The political economy of telecommunications in Malaysia and Singapore: A stakeholders-structure, conduct, performance comparative analysis

Abstract

This dissertation uses a political economy approach to analyze national telecommunications markets. The analytical framework combines stakeholder analysis with the Structure-Conduct-Performance paradigm of industrial economics. Since the telecom network is an important national resource, telecom policymaking can be expected to be a highly political process in which powerful stakeholders vie to influence policy. The central hypothesis is that national telecommunications policy decisions reflect the main stakeholder's interests in each country. First, the introductory chapter discusses economic issues affecting telecommunications network development. Then, the literature on the political economy of telecommunications is reviewed. Next, the theoretical principles behind this analysis are presented. Data collection for the study was based on a multiple case study methodology using information on the markets for basic services, payphones, mobile telephony, paging, EDI and the Internet in Malaysia and Singapore. In Malaysia and Singapore, the primary stakeholders are the dominant political parties, UMNO and PAP, respectively. In both cases, telecom policy and the resultant market structures can be traced to the politics of the 1960s. Malaysian market structures are seen as the outcome of UMNO's goal of increasing Malay participation in the economy while maintaining high economic growth rates. This led to the formation of competitive markets composed mainly of Malay-owned companies. Singaporean market structures are viewed as the outcome of its one-party political system in which the main stakeholder is the PAP. The result was a tendency towards monopolistic markets run by government-owned companies. At the time of data collection (1996), five of the six markets studied in Malaysia were competitive, while five of the six Singaporean markets studied were monopolies. Ownership patterns also fit in with expectations. In Malaysia, all but two of the twenty-six companies studied were majority Malay-owned, while in Singapore all five of the telecommunication companies studied were owned by the Singaporean government. The Internet was the exception to this pattern. Malaysia's second Internet Services Provider began operations in November 1996, making it Malaysia's least competitive market, while Singapore's third Internet Service Provider launched its services during March 1996, making it Singapore's most competitive market.