Regulation, institutions and commitment : the Jamaican telecommunications sector

The Jamaican telecommunications sector today is much more dynamic than it was before and provides much better service. There is widespread skepticism about the current regulatory framework, which is criticized for encouraging a tight telecommunications monopoly, little administrative discretion, and continous price adjustments to satisfy what many see as a high rate of return requirement. But the authors suggest that the regulatory framework is a"second-best"alternative, a pragmatic response to The Jamaican's institutional realities. The authors analyze why the reforms of the late 1980s took the form they did, and whether they could have been better. They find that the changing nature of regulatory institutions, ownership arrangements, and sector performance in the past 50 years is traceable to intense contracting problems between firms or interest groups and the government. Attempts to resolves these contracting problems have continuously constrained the government's (and firms) ability to implement efficient pricing schemes. In the abstract, The Jamaican's regulatory structure looks inefficient. In the context of The Jamaican's political system, politics, judiciary, bureaucracy, and interest groups, the regulatory framework developed in the late 1980s emerges as a fairly pragmatic, welfare-improving set of policies. Perhaps it could have been better, but its current design reflects basic commitment problems the government has with public utilities.