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Telecomunications Market in a Small Economy: Is there a Need for Price Control?

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Author(s): Mahendra Reddy

Journal: Asian Economic and Financial Review
ISSN 2305-2147

Volume: 3;
Issue: 7;
Start page: 843;
Date: 2013;
Original page

Keywords: Telecommunications Market | Substantial Market Power | Countervailing Power | Call Termination Rates | Imperfect Markets

ABSTRACT
Telecommunications and ICT sector in general is one of the most rapidly growing sectors in the world. The state and level of the technological development of ICT infrastructure plays a very important and critical role in the growth and development of contemporary economies. Countries who do not have the required level and technology of ICT infrastructure are struggling to keep pace with the rapidly changing market economies and thus have difficulty in maintaining their competitive edge in the global market.In this paper, we examined whether network operators in Fiji’s Telecommunications market held SMP and thus have been abusing their market power to the detriment of the economy. Based on the analysis presented in the paper, we can consider the cumulative effect of all the factors analyzed justifies the conclusion that the three network operators in Fiji, that operate in the mobile and fixed line voice call termination markets, hold SMP in relation to those networks, and such SMP will in all likelihood be maintained in the short to medium term.Given the disparity in the market share, with VFL having 76% of the market share in the mobile market and Digicel having 24% of the market share and TFL having the smallest number of fixed line subscribers, it is quite likely that market power could be abused should there not be a Price Control Order.

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