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World Bank Document Report No. 40142-AFR Public Disclosure Authorized West Africa Regionalizing Telecommunications Reform in West Africa June 22, 2007 PREM 4 Africa Region Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of the World Bank Fiscal Year January 1 December 31 ACRONYMS AND ABBREVIATIONS ACP African, Caribbean and Pacific Group BCEAO Banque Centrale des Etats de l’Afrique de l’Ouest (Central Bank of West African States) CEAO Communauté des Etats de l’Afrique de l’Ouest (Economic Community of West African States) CET Common External Tariff ECOWAS Economic Community of West African States ECPR Efficient Component Pricing Rule ECTEL Eastern Caribbean Telecommunications Authority EPA Economic Partnership Agreement EU European Union GATT General Agreement on Trade and Tariffs GDP Gross Domestic Product GSM Global System for Mobile Communications ICT Information and Communications Technology ITU International Telecommunications Union LDC Least Developed Countries MOU Memorandum of Understanding MRU Mano River Union NEPAD New Partnership for Africa’s Development NRA National Regulatory Authority OECS Organization of Eastern Caribbean States OHADA Organization for the Harmonization of African Business Law RRA Regional Regulatory Authority STAP Short-term Action Plan UEMOA Union Economique et Monétaire Ouest Africaine (West African Economic and Monetary Union) USAID U.S. Agency for International Development WAEMU West African Economic and Monetary Union WAMA West African Monetary Agency WATRA West African Telecommunications Regulators Assembly WTO World Trade Organization Vice President: Obiageli Ezekwesili (AFRVP) Sector Director: Sudhir Shetty (AFTP4) Sector Manager: Antonella Bassani (AFTP4) Task Team Leader: Philip English (AFTP4) i TABLE OF CONTENTS EXECUTIVE SUMMARY 1 Introduction 2 The Economic Importance of Telecommunications 3 National Telecommunications Regulation in West Africa 4 West African Regional Cooperation and Telecommunications ECOWAS—Historical Background ...................................................................... 13 Trade Liberalization ............................................................................................... 15 ECOWAS-EU Negotiations...................................................................................... 15 Regional Infrastructure Initiatives ........................................................................ 17 Regional Telecommunications Projects ................................................................ 19 Harmonization of Telecommunications Policies Project .......................................... 19 West African ICT Common Market Project ............................................................. 20 Regional Roaming Project ........................................................................................ 25 Cross-Border Connectivity Project ........................................................................... 26 WATRA’s Satellite and Wireless Guidelines ........................................................... 29 Other Related Regional Projects ............................................................................... 31 5 The Benefits of Regionalizing Regulatory Policy Political Factors Influencing Regulation and the Risk of Capture .................... 34 The Risk of Expropriation and the Importance of Commitment....................... 36 Regulatory Design Implications............................................................................. 37 A Regional Approach to Regulation ..................................................................... 39 The Eastern Caribbean Telecommunications Authority (ECTEL) Experience ........ 39 International Regulatory Reform and Trade ....................................................... 44 6 Harmonization of Regulatory Frameworks in ECOWAS Spectrum of Harmonization Models ..................................................................... 47 Centralized Harmonization ....................................................................................... 47 Separated Jurisdiction ............................................................................................... 48 Centralized Policy/National Implementation ............................................................ 48 Decentralized Harmonization ................................................................................... 49 The West African Telecommunications Regulators Association........................ 49 WATRA--An Agenda for Action ........................................................................... 52 Rules Governing Access to Bottlenecks ................................................................... 53 Mechanisms to Fund the Sector’s Social Goals ........................................................ 57 Annex A: Country Summaries Annex B: Cross-Country Comparison ii BOXES Box 1: ICT Challenges in Africa ...................................................................................... 18 Box 2: Ghana Telecom ..................................................................................................... 33 Box 3: Regionalization of Telecommunications Reform in the OECS: Impacts on Prices and Services ...................................................................................................................... 43 Box 4: Interconnection Disputes in West Africa .............................................................. 55 FIGURES Figure 1: Economic Community of West African States ................................................. 13 Figure 2: Internet and Optical Fiber Cable (2003) ............................................................ 27 Figure 3: Harmonization Models ...................................................................................... 47 Figure 4: Spectrum of Harmonization Models: Where does ECOWAS stands? .............. 51 Figure 5: Comparison of Fixed and Mobile Subscriber Totals ......................................... 83 TABLES Table 1: Membership of Regional Integration Arrangements in West Africa .................. 14 Table 2: Comparative Table ECOWAS Region ............................................................... 82 This report was prepared by a team comprising Ioannis N. Kessides (The World Bank), Roger G. Noll (Stanford University), Nancy Benjamin (The World Bank), and Athina Bougioukou (Consultant). We are also grateful to Mavis Ampah, Philip English, Cecile Niang, and Paul Noumba Um for their useful comments, Virginia Papanikolaou for very competent research assistance, and Elianne Tchapda for administrative support. iii EXECUTIVE SUMMARY i. This report assesses the potential gains from regionalized telecommunications policy in West Africa. The report seeks to assist officials in the Economic Community of West African States (ECOWAS), the West African Telecommunications Regulators Assembly (WATRA) and member states in designing an effective regional regulatory process. To this end, the report: (i) discusses how regional cooperation can overcome national limits in technical expertise, can enhance the capacity of countries credibly to commit to stable regulatory policy, and ultimately can facilitate infrastructure investment in the region; (ii) identifies trade-distorting regulations that inhibit opportunities for regional trade and economic development, and so are good candidates for regional trade negotiations to reduce indirect trade barriers; and (iii) describes substantive elements of a harmonized regional regulatory policy that can deliver immediate performance benefits. ii. After some introductory comments in the first chapter, Chapter 2 highlights how telecommunications have become an essential infrastructure service with substantial impact on productivity for businesses, international trade in services, access for households to social services, scope for e-governance, and access to the internet. Information has become a means for firms to perceive and seize new opportunities and new markets, and to satisfy new needs. Information is vital to corporate survival; it is critical to an economy's viability. Indeed, a large number of commercial activities—such as banking and international finance, tourism and travel, publishing, commodity exchange, and to a large extent all export-oriented manufacturing—are becoming critically dependent on global information and efficient electronic exchange. In a global information economy characterized by intense competition for new markets, telecommunications are rapidly becoming a vital component of national economic policy. Consequently, the quality of a country's telecommunications infrastructure is increasingly viewed by many as an important determinant of its success in improving its balance of trade and overall economic performance. The New Partnership for Africa’s Development (NEPAD) has recognized the pivotal role of Information and Communications Technology (ICT) in accelerating economic growth and development, particularly in the context of achieving a common market and continental integration. The e-Africa Commission was established in 2001, with the mandate to manage the structured development of the ICT sector on the African continent in the context of NEPAD. Both ECOWAS and the West African Economic and Monetary Union (WAEMU) have a strong appreciation of the strategic importance of ICT and are in the process of developing regional ICT policies. iii. In Chapter 3 and Annex A, the status of telecommunications service, competition, and
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