# **I. INTRODUCTION**

The dynamism of global telecommunications markets is widely attributed to rapid technological development and an increasingly liberal policy environmnent. Over the past decade, a large number of Asian economies have also embarked on reform paths, and witnessed significant expansion of their telecommunication networks and striking improvements in quality. But neither performance nor policy have been uniform across the region. Countries differ in both the sequence and extent of reform. Furthermore, it is not always apparent where the improved performance is because of specific policy choices rather than in spite of them, and where more could have been achieved had policy been different.

This paper addresses two questions. Is it possible to identify the constituents of good telecommunications policy? And is it possible to further the choice of good policy at the national level through multilateral negotiations? Telecommunications liberalization is a complex and relatively new process. Choices have to be made regarding the privatization of state-owned telecommunications operators, the introduction of competition, the opening of markets to foreign investment and the establishment of pro-competitive regulations. While there is growing consensus that each of these elements is desirable, it is a rare country that has immediately gone all the way on all fronts. In Asia, in particular, governments have differed in their willingness to concede control to the market, and most have a penchant for gradualism. Competition has been introduced, but the number of firms has been fixed by policy; privatization is often partial and there are limits on foreign participation; separate regulators have been created but they are rarely fully independent.

Even though economic theory is bold in its pronouncements on the extremes, it is more tentative in its prescriptions on the transition path. How much greater are the social benefits if privatization is accompanied by competition? How much greater are the benefits if all barriers to entry are removed in markets where some competition has already been introduced? How much competition is desirable-is there no good reason to limit entry? How far should foreign investment be encouraged in concentrated markets? How important is an independent regulator for the emergence of robust competition? What should the regulator regulate? How is any adverse impact of liberalization on income distribution and poverty best addressed? There is a surprisingly long list of questions to which we cannot yet provide definitive answers, though there is no dearth of strong opinions.

Fortunately, the telecom reform process is now old enough to have produced the data needed to analyze the implications of alternative policy choices. In its analysis of policy and performance in the Asian countries, this paper draws upon a database on telecommunications policy and regulation that has been recently created by the World Bank in collaboration with the ITU.' While there are numerous valuable case studies of the telecom sector of Asian countries, this ' This database combines responses to government surveys conducted by the International Telecommunication tJnion (ITU) from 1995-1999 with market reports from Pyramid Research, operational documents from the World Bank, information from national regulators, and various other publications.

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