14 - 20 March 2001

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Strengthening communications to take on the global new economy

Joe Tabone, Chairman and Chief Executive Officer at the Malta Communications Authority, recently spoke at the Federation of Industry's annual conference. In his address, Mr Tabone emphasises the significant potential for Malta in the digital economy – and the need to act rapidly if Malta is to carve a niche for itself in the sector. Mr Tabone also highlights his vision of the Authority's regulatory role, which he views as mainly strategic, rather than interventionist.

I was asked to focus my talk on what steps I would like to see as a means of strengthening the independence of the Regulatory role. To ensure on the one hand a fair deal to consumers and on the other, a steady future development of the telecoms sector.

The theme is very apropos, as this correlation between communications and what is loosely termed the new digital economy is behind the unprecedented growth and development we have witnessed in the American, European and Asian economies, most particularly in very recent years. The main drivers of this new economy are acknowledged as being:
• Telecoms deregulation
• Increased penetration of mobile devices
• Political stability
• Industrial relations climate and
• Increased availability of venture capital

It is therefore salutary for us to view prospects for certain aspects of our continued economic development in the context of these factors.

But before going into this, I would first of all like to focus on the new regulatory framework, setting up the Malta Communications Authority. This is precisely intended to bring about the independence, which is required to foster the development of the telecoms sector, thus providing the underpinning for economic growth and development.

As regards independence, where previously the Competent Authority existed as a Department of government, the new Authority, which came into being 1 January this year, is a statutory body accountable to the Minister for Transport and Communications. It is self-sustaining from licensing revenues, its regulatory powers circumscribed within the Malta Communications Act. These powers are wide ranging with regards to overseeing government's programme of liberalisation in telecommunications in the coming two years and for charting the landscape beyond.

I should like to add that while the statutory independence of the Authority is intended to shield such bodies from political influence, it does not imply that such bodies should be insensitive to national policy agendas. On the contrary, their actions must be anchored in the economic realities, stage of development and political agendas of the day.

The Authority's primary objective is to ensure the availability of choices and fair competition for consumers, and implicitly to create an environment that is more conducive to business development and growth in the country. Additionally, the Authority is also the agency responsible for electronic commerce, data protection and computer misuse. Viewed holistically, and in the immediate term, this constitutes much of the necessary ingredients for a Regulatory framework so essential for new economy type activity. I will elaborate a little later about the longer term.

Communications, electronic commerce and implicitly data protection represent the cornerstones of the new digital economy. This new economy is knowledge and ideas based, where the keys to job creation and higher standards of living are innovative ideas and technology, embedded in goods and services. It is all about competing for the future, the capacity to create new products and services, and the ability to transform businesses into new entities that yesterday could not be imagined.

In previous fora in the last couple of months I have had the opportunity to convey a hint of a vision of this regulatory role, which I see as being mainly strategic rather than interventionist. Understandably, the success for the attainment of this is largely in the hands of service providers. It is they who must hammer out agreements amongst themselves on matters relating to connectivity and infrastructure sharing. But coincident with this, regulatory success should be measured in terms of the climate we are able to create for investments in infrastructure development and operator choices resulting in service offerings of desirable quality, which are competitively priced. These latter are vital if Malta is to continue to make headway in generating business development ventures, be they local or foreign.

I say to continue, because I think that a good start has been made in recent years in the provision of financial services, betting operations, software and network development as well as ancillary electronic and high technology manufacturing industries. But quite apart from sectoral business opportunities, communications offer the scope for re-engineering business operations both internal as well as business to business. To do so entails a radical re-thinking of the mode in which we operate and run our enterprises.

I recently had cause to comment publicly about the Internet and how it has dramatically changed the corporate landscape forever - from organisational structure to processes, products and services produced, including the way these are delivered. I talked about local business opportunities in training, consulting, design, development and support of applications and web sites, billing centres, call centres etc. Communications offer us the essential link to this global economy and de-limits our constraints of geography.

Today's conference prospectus referenced changes in our legislation, which will ultimately modernise the country and create the conditions for improved economic development. It stated that "to succeed, this process requires a certain understanding, and changes in attitudes and in our culture". The legislation I mentioned earlier is now either in place or will be promulgated shortly as will the attendant organisational capacity of the Authority. The understanding and the culture referenced by your Federation, we all have to collectively and assiduously work on.

But speaking globally, and we must first and foremost accept, that in order to survive and prosper, we need to integrate ourselves into global developments. I say this because I fear that at times we may delude ourselves, that we are different and this is Malta, and we must therefore do different things and do them in our own very unique way. In this global context until quite recently, managers of established old economy type companies concentrated on running their business well: making cars or products, importing or exporting, property development, tourism, selling insurance or what have you. They had to contend with constant change, of course, but normally of a predictable kind: costs had to be cut, new products launched, mergers and acquisitions dealt with. In the local context, business also had the advantage of protective barriers.

