The N word
Business Editorial
Stabroek News
June 11, 2004
The recent decision by the government to pull the plug on GT&T's new GSM cellular system is, to borrow a word from Monday's Stabroek News editorial, inexplicable. Add to that clumsy.
The heavy-handed approach that seems to be aimed at compelling GT&T to interconnect with Cel*Star and open the telecommunications network to competition will probably have the opposite effect. After all investors abhor uncertainty. They want to know that their investments are operating in a stable rules-based climate and not at the whim of the authorities. There had been reports that Cable and Wireless was interested in buying GT&T from parent company Atlantic Tele Network (ATN). If they had doubts about the independence and efficiency of the regulatory framework, the government's recent move will give them further pause.
Having spent US$10M on its new system, being given a government deadline to put it in place or face penalties, GT&T's project is now at a standstill.
And other cases, such as the compulsory acquisition of the Toolsie Persaud Ltd lot on Water St, also indicate that the principles of private property are not paramount in the psyches of this country's leaders. In the case of GT&T, its relations with the present government have always been strained, given that the administration sees ATN as having stolen the utility as part of a sweet deal under the former PNC government. Many Guyanese are indeed disappointed with the performance of the utility although in recent years access to landlines (now at 95,957) is not such an issue what with the widespread use of cellular phones (now at 134,496).
But perhaps the signal that will give all potential overseas investors pause is the editorial in this week's Mirror newspaper, the PPP's mouthpiece. While applauding the move to halt GT&T's network it concludes, "It is fervently believed that a good case for nationalisation can be successfully pursued, both within and without Guyana, if it becomes necessary to adopt extreme measures to restore some degree of equilibrium in the industry."
Such a statement is reckless and it is hoped that Prime Minister Sam Hinds will disavow such rhetoric. Guyana has had enough of socialism and GT&T's history is the perfect example.
Just look at the National Development Strategy. In 1990 the old Guyana Telecommunication Corporation (GTC) with debts of US$15.8 million, "had 21,000 telephone lines and there was a waiting list of potential subscribers of well over 40,000. Moreover, the telephone system in use was obsolescent, there was the greatest difficulty in making overseas calls, and there were problems of audibility and speed of connection even with respect to local calls. In short, the sector suffered from the constraints which are usually associated with state monopolies."
The government has serious issues with GT&T and opening up the sector to competition is the right path for the country. But threatening nationalisation is not the way to go about it.