July 1999

Mediterranean Area

Several observations about the telecommunications regulatory regimes in the Mediterranean area are listed below :

• there are important differences between the countries in the Mediterranean area. Some countries have liberalised their telecommunications sector, while others have not yet initiated a deregulation program,

• however, most of the countries indicate that the development of telecommunications infrastructure and services is an essential component of their global development policies. Most of them are currently involved in in-depth reforms of major economic sectors, in particular the telecommunications sector.

1. Reforms and new telecommunications laws

One can observe four categories of countries according to the regulation of telecommunications :

1.1 Israel, the most liberalised country. Indeed, since June 1st 1999 networks and services have been liberalised for data and domestic public voice services. International voice services and networks should be totally liberalised in 2002 (currently three operators are in competition);

1.2 Cyprus, Egypt, Jordan, Malta, Morocco, Tunisia and Turkey. One can observe that the regulatory and competitive situations are not totally homogeneous in these countries. However, all are involved in a liberalisation processes of some kind. It seems interesting to outline the main characteristics of these reforms :

Regulatory aspects

• most of those countries are signatories of the World Trade Organisation Agreement on Telecommunications reached in February 1997 under which they agreed to liberalise the sector from 1999 or onwards. Examples being Turkey and Tunisia.

• Cyprus, Malta and Turkey are candidates to join the European Union, and have expressed their willingness to transpose EU directives into their national regulatory frameworks,

• most of these countries have adopted or are preparing new telecommunications laws that include deregulation objectives :
  • the objective of liberalising the telecommunications market in the medium term
  • the objective of creating an independent regulatory body
  • the objective of privatising the historic operator (which is not currently an objective of Jordan for example)

Competitive aspects

• it is easy to observe that all these countries have started to implement competition in certain sectors, such as the mobile sector, data services or Internet.

1.3 Lebanon and Palestine.

These countries are engaged in in-depth reforms aimed at the (re)-construction of their networks. Telecommunications are seen as key assets to stimulate economic recovery. National debates exist surrounding the future status of telecommunications.

1.4 Algeria and Syria.

The deregulation of the telecommunications sector is not yet planned. Nevertheless, the government of Syria has drafted a program aimed at the improvement of telecommunications infrastructures and services. In Algeria, it is worth noting that the government liberalised the provision of Internet services in 1998.

The table below provides an overview of the regulatory evolution in the Mediterranean countries.

Table 1 : Regulation overview in the Mediterranean countries

2. Privatisation of the historical operator

Israel and Malta are the only countries to have begun privatising the historic operator.

In the remaining countries, the historic operator is still 100 % state-owned, and most of the time, still integrated with the Ministry of post and telecommunications. However, an important proportion of these countries have begun economic reforms aimed at economic and social development. The privatisation of major state enterprises is normally a main component of the reform program. Indeed, privatisation is conceived as a key element in:

• accelerating the modernisation of major sectors
• bringing know-how and new management methods
• attracting foreign capital

For example, Morocco should privatise the historical operator by 2000 and Turkey issued a new law including the objective to privatise Turk TeleKom.

3. The liberalisation of services and infrastructures

3.1 Mobile services

Competition has been introduced to the mobile sector in Turkey, Israel and Lebanon. A second GSM licence was granted in July 1999 in Morocco. Countries such as Jordan and Tunisia plan to issue new mobile licences in medium term.

The table below shows the impact of competition on the development of mobile markets.

Table 2 : Number of mobile operators and penetration rate of mobiles

3.2 Data and Internet services

As it can be seen in the table below, competition has been widely introduced into the market for the provision of Internet services. In an important number of countries, the provision of the Internet backbone remains under the monopoly of the historic operator, but one can identify a number of service providers as well. In fact, It appears that the Internet is accelerating the process of liberalising telecommunications.

The table below provides an overview of the competitive situation in the Mediterranean countries.

Competitive situation in telecommunications

KEY:

3.3 Public voice services and infrastructures

• in June 1999, Israel, liberalised public voice services and infrastructure
• For most of the countries, the process of full liberalisation should start from year 2003 and onwards.