Now life has become a little more difficult. Change has become more complex and ubiquitous. Established companies are no longer quite sure who their competitors are, or where their core skills lie, or whether they should abandon their particular line of business that once served them so well. And so I come back to the Internet, which lies behind this new uncertainty. It is this development that has begun to transform managers' lives.

But why this disruption to the old order of doing things? We may say that after all that e-mail is no more than the old letter or memo and the electronic invoice a screen version of its paper predecessor, the Intranet is the old bulletin board etc. The answer lies in the many qualities of the Internet, as a market place, an auction house, an information system, a tool for manufacturing goods and services, a vehicle for locating new suppliers, co-ordinating or collaborating on a project, collecting, warehousing, processing and managing data.

And at the root of the changes is the dramatic fall in the cost of handling and transmitting information which is at the core of any business process, be it an instruction, a plan, an advertisement, a blueprint, report or a set of accounts. All this information can be handled far more cheaply than before. However success in exploiting these opportunities is not merely dependent on the development of a business, technology or Internet strategy. It needs intelligent, empowered employees and a culture of openness and willingness to experiment. More than anything else it needs commitment from the top. It needs determined leadership. I have so often come across situations, where despite major investments in technology, senior executives still refuse to read their own e-mail, or worse still not have access to it. Sadly they wear their techno phobia as a badge of honour.

As a personal anecdote, since assuming my present position in the last month, I have succeeded in conducting formal business with government agencies, procured consulting services, entertained job applications and project managed activities using Internet facilities. I would not say it was easy to accept this mode of conduct of business, but in the end all the parties would acknowledge that it was infinitely more cost effective and expeditious. But this is merely a hint of what is possible. This should be commonplace business conduct.

Government has set out its vision for electronic government - birth certificates, licensing, payment of bills or taxes, education, social security disbursements. These plans in themselves represent business opportunities in application software, Internet and communications development.

But quite aside from these intrinsic opportunities, Maltese business must lead the way in re-engineering processes to accept electronic orders, in inventory management, in customer call centres, in adopting intra and inter company collaboration, in diversification, in empowerment of staff, in improved communications, in training etc. In short, in moving from the old way of doing things to a new way. It is this culture change, which I think your Federation is trying to convey in the theme of this conference.

Talking about the accelerating pace of change sounds like a tired old cliché. But to illustrate the reality of this; it took 38 years for radio to reach 50 million people in the US, 13 years for Broadcast television to reach the same number, Personal Computers took 16 - while the Internet has reached that level of usage in just 4 years. Mobile telephony penetration has exceeded fixed telephony in several countries. The local mobile subscription base has increased 300% in the short course of 12 months. Internet participation in Malta, while lower has increased dramatically in the past year. Most households to-day have cable or satellite TV access. And the convergence of technology, information, media and electronics is happening as we speak.

The potential for Malta in this digital economy is significant, but we need to act rapidly if we are to carve out a niche for ourselves in this sector. As we are often reminded, our strategic location, multi lingual and skilled resources, our company law and legal framework, including the new Business Development Act, as referenced by the Minister for Economic Services, make for a conducive environment for such investments. With this digital industry at a relatively embryonic stage, it allows for fairly easy entry, with very good returns, albeit at high risk. Because this new digital economy is knowledge based, it is well suited for sustainable development in Malta. But the opportunity window for entry is short - possibly a year or two - and with brisk competition for a cut of the action from many countries.

All this provides unparalleled opportunities for business and at the same time, challenges for government to ensure currency in its regulatory framework, which factors in this convergence and future developments which we cannot even foresee. This is the longer term Regulatory framework. The recently published White Paper in the UK titled "A new Future for Communications" sets out how that country is proposing to chart a course through this uncertain but exciting environment to create a communications infrastructure and service which allow consumers and business to make the most of these opportunities emerging around them. In charting such a course, government recognises it has to be clear on two issues; the goals it seeks as a society and the regulatory framework that helps to achieve such goals.

Malta is following a similar path in the creation of the Malta Communications Authority. On 1 March the new Authority will be operating out of new premises in Sliema. I'm hopeful that soon after, we shall have on board a range of core competencies to provide some substance behind this regulatory framework. We have embarked on constructive dialogue with service providers and are already witnessing the fruits of these efforts in improved competition, services and cost reduction for consumers. We have a long way to go, and no doubt it will be a tortuous journey, but in the end I am confident that it will be yet another initiative that will help immeasurably the economic climate and development potential of this country.

The Business Times, Network House, Vjal ir-Rihan San Gwann SGN 07
Tel: (356) 382741-3, 382745-6 | Fax: (356) 385075 | e-mail: editorial@networkpublications.com.mt