The demand for telecommunications is rapidly increasing in Belize Essay
The demand for telecommunications is rapidly increasing in Belize
Research has found that an estimated fifty million minutes of international long distance telephone calls originate from Belize each year. The government has aimed to ensure that consumers have lower prices, higher quality services, wider array of service choices, and state of the art technology. It also seeks to improve the efficiency of numerous business ventures which would facilitate the economy of the country. An improved telecommunications infrastructure will also increase the level of foreign investment.
The telecommunications sector has been constrained by limited financial ability to invest in development of new infrastructure (Fox 103, 2007). As a state run institution, BTL has found it difficult to maintain a state of the art telecommunications network. Satellite, cellular, and information technologies are changing at a rapid rate. Belize already faces several disadvantages as compared with its neighbors because it is losing competition in terms of cellular teledensity. It also has the greatest unsatisfied demand for services and the longest average wait for installation of telephone lines.
It also suffers from a disadvantage in terms of the number of lines per employee and level of investment per employee. BTL has invested twenty dollars in telecommunications for every inhabitant. Other countries with similar economic levels have invested two to ten times higher. The country has annually invested less in telecommunication than the amount needed to maintain the current level of personal welfare enjoyed. The low investment rate has created several problems for BTL (Fox 103, 2007. Research conducted for a group of Belizeans determined that forty percent of the participants had no idea about the telecommunication reforms.
Twenty percent claimed that government plans to reform the telecommunication sector would fail. The government aims to ensure that the demand for telecom services will increase if the level of services is upgraded and modernized. The country aims to privatize and liberalize the sector which would give an incentive for private organizations to provide services in remote areas of the country. Numerous communities in Belize do not have access to adequate telecommunication services. Private companies have been selected to tap for customers who would provide a large number of citizens with the opportunity to obtain telecommunications services.
The Public Utilities Commission which was formed in the late 1990s regulates the telecommunications industry in Belize. It has worked with the government to develop a policy framework for the telecommunications sector. This policy is the future blueprint and development of the industry (Cronin 31, 2007). The Belize Telecommunications Act was passed in 2002 which allowed all licenses, permits, and permission for operating until the expiry of previous licenses. This act allows the development of the telecommunications industry by the system of competition.
It has granted two licenses to the Belize Telecommunications Limited and International Telecommunications Limited. An individual license was also provided to Speednet Communications Limited. The PUC has granted an estimated twenty licenses for internet service providers, data networks, and private domestic networks (Cronin 32, 2007). The PUC has also allowed the improvement in the set of rules and software applications to improve the quality of communications. Belize has not managed to open its telecommunications market to competition and privatization.
As a result it has been experiencing slower sector growth and higher prices as compared with its neighbors. High prices and the slow rate of innovation have been identified as being responsible for the slow pace of development (Cronin 29, 2007). There are also limited opportunities for entrepreneurial initiatives. The new government aims to properly design and implement reforms in the telecommunications sector. It requires political will and capacity to reform which would assist in the development of the telecommunications sector.
It also requires the need for clear policies and basic rules of the game. The policy for licensing new companies must be clear as it would ensure that the sector structure is secure in the future. The pricing rules must be well defined which would allow firm numbers and simple formulas for automatic adjustments to hold for several years. Another requirement is the powers of the regulatory authority and the decision making processes will be used in interactions with regulators. Credible and stable sector policies and rules are another objective of the government.
They aim to create a broad consensus on the reform package (Cronin 30, 2007). Another important step is the government seeks to add credibility to the reform process by relating the process to its success. Good telecommunications laws also need to be implemented according to the objectives of the new government. The current legislation needs to be upgraded so that it can assist in telecommunication reforms in Belize. A major task of the Belizean government has been to create credibility for its telecommunications reform policy.
Private investors believe that the absence of credibility would result in the risk of expropriation and having investors taken hostage in terms of the ability of the government to force utilities to charge unprofitable rates for their services. While the government wants to encourage private investment, it must create an institutional arrangement that limits their own ability to behave opportunistically once private telecom operators undertake their investments. The creation of regulatory bodies creates questions concerned with accountability and autonomy.
Empirical studies that have studied the Belizean telecommunication sector have tried to explain the partial telecommunications reforms or the effects of political and institutional variables on network deployment. Research has explored how new political institutions measured by index of checks and balances affect the long run level of penetration in Belize (Cronin 39, 2007). Political limits have a strong and positive relationship with the growth of main lines. It highlights the importance of policy for promoting steady and strong incentives to private investors in a sector where opportunistic behavior might be expected.
Other researchers studied the effects of telecommunications regulation and political variables in which they found that these variables help explain the level of network expansion. A better and specific regulatory environment leads to greater investments in telecommunications. Ownership and competition by private investors tend to create favorable environment for the expansion of telecommunications. Regulation helps assist the private firms that enter the telecommunications sector of Belize.
Research conducted for the links between privatization and network expansion found that privatization is strongly linked with the efficiency and reliability of the telecommunications sector. Competition a major variable can have a positive effect on the telecommunication sector. Regulation is however considered to negative with relation to network expansion. Regulatory environment constitutes an important factor for private organizations that seek to operate in Belize. Strategic decisions made by companies can be linked with traditional economic factors and regulatory conditions.
The performance of the telecom industry affects and is affected by the political and regulatory decisions. Privatization, liberalization and regulatory enhancement are linked and influence each other in the success of the telecom industry (Cronin 69, 2007). Belizean telecommunications market is an emerging market which is considered risky by major telecom operators. It also suffers from volatility because of the vulnerability of the economy to market fluctuations. Consumers in Belize are also sensitive to prices even during the times of economic boom. Low prices and regulations make Belize an unattractive option for Western telecom companies.
Despite major bills and reforms, the sector continues to be dominated by the BTL. Belize Telemedia retains its monopoly and hegemony over the telecommunication sector. It is also favorably supported by the government which continues to provide economic assistance to the company. The sluggish capital market and uncertainty about future economic development in Belize means that carriers will prefer technology that makes the most of existing infrastructure. This will increase the sales opportunities with products that offer reliable and efficient service.