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330 Diagnosing Corruption in Ethiopia A range of stakeholders are involved (figure 8.1). The government establishes regulatory policy for the sector, and an independent regulator oversees the adherence to these regulations and grants licenses. In competitive environments, the government (or the independent regulator) will grant a license to one or more telecoms network operators (which can be either a government or private sector organization or company) to own or operate all or part of the network. The network operator will typically purchase equipment and services from telecoms suppliers. The telecoms suppliers are normally major international companies that design, manufacture, supply, and install their own specialist equipment. This equipment and the services may include transmission and receiving equipment, mobile telephone masts, software, cables, satellite services, and telephone handsets. The network operator arranges for contractors to carry out the necessary civil and building works, such as foundations for mobile phone masts, access roads and buildings, and the laying of cables. Once the network infrastructure is in place, the operator then sells telecoms services such as telephone and Internet services to business, individual, or business consumers. Corruption Risks in Any Telecoms Sector In common with some other industries or utilities, the telecoms sector in many countries is regulated by government, requires major investment in infrastructure, and generates significant revenues. As such, the following factors make it prone to corruption risks: • High revenues. Telecommunications is a high-volume, high-value business. A well-run telecoms network can be exceptionally profitable, producing large revenue streams for many years. A bribe of millions of dollars for a license or reduced regulatory controls may be only a fraction of the profit achieved by a private sector network operator if it can, as a result, obtain market entry or improve its market share. • High research and development costs. Telecoms equipment suppliers invest millions in research and development of new products in the expectation of recovering that investment by winning high-value contracts. Therefore, they are under considerable pressure to win such contracts, which may induce some to engage in corrupt practices. • High costs and significant risks of market entry. The installation of the basic infrastructure needed for a telecoms network can represent a significant investment—most notably in the case of satellites and cables (particularly undersea) 2 as well as with secondary mast-based
Figure 8.1 Typical Telecoms Sector Stakeholders government establishes regulatory policy for sector independent regulator oversees adherence to policies and grants and reviews licenses contractors construct necessary civil and building works network operator(s) own and operate network telecoms suppliers design, manufacture, supply, and install equipment for network operators business users individual users government users Source: Authors. 331
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DIRECTIONS IN DEVELOPMENT Public Se
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Diagnosing Corruption in Ethiopia P
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Contents Foreword Preface About the
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Contents vii Chapter 6 Construction
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Contents ix Map 3.1 Ethiopian Regio
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Contents xi 3.6 Summary of Corrupti
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Foreword The government of the Fede
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Preface Although many would argue t
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Preface xvii Goldie-Scot, Piers Cro
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xx About the Editor and Authors bil
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xxii About the Editor and Authors g
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xxiv Abbreviations GAC Governance a
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CHAPTER 1 Overview Janelle Plummer
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Overview 3 Focusing on Ethiopia, th
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Overview 5 for their knowledge of c
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Overview 7 and group discussion wit
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Overview 9 analysis, Goldie-Scot ge
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Overview 11 Chapter 8: Telecommunic
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Overview 13 might be explained by t
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Overview 15 The perceptions of corr
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Overview 17 Given the Ethiopian gov
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20 Diagnosing Corruption in Ethiopi
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44 Figure 2.4 Corruption Vulnerabil
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100 Diagnosing Corruption in Ethiop
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154 Table 4.4 Value chain area Cons
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Annex 4.1 Ethiopian RWS Borehole St
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CHAPTER 5 Justice Sector Corruption
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Justice Sector Corruption in Ethiop
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Table 5.2 Disposition of Civil and
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CHAPTER 6 Construction Sector Corru
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Construction Sector Corruption in E
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Table 6.7 Overview of Perceived Cor
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Figure 6.5 Drivers of Corruption Ri
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Corruption in the Mining Sector: Pr
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