Liberalization in the Dutch Caribbean - Telecom first, airlines to follow suit

April 01, 2009 7:29 AM

The government of the Netherlands Antilles has been in favor of liberalizing the telecommunication market for may years now. Liberalization of the telecom market means opening it up to domestic and foreign competition, subject to certain regulatory principles.

Basically, liberalization means competition; competition means price levels determined by the market, not by a monopoly. This will benefit the consumers. In a free market telecom companies will, in principle, also be more innovative, more service-minded, offering a better and wider range of services, including service packages, for example, in an attempt to keep their customers or to convince others to join them. Thus, if a particular telecom company is performing worse than its competitors, it will lose customers (market share).

Like in any other country which implemented liberalization policies, both the Netherlands Antilles government, as well as the competitors who entered the market in the past decade, face stiff opposition from the monopolist companies in both Curacao and Sint Maarten. For many years now, various telecom parties have been using the Courts in First Instance and the Court of Appeal as their battle grounds. However, there is no one who believes that the monopolists will eventually win.

Telecom and airline companies have much in common with regards to, for instance, regulatory environment, market circumstances and business performance criteria. At the end of the day, an airline is a business like any other business.

As far as a transportation policy is concerned, issues like deregulation in other countries and the globalization of markets, for instance, will eventually force the Netherlands Antilles to also liberalize air transportation. If Curacao wants to benefit from its geographically strategic position, in particular regarding regional transportation, it must allow foreign investors and airlines to enter its market without too much hassle and without too many or too burdensome restrictions. Any government policy should include measures to mitigate domestic distortions which might be the result of liberalization and should provide for regulation that ensures (as far as possible) long-term commitment from foreign investors and airlines. This is the way to create an air transport industry that will further the economic vitality of Curacao.

Karel Frielink
Attorney (Lawyer) / Partner Spigthoff

(Source: Karel's Legal Blog)

March, 2009