Malaysia, Pakistan, and Singapore. Some economies have introduced competition and privatized more or less at the same time (Japan and Sri Lanka) while others have made limited, if any, progress towards private, more competitive market structures (Taiwan and Thailand).

Countries also differed in their choice of the fixed-market segment that was first opened to competition. The region was among the first in the world to open up local markets to competition. Hong Kong, India, and Singapore first liberalized this market segment. Korea, Malaysia and the Philippines first permitted competition in international services, while China started liberalization by introducing a second domestic long distance carrier.

The approach to regulation has also differed across countries. Figure 1 shows when a separate regulatory agency was created in each country. It is striking that in a large number of major economies-including China, Indonesia, Japan, Korea, Malaysia, Taiwan and Thailandregulatory functions are still exercised by the sector ministry or other government bodies. It is interesting to note that in several of the countries which do have a separate regulator (Hong Kong, Pakistan, Philippines and Pakistan), the responsibility for establishing interconnection rates lies with the dominant operator-though the regulator is responsible for arbitration of disputes.

The picture of the state of fixed-line competition that emerges from Figure 1 must be heavily qualified. Most governments have limited the service segments subject to competition, restricted the number of licenses awarded or have imposed geographic limitations on new market entrants. For example, India divided its markets into separate circles and admitted one private operator in each to compete with the incumbent Department of Telecommunications (DOT). New entrants were allowed to offer intra-circle long distance services, but the DOT maintained its monopoly on inter-circle long distance telephony.

On the other hand, several countries that have retained their public service monopolies allowed private entry through build-operate-transfer (BTO) and related arrangements. In Thailand, for example, fixed-line basic services concessionaires have installed networks with total main line capacity of 4.1 million lines, while the state maintained control over the networks. Similarly,

> 3 The information shown is based on the recently created World Bank/lTU database on telecommunications policy and regulation.

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