From department to regulator
the liberalisation of telecommunications
Transport and Communications Minister Censu Galea addresses a conference
on Managing the transition from a government department to a regulator.
Mr Galea highlights the liberalisation of the telecommunications sector
and stresses the importance of competing openly and fairly
After the liberalisation of the telecommunication sector in the United
Kingdom in the early eighties, various countries all over the world
have realised the benefits of a liberalised market and implemented radical
changes in most sectors of this industry. In Malta, we are now, also,
gradually, experiencing this change from a monopolistic situation to
a liberalised market according to a carefully planned process as outlined
in the National Plan for the Liberalisation of the Telecommunications
Sector. This plan was launched in August, 2000 and will be reaching
its climax at the end of this year when the last remnants of the old
monopolies will be removed. This will mean that fixed line telephony
as well as the international gateway service will be open to competition.
For this reason, I find it most appropriate that we are meeting here,
at this particular point in time, to discuss liberalisation and the
setting up of an independent regulatory body in the telecommunications
sector, which will oversee and facilitate the great changes that are
taking place in this vital sector of our economy.
Over the past three decades, as telecommunications market liberalisation
developed, many governments realised that the introduction of new regulatory
systems was essential for a competitive telecommunications market. Various
governments embarked on different approaches ranging from the setting
up of a Regulatory Authority under full government control, to the example
that was pioneered in the Nordic countries where they set up fully fledged
The Nordic model was a success and was adopted by a number of other
industrialised countries. This line of thought has yielded results,
and the restructuring in the regulatory sector paved the way for the
entry of new operators, the development of new technologies, the provision
of new services and in the creation of new skills and numerous job opportunities.
Some key elements in the setting up of Regulatory Authorities were universally
accepted and the first key requirement was to develop a regulatory institution
independent of all interested commercial parties, in order to ensure
fair competition among all market participants. In Malta, this presented
the Government with a problem, as it was faced with a situation where
the old monopoly was partially privatised before the market was liberalised.
We all accept, that the best way to establish a telecommunications regulatory
body which has no connections with interested parties, is to ensure
regulatory independence. This is the principle that we adopted when
the Malta Communications Authority was set up. A telecommunications
Regulator that is not only independent from the industry, but also operates
at a distance from the Ministry as well as or other government bodies,
at a time when the Government is still a major shareholder in the old
At this point, one might ask, how can the Minister expect the Malta
Communications Authority to be independent when it still falls under
his responsibility? I believe that The Malta Communications Authority
should be accountable to the Ministry by adhering to Government policy
as outlined in the National Plan for the Liberalisation of the Telecommunication
Sector. I also expect it to strive for efficiency, effectiveness, value
for money, transparency and impartiality in the execution of all its
These expectations in relation to a regulatory authority should, in
reality, be no different from what the Minister expects from such an
Authority, other than latitudes in financial and human resources management.
In the case of the Communications Authority, the Minister can ensure
accountability in financial matters and regulatory performance by applying
the tools at his disposal as enshrined in the Malta Communication Authority
The law clearly states that the Minister may, in relation to matters
affecting the public interest give instructions on policy to be followed
by the Authority in carrying out functions vested in the Authority.
The Authority is also legally obliged to grant the Minister facilities
for obtaining information with respect to its property and activities
and furnish him with returns, accounts and other information with respect
thereto, and afford to him facilities for the verification of information
furnished, in such manner and at such times as he may reasonably require.
The Minister is also briefed on the operations of the Authority in an
annual report submitted to him and the Minister of Finance, which contains
any information relative to the proceedings and policy of the Authority.
The separation of policy-making from regulatory functions may at times
become a grey area. However, the difficulties or problems that may arise
from such separation stem from the extent to which Ministerial discretion
is exercised in relation to the overseeing of the activities of the
Authority, in ensuring that the Authority moves in line with Government
policy and in utilising the accountability tools afforded to the Minister.
There is really no magic formula for ensuring that the Ministry does
not opt for either abdication or excessive control. It is really a question
of close co-operation between the policy maker and the regulator to
ensure responsiveness of regulation to Government Policy on an ongoing
basis. The role of the Ministry in ensuring responsiveness on the part
of the regulator is therefore to lay emphasis on the attainment of Governments
strategic goals and rather less on control of the day-to-day running
of the regulatory body.
The advantages of the separation have to do with visible detachment
of Government from the regulatory aspects of the telecommunications
market. It creates an environment that is fair and as a result is conducive
to liberalisation and investment in the telecommunications sector.
The presence of regulatory authorities in my portfolio has not altered
my constitutional responsibilities as a Minister in any way, and I am
still fully responsible for the business of Government in articulating
policy relating to telecommunications and in ensuring that such policy
is implemented. In this scenario, the Permanent Secretary in my Ministry
has specific responsibilities regarding regulatory authorities. The
Permanent Secretary supports the Minister in ensuring the accountability
of the authorities under his portfolio as laid down in the law and in
providing policy advice to the Minister.
My Government has committed itself to liberalize the telecommunications
sector. On the other hand, it is important that this liberalisation
is carried out with our feet steadily on the ground. It is also imperative
that no one gets a dominant position that prevents the possibility of
new operators joining the fray. As it has always been said, there must
be a level playing field where nobody is afforded any advantages.
Therefore, the role of the regulator, which has now been enhanced with
the setting up of the Communications Authority, is a vital role which
will reach its full capability when the market is fully liberalised.
During the interim period of partial liberalisation the Regulator had
to operate within the prevailing legislation of the country. From time
to time, this period of gradual change presented the Regulator with
various quandaries mainly in dealing with the natural reluctance of
operators which had been used to the comfort of a monopolistic situation
in accepting that change was after all in their interest.
Over the last couple of years liberalisation of the Telecommunications
market has brought various changes that even the most liberal minded
amongst us could ever imagine. These initiatives to open up the market
were inspired by the beliefs in the merits of the free market which
itself is the catalyst that brings technological change. The combined
effects of deregulation and technology have opened up the local telecommunications
market and this trend has led to a proliferation of services that most
of us had previously believed impossible to exist in a small island
economy like ours.
I do not believe that anyone now contests the fact that liberalisation
has been beneficial not only to the operators and their workforce, but
even more so, to the consumer who now has a choice of operator, services,
as well as custom made tariffs at very competitive prices. Now we must
ensure that we maintain this momentum of expansion while being even
more vigilant to prevent any attempt by any operator to corner a particular
market by resorting to anti-competitive practices. We must also strive
to create a situation here in Malta which will make our country more
investor friendly. The advantage of having an efficient and truly independent
Regulator in a small island economy is vitally important. I believe
that the record of the Malta Communications Authority, so far, augurs
well for the future.
There is no easy formula to guide the regulators tasks and actions
but there is no doubt that the role of Regulatory Authorities elsewhere
has contributed greatly to the smooth transition from the old monopolies
to the present situation where operators can compete openly and fairly.
I believe that as the Telecommunication sector matures, we can move
closer to a situation where the role of the Regulator will be gradually
facilitated by market forces.