Regulating for telecommunications competition in developing countries: Papua New Guinea

Papua New Guinea is a low-middle income, developing, Pacific country whose telecommunications market has developed under regulatory arrangements strongly influenced by Australian policymaking. Nevertheless, it demonstrates very weak performance compared to similar low-middle income countries. Why does a country whose regulatory regime draws on current international recommended 'best practice' perform so poorly? We develop an inquiry framework based on World Bank and the International Telecommunications Union guidelines for assessing the effectiveness of regulatory arrangements in a developing country. The framework takes account of developing country challenges: limited capacity, limited commitment, limited accountability, limited fiscal efficiency, and trade-offs between factors that take account of these limits. The analysis indicates the most likely explanation for poor performance derives from lack of investment and an unstable set of ownership arrangements constraining government-owned Telikom from being an effective competitor. Weaknesses in regulator accountability provisions may have contributed to obscuring poor performance. Introducing at least one more foreign operator will improve outcomes only with clear separation of government ownership and regulatory activities and credible commitment from political agents to refrain from interfering in operations of both the incumbent firm and regulatory agencies.