Telecommunications Licensing Regime: A New Method of State Control After Privatisation of Telecommunications

• Author: Atip Latipulhayat
• Position: Senior Lecturer in Telecommunications Law and International Law Faculty of Law, Padjadjaran University, Bandung-Indonesia
• Pages: 24-35

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Atip Latipulhayat

Senior Lecturer in Telecommunications Law and International Law

Faculty of Law, Padjadjaran University, Bandung-Indonesia

atiphayat@gmail.com

Abstract: Telecommunications is one sector historically subject to state monopolies

in both developed and developing countries for many reasons. The Indonesian legislation

stipulates that the telecommunicatio ns sector is of national strategic importance and must

therefore be controlled by the state. Not surprisingly, t he Indonesian government has tended

to read the term “state control” as state or government ownership. Since the late 1980s,

there has been a radical policy reversal whereby governments have progressively reduced

their ownership and involvement in this sector by increasing private sector par ticipation.

One of the most important consequences of this is that privatization has led governments no

longer being able to play traditional tripartite roles of owner, operator and regulator of

telecommunications. More specifically it raises a critical question; in what ways might t he

government maintain its control over the sector when privatization reduces state ownership

in SOEs? This paper argues that licensing is a legal tool to maintain state control after

privatization of telecommunications. It can be used as a tool to implement important

national priorities, be it opening the markets for eq uipment, services, and networks to

immediate o r gradual co mpetition, o r to pre serve a monopoly for the time being so as to

permit investors to recoup their expenditures or to continue a source of revenue for the

government.

1. Introduction

A telecommunications license aut horises an entity to provide telecommunications services or operate

telecommunications facilities. Licenses do not have the same importance in all countries. In a few

countries where monopoly telecommunicatio ns operators have long been privately owned, notab ly

Canada and the US, there have traditionally not been teleco mmunications licenses. Instead, regulatory

terms and conditions were imposed through decisions, orders or traffic-approval processes of a

government regulator y authority. In some other countries, including Latin American countries, private ly

operated telecommunications carriers were traditionally granted conces sions or a franchise.

This paper examines the concept of the license particularly its relevance with state control after

privatisation. The paper begins by pro viding a brief discussion on the privatisation of telecommunications

and more specifically on the methods of state control after privatisation. Subsequently, the paper reviews

the concept of a lice nse including its obj ectives and type of licensing regime. To obtain an empirical

understanding, the app lication of the licensing s ystem in Mala ysia and the UK are subject to special

scrutiny. Finally, the paper examines the present Indonesian licensing regime and this is followed by an

analysis of the relation between a license and state control, and also suggestions are considered for the

future Indonesian licensing regime.

2. Privatisation of Telecommunications

Privatisation and telecommunications industry have been interacting since the 1980s and state control in

the sense of government i nvolvement in the sector has been a central is sue. Telecommunications is one

sector historically subject to state monopolies in both developed and developing countries for many

reasons. The Indonesian legislation stipulates that the telecommunications sector is of national strategic