Telecommunications is one sector historically subject to state monopolies in both developed and developing countries for many reasons. The Indonesian legislation stipulates that the telecommunications sector is of national strategic importance and must therefore be controlled by the state. Not surprisingly, the Indonesian government has tended to read the term “state control” as state or government ownership. Since the late 1980s, there has been a radical policy reversal whereby governments have progressively reduced their ownership and involvement in this sector by increasing private sector participation. One of the most important consequences of this is that privatization has led governments no longer being able to play traditional tripartite roles of owner, operator and regulator of telecommunications. More specifically it raises a critical question; in what ways might the government maintain its control over the sector when privatization reduces state ownership in SOEs? This paper argues that licensing is a legal tool to maintain state control after privatization of telecommunications. It can be used as a tool to implement important national priorities, be it opening the markets for equipment, services, and networks to immediate or gradual competition, or to preserve a monopoly for the time being so as to permit investors to recoup their expenditures or to continue a source of revenue for the government.
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Senior Lecturer in Telecommunications Law and International Law Faculty of Law, Padjadjaran University, Bandung-Indonesia, Managing Partner of LHRP Law Office, email@example.com