Monopoly
In a monopoly scenario, a single supplier supplies the whole market. Traditional view of the telecommunications sector is that the telecommunications market was monopolistic in nature. Telecommunications industry was traditionally a natural monopoly, where the telecom services and the collection of products were supplied by one telecommunication company. In a monopolistic market structure, the company and the industry are identical. The single company makes all the output and price decisions, it has complete control over the market (Gerber & Braun 1998). Traditionally, the telecom service providers, or operators have been government-owned monopolies.

One major problem with telecom monopoly is that monopolist may exploit its market position by charging excessive prices and compromise quality of service. With the reforms in the telecom industry, came a series of restructuring of the telecom industry. Today most developed countries are or have introduced competition in the telecom market that was once monopolistic in nature. Driven by technological developments, competition has come to dominate a market that was once a monopoly. For instance, in 1976 in the U.S, the traditional monopoly service provider was faced with competition in the long-distance market from use of microwave technology (Gerber & Braun 1998). The development of wireless technology has brought in competition in the telephony market, with fixed line subscribers migrating to cellular markets where there are competitive services. In Africa, most fixed line operators are still monopoly in nature, however there is competition in the cellular market. The South African government is in the process of introducing a Second National Operator to compete with Telkom, the monopoly fixed line service provider.

Privatization and Liberalization
Amongst the wave of reforms that characterized the global telecom markets in the 80’s and 90’s, was the privatization of national companies. Privatization and liberalization are two telecom reforms that improve the public treasury. Since the processes of liberalization and privatization have been taken into consideration by countries such as India, Malaysia and South Africa, their telecommunication infrastructures have improved drastically. Malaysian government has developed its telecommunication infrastructure by privatizing the former RTT, which is presently known as Telkom Malaysia, and most of its shares are sold in the stock exchange.

Privatization and liberalization cut the existence of monopoly and promote competition. The privatization of national companies comes in either public stock floatation or private sales to strategic investors. In the telecom sector, it could also include the opening up of market to private investment in the thriving telecom market. In developing countries, the realization that investment in the telecom infrastructure is a necessary foundation for economic growth, has further spurred the need for privatization. Developing countries identify that massive investment is required to address the low teledensity and poor service typical of the telecom market. Such investments, in most cases, are far beyond the reach of many governments that have other social development projects to fund. Subsequently “private sector investment – through privatization of national carrier or other forms of private sector involvement – is often the only recourse” (Pisciotta, 1997). Another reason for privation is also to tap into the advantages that modern technology offers through foreign investment into the local telecom infrastructure.

Definition of the Two Concepts
Privatization
Privatization can be defined as the selling and transferring of at least part of the state ownership of a corporation to private owners. It can be defined as the process where by the government handover its management or assets of services to private interest.
It can also be defined as a transfer of government (public) agency to a non-government (private) body. Privatization is the transfer of public functions and resources to the private sector. This transfer can entail the operation, management, or actual ownership of publicly owned facilities.

Liberalization
Liberalization
Liberalization usually means the process of transferring monopolistic market to a free market environment, which will expand trade relation and also promote competition. Liberalization encourages the lifting of barrier to entry to accommodate many players in the market and hence transform a market into a free and open market. The World Trade Organization has prescribed liberalization of the telecom market. Many countries have endorsed the WTO’s liberalization guideline and subsequently open their telecom market, leading to open and competitive market. Specifically, it has brought about an era of competition in the telecom sector. Privatization without liberalization is possible: a monopoly merely becomes a private one. In most cases of telecommunications privatization, however, some element of liberalization is involved.

• Privatization of a public telecommunication operator can generate a lot of financial benefit, as privatization can be considered as the component of the development of a market economy. Privatization can benefit the majority of the people. Analysts mostly welcome the government’s stance on the sale of public telecommunication operator because they do not expect this to have a major impact on the currency. In 2001, the South African government aimed to earn R18 billion from privatization in the fiscal year 2001-02, mainly from its telecom assets (Reuters 2001).
• In a privatized entity, private operators bring new skills, which are efficient with high standard and quality. Privatization limits monopoly and instead promotes liberalization because it allows competition among various companies. Private companies introduce new technological innovations and services to challenge other companies. Private companies provide good quality service to attract the customers and also to facilitate the development of the small businesses.
• Private companies improve the telecommunication infrastructure because they are always equipped with advanced technologies in order to attract both local and foreign investors. It shows how effective a public telecommunication operator will succeed if it becomes privatized. It is best for the country to Privatize a public telecommunication operation, because privatization increase the performance of the economy by improving utilization of resources and it also allows competition which enhances efficiency and capacity of the private sector to adapt itself more rapidly to changing circumstances. In South Africa the government and labour union were at loggerhead over privatization. The labour union argued that privatization leads to loss of jobs and the government believes that privatization generates income and again it can overcome the problem of government failure because the state-owned monopoly companies have failed to deliver for the past years.

