The Evolving Role of Telecommunications in World Economies

Definition of the Problem 

The close of the 1980s saw an increase in corporate globalization. The expansion of business to a global scale in both the telecommunications sector and the business sector has provided an avenue for evaluation of practice policies. The Organization for Economic Co-operation and Development (OECD) member countries have, thus, experienced a paradigm shift in international service provisions that relate to telecommunication technology and the service carriers. The rise in the number of public telecommunication operators (PTOs) has come with the expansion of telecommunication related activities to countries out of home territories. While the expansionism to cover regional services is a fairly new phenomenon, international operations have drastically expanded. Generally, the increase in the number of operators that currently provide international services surpasses the provisions given by policies that were initially drafted for national operators. 

Internationalism in the management of communication technologies requires that there be policies and orders that guide the flow of capital and the different forms of investment protocols. Further, the changing interaction aspects of business relations require a consistent idealization of the parameters that would govern resource and technology sharing while ensuring the differently versed economies operate in a manner that allows relative benefit for all the member countries. 

Among the key issues that arise with expansionism to international markets include the asymmetry that arises in the freedoms and liberalizations that are accorded to the PTOs by different OECD member countries. This problem creates economic impacts relating to the globalization of PTO services. This way, there is a need to develop national and international policies that have a form of wider cross-border coverage. 

The practical factor affecting telecommunication policy and globalization is the challenge of establishing transparency rules, which will ensure that new markets are fair. The government in the OECD will have to impose strategies that can facilitate safeguarding against potential market exploitation by PTOs at national levels. The OECD government’s ability to control PTOs operations beyond the national level is limited by laws (Arruda, 2017). Therefore, governments of different nations should engage in the negotiation of international commonly accepted policies such as the general agreements on trade in services (GATS). 

Issue Analysis 

In the traditional telecommunication setting, PTOs played a domestic role in service provision. While international services were still available, the PTOs served a different role at the time with the international telephone services being provided by the domestic carriers. This model of service provision was under the direction of bilateral and multilateral agreements being made between the public telephone service operators. Thus, the PTOs only served to interconnect domestic networks with little international extensions of individual PTOs. Within this scenario, there was no need for new policies that would address international operations by PTOs. Currently, most of the PTOs have extended beyond their domestic borders within the OECD. With services being provided to customers beyond geographic boundaries, international diplomatic and economic issues are bound to arise. 

The Paradigm Shift to Internationalization 

Most of the PTOs currently operate as global brands rather than as local companies. Thus, they are more likely to compete with one another in the international markets. One particular aspect of PTO operations in the globalized world is the carrying out of their activities with the distinction from foreign investment and trade. For instance, recent studies offer that the nationality of a service providing PTO does not influence the choice of the majority of service consumers (Arruda, 2017). At the same time, it must be remembered that PTOs operate as competitors to each other; and as customers to each other. What ideally matters to the consumers is the quality of the service that is accorded to them, and the cost of the services they receive in the telecommunication arena. 

The existing national telecommunications policies are designed to take into account the nationalities of both the PTOs and the customers that they serve. The radical approach to the policy management of the services provided by the PTOs and the scope of geographical limitation becomes obsolete in the face of globalization and international relationships. The national policies were originally formulated to take into account the welfare of the home country needs and safeguard operations within the country’s borders. Ideally, they were formulated with a political logic in the direction of their formulation. 

Current PTO operation statuses accord them an international brand outlook. The operation mechanism provides that current PTOs operate as both competitors and customers to each other. This scenario occurs when one PTO is a customer to the host country PTO while providing its own services as well. This scenario was exemplified by the British Telecommunications Services’ GNS, which is a customer to France Telecommunication PTO by virtue of leasing circuits from the French Telecommunication PTO to be able to provide telecommunication services within France. 

Globalization, as such, has created a wide discrepancy between the consumers of the national telecommunication policies and the recipients of the services offered through the telecommunication providers seeking to operate across borders. These ideals have effectively been experienced by all the PTOs eyeing international prospects regardless of their status as government-owned or private. International investments by PTOs in other counties are not a new age phenomenon with a history of European PTOs investing in other counties and regions such as Africa and the Caribbean. International expansion of brands is often cited as one of the main aspects of long-term sustainability by businesses. The operation of PTOs in the international market, if not regulated, poses multiple problems to both the consumers of their services and the service providers alike. 

