Last Thursday, members of the IT industry, researchers and interested members of the public got together with Ministry of Infrastructure and Public Utilities to discuss proposed new laws governing Vanuatu’s burgeoning telecommunications sector.

At issue was a Bill to define the precise role of the Telecommunications Regulator. Designed to supplement the existing Telecommunications Act of 1989, it outlines in detail the extent of the Regulator’s mandate to influence the newly-liberalised telecoms market.

The draft Bill describes an environment wherein the Regulator has wide latitude to impose his will on telecoms operators if they misbehave. Among other things, he can enforce fair and equitable access to rare or unique infrastructure (known as bottleneck resources), he can intervene if telecoms operators are deemed to be offering preferential or prejudicial prices to others and if necessary he can enforce tariff or pricing regimes on carriers if they don’t play fair.

Viewed in the light of their exemplary track record, the draft Bill reflects well on both the Ministry and the Regulator. To date, their attitude has been to let market forces work with little if any intervention. They have nonetheless made sure that the regulatory stick they hold in reserve holds real clout. The proposed Bill gives this all the force of law. Rather than relying in the language of various negotiated agreements, they’ve outlined a set of rules that applies to anyone and everyone operating in the telecoms sector.

Others aren’t so sure that a big regulatory stick is such a good thing….

Digicel Pacific’s General Counsel David Dillon objected vociferously to the draft Bill, remarking that investors need more than verbal assurance that the Regulator’s broad mandate won’t be abused in the future. While expressing all confidence in the incumbent Interim Regulator, Dillon nonetheless contended that you can’t take good will to the bank.

Telecommunications is an expensive business, he explained. Digicel’s investment to date is close to 3.5 billion vatu, with more planned. The benefits for Vanuatu are undeniable, he said, with an estimated total of 100,000[*] people now actively using one or other of the mobile telephone services.

What is required, Dillon suggested, is a regime that makes it more difficult for the Regulator to intervene in the market without good reason. He repeatedly mentioned the need to establish a ‘clear threshold’ for action. Put plainly, the Regulator should not be able to intervene in the market unilaterally and arbitrarily.

According to Dillon, one way to ensure this is to make the Regulator’s role more reactive. If, for example, the Regulator could only intervene following a formal complaint filed in accordance to a high standard of evidence, then a telecoms operator could be assured that they wouldn’t face unduly high legal and consulting fees spent fending off frivolous complaints designed only to slow them down and make them less competitive.

Dillon also suggested that the Regulator have a more clearly defined ‘toolkit’ of actions available to him. The range of available remedies should be defined by the circumstances, he said. Again, this would have the effect of ensuring that some future Regulator doesn’t run roughshod over the marketplace.

Lastly, Digicel complained about the lack of higher authority. As the Bill is written, the Regulator’s decisions can be appealed to the Supreme Court, but the court can rule only on whether the Regulator followed the correct process. It can’t rule on whether the substance of his decision was right or wrong.

Why not follow the European Union model, asked Dillon. Current EU regulation allows for the creation of an appeal board composed of industry experts. This board can rule not only on the process, but they can also decide whether the substance of the decision is correct.

State Law’s legal advisor replied that this approach had been considered, but was ultimately rejected due to cost considerations, along with concerns about sovereignty. This technical expertise necessary simply doesn’t exist in Vanuatu, he maintained. What would people think if we were seen to be outsourcing our legal decisions overseas?

While TVL’s Managing Director Ian Kyle had little to say at the meeting itself, he confirmed that he had already voiced reservations about the regulatory framework.

Digicel, he claimed, “has only 50 sites in operation and a relatively modest US $30m investment. TVL has 260 sites across the country, has invested hundreds of millions of US dollars into our network, and applies a further US $10m each year” in capital and operating expenses. (Digicel claims 63 operative sites in Vanuatu.)

“We therefore endorse the essence of this point, as do our shareholders.  On the other hand, we are confident, from our prior negotiations with Government, that they too understand the matter.”

