After the Call Drops: Regulatory Quality in the African Telecommunications Sector

Abstract

In the last twenty years, the forces of privatization, liberalization and regulation have transformed the African telecommunications sector. The tremendous growth of the sector has been dubbed the “Mobile Revolution” and access to telecommunications services has reached unprecedented levels. However, regulators have struggled to continue the reform process and further enhance competition. Reform initiatives often stagnate because regulators are unable to resolve conflicts with oppositional interest groups. Using the policy network theoretical framework, I develop and understanding of variations in regulatory quality based on the institutional context of the regulator. This theoretical framework presents conflict as inherent in regulatory issues but argues that governance institutions provide the resources and means for regulators to enforce decisions and prevent oppositional interests from disrupting the implementation process. My research questions are : (1) How does institutional context impact regulatory quality in the African telecommunications sector? (2) What is the impact of regulatory quality on sector performance in terms of access and affordability? . This research uses a panel dataset of 37 African countries in the period 1996- 2011 disaggregated into the three primary subsectors and construct a measure of regulatory reform quality. This analysis uses a Heckman two-step model to identify the determinants of a country’s propensity to reform and the effect of six dimensions of governance on the quality of regulatory reforms. Then a fixed-effects regression model is used to demonstrate the effect of regulatory quality on sector performance in terms of access and affordability. The results indicate that governance institutions have a positive effect on regulatory quality but the results are inconclusive about which dimensions are most salient. The results also show that regulatory quality has a positive effect on access and affordability specifically in the mobile subsector. The significance of these findings are supported by a case study of the challenges the Independent Communications Authority of South Africa has faced in trying to introduce regulation to promote competition in the broadband subsector. The Authority is legally independent but operates in a weak institutional context rendering it effectively impotent as it lacks the capacity to enforce regulation. The main policy implication is that the quality of regulation is constrained by institutional context and I propose regional regulatory harmonization and capacitybuilding initiatives to address this challenge