The independent regulatory body: a new regulatory institution in the privatised telecommunications industry (the case of Indonesia).

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inr. J. Technology Transfer and Commercialisation, VoL7, No, 1, 2008

The

independent regulatory body:

a

new

regulatory

institution

in

the privatised telecommunications

industry (the

case

of

lndonesia)

Atip

Latifulhayat

Padjadjaran University

Law

School

Bandung, Indonesia

E-mail: atiphayat@yahoo.co.id

Abstraet: Privatisation has

led

to

the reorganisatioa

of

the governrnent

institutions involved in the telecornmunications sector. More specifically, it has

moved the telecommunications structure from governmenfbased supply to

markerbased supply. One

of

the important consequences

of

this is that the

govemment's involvement

in

the sector has focused more on its role as a

policymaker. The govemment's involvement

in

detailed management

of

the

telecommunications operation may create negative impacts in the competitive

market. The establishment

of

an

independent regulatory body has been

essential

in

changing

the

regulatory mechanism

from

a

political

to

a

professional orientation.

Keywords:

telecornmunications; independent; privatisation; regulation;

Indonesia.

Reference to this paper should be made as follows: Latifirlhayat,

A.

(2008)

'The independent regulatory body: a new regulatory irnstitution in the privatised

telecommunications industry (the case

of

Indonesia)',

Int-

J.

Technology

Transfer and Commercialisation, Vol. 7, No. 1, pp,15-33.

Biographical notes:

Atip

Latiftrlhayar

is

a

Lecturer

at

the

Padjadjaran

Univeisity Law Schftrl, B:indung, lndonesia.

I

Introduction

In

the

classic

Posl

Telegraph

and

Telephone

(PfT)

model

of

telecommunicatious

supply, state control was carried out through direct ownership in State-Owned Enterprises

(SOEs).

More

specifically,

a

_sector

ministry

typically

_perforrned

policy,

_ownership,

and

regulatory

functions (the tripartite

role) (Colin,

1996).

In

the

last

two

decades,

however, ttre wisdom

of

relying on

regulated

public

monopolies

for

the

provision

of

telecommunications services was increasingly put

into

question. The

first

and arguably

most important reason was that the performance of those operaton proved disappointing.

various

studies demonstrated that

publicly

owfled companies,

in

general, tended

to

be

less efficient than private ones, and that telerommunications markets open to competition

tended to perform much better than those which were not (Galal et

al.,

1994).r

l5