TVL were more reticent about the issue of appealing regulatory decisions. Kyle stated that they and their shareholders would rather avoid litigation due to the expense and inherent uncertainty of the process, but hinted that other players might not be so inclined. To this end, he said, a clearly defined framework would help everyone.

Reiterating his confidence in the government’s intentions and ability, Kyle nonetheless characterised the proposed Bill as a ‘work in progress’ – a commendable effort that required further clarification before it could be considered properly finished.

Other parties from civil society and local research institutes expressed overall confidence in the government’s commitment to building a healthy and vibrant telecoms market. Nikunj Soni of the Pacific Institute of Public Policy made the distinction between policy and legislation, suggesting that a clear statement of the Government’s position and intentions would do more to clarify the Bill than any additional legalese.

Vanuatu has an excellent track record in telecoms regulation, he maintained. Far better, in fact, than past efforts, like the much-maligned VMA, for example. One need only consider the Bill in light of these past failures to see that important lessons have been learned, and most – if not all – of the critical protections against abuse or politicisation of the Regulator’s position will be in place when the Bill becomes law.

DPAA’s Andonia Piau-Lynch was largely supportive of the work the government had done to date, but admonished them that market forces should not be the only consideration when striving for universal access. She encouraged all parties to remember the disadvantaged and to ensure that they too have equal access to our newly abundant communications services.

Legal wrangling notwithstanding, Government representatives were glad of the opportunity for robust engagement on these important issues. John Crook, Interim Telecommunications Regulator expressed satisfaction with the process to date, and said, “I expect that the government and the advisors will take the major points into account as the law drafting is finalised.”

The proposed new Telecommunications Bill is not a perfect document. But Vanuatu is not a perfect place. Considering the limited resources it can bring to bear, the great gains it’s made in improving communications nationwide are truly commendable.

Contrasted with other legislative efforts (like the recent Employment Act amendments), its efforts in telecommunications are truly laudable. Much work remains to be done, but so far, Vanuatu’s record in this area is world-class. If things continue along this track everyone, investor and consumer alike, can be confident about Vanuatu’s status as a reputable and reliable place to do business.

Others have expressed doubt about the number, but without hard evidence to work with, their suppositions were based more on whether the number ‘feels right’ (i.e. if it matches whatever anecdotal evidence they have available to them). I provide the number here uncorroborated, though I assume it must have some basis in fact if Digicel is willing to use it in public.

I’ll write more about the significance of this number in a separate post….

Here’s a more detailed analysis.

There is only one thing worse than a badly played football match: a badly refereed match.

What makes a bad referee? Players the world over agree that it’s not strictness or laxity; what makes a referee really bad is when he’s inconsistent and unpredictable. The ref consistently calls offsides in favour of the defence? Not great for the strikers, but a team can adjust and try different approaches to the net. The ref calls them consistently in favour of the offence? Drop the zone defence and mark your man carefully.

But when neither team knows how the play will be called, it creates uncertainty, which leads to sloppy play and sometimes a little opportunistic cheating, hoping that this time the ref won’t call a questionable play.

This principle applies everywhere. In numerous business surveys, company leaders consistently report that continuity and predictability in economic management and government affairs matter more to them than the economic structures themselves.

As long as clear rules exist around ownership, trade and the economic environment in general, a well-run company will be able to find its way – and possibly to thrive – under just about any regime.

But a company that can’t predict what will happen tomorrow can’t plan effectively. And a company that can’t plan finds itself scrambling from one day to the next. It finds that it can’t commit – neither to its customers nor to its staff. When this uncertainty becomes generalised, with nobody willing or able to say what tomorrow holds, the business climate worsens all round.

The government of Vanuatu has made great strides in recent years in its efforts to make its bureaucratic components simpler and more predictable for all concerned. The primary purpose of this is to insulate the civil service from the innate turbulence of Vanuatu politics. By carefully channeling initiatives through straightforward but rigourous processes, the worst weaknesses of government instability are compensated for.

The days are long past when political infighting could result in the failure to table a budget, as happened under then-Prime Minister Barak Sope.

These reforms are invaluable, but not sufficient. The process of creating new laws and regulations requires the same kind of predictability and respect of process. Currently, there is next to none.

