Can cable TV network boost broadband competition in Turkey? : developing policy implications for Turkey

Abstract

Turkey is one of the most important emerging markets in the world. Considering its young educated population prone to use computer technologies, Turkey can make more benefit from broadband services. Compared with OECD countries, however, current broadband access penetration in Turkey, particularly for fixed broadband service, is quite low. Furthermore, there is a limited competition in Turkish fixed broadband market, which is highly dominated by a single incumbent network. Different than many developed countries, cable TV infrastructure, which is an important part of facility based competition in fixed broadband market, has not been developed much and it is still owned and governed by the state company called Torksat which is established primarily responsible for national satellite operations. In October 2014, Finance Minister Mehmet Simsek has announced Turkish government's new privatization agenda covering cable TV operations of Turksat. In this thesis, it is focused on possible effects of the privatization of cable TV network on the competition dynamics of Turkish fixed broadband market and developing policy implications for Turkey to enhance sustainable broadband ecosystem. The research findings, based on the interviews conducted with experts from Turkish telecommunication and media sector, affirms the government's privatization decision that privatization of cable TV platform is needed because of uncompetitive company behavior and lack of private sector motivations in management under the ownership of state. Moreover, privatization is high likely to enhance consumer welfare. Although, the service coverage area of the cable platform is low, it has a potential, to make a significant impact on competition with follow up coverage investments. There are economic incentives, complementarily, to invest in network roll out in Turkey. However, there are challenges mainly rising from municipals' attitude toward new infrastructure deployment. Therefore, developing policies triggering investment incentives for network roll out and eliminating the reluctance of municipals toward telecommunication infrastructure development would be the key policy implications to increase the attractiveness of the cable platform auction and to sustain competitive environment after the privatization.