• Raising cash to lower national debt
• Raising foreign exchange, which can be used to extinguish foreign debt or purchase needed imports
• Raising domestic currency in order to expand services or facilities
• Curbing losses incurred by state-owned enterprises and controlling subsidy flows to those enterprises by moving into new business venture and opportunities
• Increasing operating efficiencies through more liberal personnel policies and more market-oriented procedure
• Spreading corporate ownership more widely through the sale of stock
• Gaining control of, or improvement in, public policy objectives through the creation of regulatory bodies (Cheong and Mullins 1991: 112)

• Some observers believe that privatization will eventually impact negatively on the goal of universal service. Privately run corporations operate on a stringent need for profit basis. This implies that services will be increasingly provided to the rich who can afford to pay for the services. For the rest of the population, who belong to the low-income group or the unemployed, access to services could be a mirage.
• Privatization has a potential loss of management control and lesser opportunity for local participation, because in most cases when a company is privatized it then brings its own expertise from the outside country and as a result it also lead to retrenchment and this will aggravate the country’s poverty and unemployment problem, so privatization in some cases appears to be complex and uncertain. Domberger (1995: 43) states that, public enterprises are inherently as efficient as private ones and a change of ownership is not a necessary condition for performance. The point is, privatization is not a solution for performance; even a public sector can do better especially if they can be well managed. Privatization also weakens the state control over the national telecommunication operator because the state no longer owns 100 per cent of the company.
• Privatization lead to loss of jobs
  The prospect of transferring a state-owned company to private owners has systematically created the fear that the change will immediately bring unemployment. (Petrazzini 1995:19). Private sectors usually prefer employees who are specially trained for a particular field or who have experience in that field.
• Privatizing leads to a rise in prices for domestic consumers
  It could be argued that privatization leads to a rise in prices for domestic consumers. For instance, in Mexico, after the telemex’s privatization in 1991, prices were increased and residential users were more affected by the price increase than business and long distance caller.

1. Privatization with full competition
   In this model, a policy of full and open competition is implemented at the same time as privatization. All restrictions on entry into all sections of the telecom market are removed. This model was utilized by New Zealand in 1990, Chile the first Latin American country to open its telecom markets to private sector is another example of a privatized and fully liberalized market.
2. Privatization with phased-in competition
   In model two, privatization of national carriers is accompanied by a period of exclusivity rights, or limited competition, in basic telephone services. In some instances only fringe services are liberalized at the outset. In this model, national carriers are privatized with a gradual and measured implementation of competition with exclusivity in the provision of basic services guaranteed for a certain period of years. Several countries in Europe have followed the process of partial privatization. South Africa followed this model with the privatization of the national carrier with exclusivity for fixed operation that was meant to lapse in May 2002.
3. Liberalization without privatization
   Government may introduce liberalization into the telecom market without actually privatizing the national carrier. “One reason for pursuing this approach is to gain the advantages of foreign investment, technology and management expertise without suffering the political disadvantages and disruptions of a privatization transaction” (Pissciotta, 1997: 339). Some of these disruptions include opposition from workers’ union based on fear of job loss, military and defence interest based on fear of loss of control and security over critical communication facilities and in some instances, constitutional prohibition against foreign ownership.
4. Private Sector Participation without Privatization and Liberalization
   This is an innovative way of attracting private sector investment and expertise without actually privatizing and introducing competition. Ways of doing this include the granting of concessions by national operators to private industry to build and/or operate certain facilities or services. The national operator then enters into a management contract to improve operations and enhance profitability. In this model, foreign investments are invited in the form of build, transfer and operate (BTO) arrangements. In these arrangements, private companies invest capital to develop a project and operate the system for a period of time, ownership rights are eventually transferred to the government company. Examples of these arrangements are in Saudi Arabia and China- where “private sector participation in telecom is not permitted. Private company involvement is limited to consultant services and supply contracts” (Pissciotta, 1997: 339).