To be clear: The State Law Office generally does excellent work in drafting legislation. With a few notable exceptions, Vanuatu’s laws in recent years have been clearly scoped, defined and written. But State Law’s influence is limited to ensuring the legality and clarity of the bills they draft. They have no say at all over their contents.

What a Bill actually contains is entirely up to the Cabinet members and their staff.

So how, exactly, did the recent amendments to the Employment Act come about? To the best of my knowledge, there was little if any consultation with business, unions, civil society organisations or the general public. Whatever actually transpired, the near-panic expressed by a number of prominent business owners demonstrates that they were singularly unprepared for the Amendments’ passage in Parliament.

Contrast that with the policy and legislative review conducted by the Ministry of Infrastructure and Public Utilities. For years now, they’ve been talking, thinking, researching and sharing their views with anyone interested. Policy papers and proposed legislation are made available months before they enter Parliament. By the time a Bill arrives on the Order Table, people know exactly what’s in it, and what motivated the choices made.

Not every stakeholder agrees with every aspect of what gets enacted. But at least they know what to expect. The player doesn’t have to like the call, but she needs to respect the referee.

In any given election, about half of all elected MPs are new to Parliament. Efforts are underway to educate them in Parliamentary process and the roles and responsibilities of Members and Ministers. But we need more.

The real battle behind the Amendments to the Employment Act is not over their constitutionality. Nor has it to do with the Minister’s prerogative – and responsibility – to legislate matters of employment rights. It’s not the Minister’s responsibility to make everyone like what the Act contains.

The shock of latest amendments has done nothing but create uncertainty. They undermined confidence across the board. Businesses are increasingly tempted to perform an end-run around the rules, to sack their fulltime employees and require them to return as short-term independent contractors.

This means that such workers will get no severance at all. Worse, benefits like VNPF contributions become the employee’s responsibility. This will almost certainly undermine the Provident Fund. There will doubtless be other negative consequences as well. In short, the Minister’s unquestionably good intentions are being subverted by the lack of due process and consideration.

It is up to the Minister and the Government to ensure that Vanuatu’s market place is ruled fairly, clearly and consistently, according to rules that we may not all like, but we all agree to respect. The only way to achieve this is to create a clear, well-trodden path down which every piece of policy and legislation must travel before it becomes law.

This is a commendable goal. Respect for the creative works of others is at a low ebb these days. We need to alter our cavalier approach to copyright and to properly reward those who spend their time and effort in creating the music, movies, software and other creations we so enjoy.

The advent of the Internet and its increasingly important role in people’s day-to-day lives have caused a fundamental shift in the nature of creativity and sharing. In the past only a small minority of writers and musicians ever saw their works published, and fewer still managed to do so without first being recruited by a major producer.

Anyone wishing to achieve any kind of popularity was at the mercy of those who controlled the means of distribution, who had relationships up and down the supply chain, who could spend the required sums on advertising and marketing. It should come as no surprise, then, that traditional publishing and recording contracts gave the majority of the revenues from such works to the publishers and recording companies. Only a small fraction of that was ever returned to the creative artists themselves.

Copyright law has changed greatly over the years. Its original intent was to provide protection to the author of a creative work, allowing them a short-lived period of monopoly on the reproduction of their opus. It was reasoned that this would ensure that creators had every opportunity to profit from their efforts, in exchange for enriching the market of ideas for generations to come. In the intervening years, publishers and distributors have lobbied successfully for greater and greater protections, including a much longer protection period than originally envisaged.

In the age of printed books and vinyl records, this worked quite well for almost everyone concerned. Reproduction was an expensive and time-consuming process and though some complained about predatory practices in the recording and publishing industries, it was rare that truly great talents went unremarked and unrewarded.

With the advent of cheap home recording equipment, however, things began to change. Friends began to make ‘mix tapes’ for others using their dual-cassette machines. Video cassettes routinely changed hands, allowing a generation of office workers to catch up on their favourite soap operas, and fundamentally changing the power of position in the broadcast schedule.

