GETTING THE DIAL TONE

GETTING THE DIAL TONE

When it comes to bringing the information revolution to the developing world, money's not the main problem.

Addressing a worldwide telecommunications conference here, a leading development expert said enough capital is available, but in many developing countries, especially Africa, the risks are too high, a leading development expert said.Sam G. Pitroda, head of WorldTel, said that at current prices of about $1,000 per line, telephones cannot be brought into the poorest regions.

"Only if you reduce the prices to $500 or less, you can make telephones accessible to the people who need them most," he said.

WorldTel is a private enterprise created by the International Telecommunication Union earlier this year to marshal private capital for telecom projects in countries with the lowest teledensity. Most of the intended beneficiary countries are in Africa, a continent with fewer telephone lines than the city of Tokyo.

While "leaders of many developing countries understand telecommunications bring economic transformation, they do not realize that they have to reduce the risks to attract investors," said Mr. Pitroda, who is also special adviser to the Indian prime minister on telecommunications.

"They have to be more open to new technology and they have to accept new ways of working and making decisions, and that will be the hardest thing for them to do," he said.

Plugging all countries, including the poorest ones, into the global information infrastructure is the central topic of discussions at Telecom 95, the largest gathering of telecommunication officials and corporate executives in the last four years. Creating an international market that's open to all comers is also the subject of multilateral negotiations sponsored by the World Trade Organization.

Access to the information superhighway, said ITU secretary-general Pekka Tarjanne, "should be one of the universal human rights. Without the right to communicate, we will never, never have a truly global system," he said.

According to Mr. Pitroda, "there is no magic formula" for the developing governments to adopt in order to attract foreign capital. Nor, he said, is it necessary for the governments to privatize their telecommunication monopolies. ''Privatization is no panacea," he said, adding, "privatization will be of no use to you if the government is corrupt."

To attract investors in WorldTel projects, Mr. Pitroda said the enterprise will invest only in projects which offer the prospect of at least a 20 percent return. "We don't promise a 20 percent return on investment, but we're shooting for it," he said.

One of the first countries to receive WorldTel financing could well be Congo, which has embarked on an ambitious economic reform program, calling, among other things, for privatization of telecommunications.

"My government's priority is to privatize all key industries, including energy, transportation and telecommunications," said Jean Itadi, Congo's minister of posts and telecommunications.

He said the law to carry out the plan is in place, and the post and telecommunications monopoly has already been divided in preparation for the sell-off.

Privatization is also the central feature of Ghana's reform program, according to Minister of Transport and Telecommunications Edward Kojo Salia. ''I must seize this opportunity to invite telecom operators and investors to participate in our sector privatization," he told his audience.

In addition to the "persistence of monopolistic structures," in the state-run telecom sector, he said, the main barriers to development in the entire sub-Saharan Africa include the dependence on financial aid by multilateral development agencies and handouts by the developed countries, lack of managerial and technical skills, illiteracy and poverty.

"The combined effect of the high illiteracy rate and high incidence of poverty has been that many Ghanians cannot afford the telephone, much less the value-added derivatives such as mobile phones."

Lawrence J. Ellison, president and chief executive of Oracle Corp., agreed that much depends on the developing countries themselves in whether they will manage to attract private investment. For the private sector, he said, "The bottom-line issue is how restrictive the governments will be."

For Jorma Ollila, chief executive of Finland's Nokia Corp., deregulation also is "one of the most important issues for the telecommunications industry in this decade."

He said removing regulatory barriers must be "on top of the priority list of all countries where the telecommunications is still run in a monopolistic fashion."

According to Robert M. Frieden, associate professor at Pennsylvania State University, even countries clinging to the monopolistic telecom system will come under increasing pressure not only from the private sector, but from their own citizens, as new technologies will allow people to bypass obsolete and expensive structures. In his view, "The marketplace will conduct its own referendum and deliver its own verdict," on the future of the global information infrastructure.