The Policy Issues 

Globalization has been paralleled by technological developments that have allowed PTOs to expand both their coverage and the range of voice and video services they provide. For instance, the provision of discounted voice services through reselling of the internationally leased circuits allows customers to access services at cheaper prices. The options extend to services such as free international calls and calling card services. The latest development has been heralded by the dawn of the internet age that has coupled telephony with internet services to make services extent to wider regions at a cheaper price. However, policy issues arise in terms of billing and the reception of the taxes and charges from the call billing (Campbell et al., 2017). Currently, a call originating from a foreign country are to be treated as outgoing calls from the caller’s home country. Thus, rerouting of calls through different countries presents a major billing problem with most of the subscribers and users arguing that their services are often overcharged. Further, a rise in the number of players in the market who operate passively by not owning any form of circuits and technology but provide services through leasing of circuits mean that PTOs are no longer the only players in the telephony market. Thus, there is a need for policies to be evaluated and changed to cover the increasing number of new players in the market. 

Foreign direct investments (FDIs) have also become a major phenomenon in telephony service providers. The FDIs might currently take multiple forms such as the purchasing of shares from companies that operate the telephone services, the setting up of joint investment ventures, franchising, acquisitions and mergers to provide better services than a single telephone operator would manage (Githraj, 2018). With the direct foreign investment, the PTOs are able to run their operations in the international markets as global brands. However, there is a need for policy changes to address investment options by the PTOs in issues that include cross-border movements of investments. Recent studies, for instance, Campbell et al. (2017), provide that PTOs are more likely to invest in more liberal markets such as those in the United States and the United Kingdom. 

Direct investments could create multiple policy issues that would need to be resolved. For instance, the ownership of the communication technologies in the receiving countries would be low among the citizens of the country. Future policy changes for operation in the domestic space might also impact the level of service. The countries in the OECD have an agreement to cooperate in their economic development endeavors. However, the overall high impact rate on currency volatility that might be created by globalization of the telecommunication services needs to be addressed on a more planned and concerned level. 

The Proposed Solutions 

When different nations come together to formulate common telecommunication policies, there is a possibility that policies will be commonly adapted and agreements on PTO operations reached. Governments are limited by law in making decisions regarding the establishment of fair markets across their borders. However, through collaboration, they can establish fair policies which can adjust to the globalizing economy. 

PTOs and telephony services will continue operating on an international scale with some to the PTOs remaining highly ambitious to take on global roles. However, the policy changes that exist do not address all the new scenarios that operating telecommunications services faces as they try to operate in new countries and regions. For instance, policies should contain instruments that direct the aspects of foreign direct investment (Campbell et al., 2017). These instruments would include regulations that provide directives on foreign ownerships for PTOs. Most governments take on this form. However, the rules relating to the foreign ownership of the PTOs. The ownership clauses should account for conditions of entry of investment and how to remit earnings back to the country of origin. 

The level of liberalization and restriction for foreign ownership, while varying according to country-specific targets, it is recommended that countries should set up multilateral deals that regulate the market jointly. Joint regulation helps to eliminate monopoly while at the same time providing home PTOs with an opportunity to operate a larger share of the domestic market. In some countries, governments seek to own a majority share of the PTOs operating in their territory (Campbell et al., 2017). Thus, governments seeking to own the larger PTOs’ share is a form of indirect control in the market through government involvement in business. Further, government control of the majority share indices places control of the market in the hands of government policies. 

Conclusion 

The rise in the number of public telecommunication operators (PTOs) has come with the expansion of telecommunication related activities to countries out of home territories. Globalization, as such, has created a wide discrepancy between the consumers of the national telecommunication policies and the recipients of the services offered through the telecommunication providers seeking to operate across borders. With more of the PTOs expanding to global operations, there is a definitive need for countries to set up policies that address the different aspects created by the bid to control foreign market shares. These might include ideals such as foreign direct investments. PTO ownership might control the charge rates for the services due to the need to drive profits. Government policies aimed at the regulation of the market through government involvement are also key to the sustenance of domestic control while expanding to other regional markets. 

References 

Arruda Filho, E. J. (2017). Regulation misunderstanding: Convergence complexity providing failures in telecommunication services costs. Journal of Information Systems and Technology Management, 14(1), 111-127.  https://doi.org/10.4301/s1807- 

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Campbell, K., Diffley, J., Flanagan, B., Morelli, B., O’Neil, B., & Sideco, F. (2017). The 5G economy: How 5G technology will contribute to the global economy.  

https://cdn.ihs.com/www/pdf/IHS-Technology-5G-Economic-Impact-Study.pdf 

Githraj Serje. (2018). Telecommunications networks: Towards smarter regulation and 

contracts? - Serge J.H. Gijrath, 2017. SAGE. https://journals.sagepub.com/doi/full/10.1177/1783591718782305 

Kurniawati, M. A. (2020). The role of ICT infrastructure, innovation and globalization on economic growth in OECD countries, 1996-2017.  Journal of Science and Technology Policy Management . 

http://doi 10.1108/JSTPM-06-2019-0065