The music, movie and television industries cried out at the prospect that their artists might be denied revenue. Some countries arranged for a tariff to be placed on the sale of every blank cassette, recordable CD or DVD disk, the proceeds of which would be given back to an industry body, which in turn would share the money among recording artists according to their recent sales ranking. In Canada, for example, publishers and recording companies receive between 80 and 85% of the approximately 28 millions dollars annually collected from this. Performers receive the bulk of the remainder.

Producers and distributors still complain, however, that digital reproduction is far too easy, that the Internet makes it possible for people to share unauthorised copies of their work on an unprecedented scale. But when they announced a campaign of legal attacks on illegal file-sharers in the US, they were roundly castigated for treating their own customers like criminals. More importantly, this campaign of legal intimidation has had little or no effect on the level of file sharing among the general public.

There’s a good reason for this. Digital reproduction is just way too easy, and no technical measure can ever successfully stop it. Copy-protection schemes such as the rather euphemistically named Digital Rights Management are ineffective in their very nature. There is no technical way to stop someone from making copies of anything he likes. In order for a song or a movie to play, it has to be read by the computer. And the moment it is readable, it can be written as well. Copying is inevitable. It’s just that simple.

The major distributors and publishers are being forced to find other means to maintain their historical control on the production and dissemination of creative works. Their popularisation of the word ‘piracy’ has had an unfortunate rebound effect, wherein responsible people resent file copying being equated with rape, pillaging and plunder, and many youth proudly flaunt the title, even to the point of creating International Talk Like a Pirate day, when people are encouraged to speak like characters from a Robert Louis Stephenson potboiler.

The proposed legislation in the UK and its copycat counterpart in Australia would require Internet Service Providers, or ISPs, to suspend or even terminate the account of people suspected to have repeatedly downloaded unauthorised music and video files. Apparently, their experience with the fruitless wave of lawsuits in America has taught the recording industry that they shouldn’t be seen to be policing this area themselves.

The proposed legislation won’t work, unfortunately, for technical, ethical and moral reasons.

First off, trying to put technical limits on what can and cannot be freely copied futile. If a file can be read, it can be copied, and if it can’t be read, it’s useless to anyone. Limiting distribution is also an impossible task. There is absolutely no way to tell whether you’re sharing unauthorised copies of files without watching everything you do on the Internet – and that would be an unwarranted and egregious violation of your privacy.

But even if such a legal precedent were allowed, it would still be trivially easy for someone to hide their activity using encryption technology. They could practice misdirection by transferring the files via shared computers located overseas. Or they could simply disguise the traffic to make it look like they’re downloading from a website or mail server. There’s already one Russian service in existence that is promising exactly that.

There is no technical or legislative solution to the sharing of illegal content. Every measure introduced to curb this kind of activity has acted as nothing more than a temporary inconvenience to those determined to copy files. Worse, it’s made it more difficult for people to take advantage of any number of legitimate uses of file sharing.

A digital copy costs next to nothing to create. And when I give a copy to my friend, I still get to keep the one I’ve got. This means that digital music and video is effectively free to obtain. It is not, of course, free to produce. It’s cheaper than ever it was, but it’s still a long way from free.

This represents a tremendous threat to those who have traditionally controlled the production and distribution of creative works. It also provides a revolutionary opportunity to independant artists the world over and to those in traditionally marginal markets. Artists who might only sell a copy or two in any particular record store are realising decent profits by marketing and selling their work to a global audience on the Internet. Many bands are being signed by clubs and promoters based on the support shown by the size of the following on their MySpace websites.

File copying should be encouraged, not punished. At the same time, we need to find ways to recognise the value of every artist’s contribution to society. There’s no easy way to do so, either. Respect can’t be legislated, regulated or applied coercively through threat of litigation. It arises organically, based on a sense of the common good.

People in Vanuatu know more about respect than most. Every important tabu has been preserved as much by the willing compliance of the people as by any overt threat of force. As more and more of Vanuatu’s kastom is captured and stored on computer, we’ll have to work hard to ensure that it continues to be revered and respected by all who view it, no matter how widely it’s shared.