ARE BUILD-TRANSFER-OPERATE REGIMES JUSTIFIED?

Build-Transfer-Operate (BTO) regimes refer to the contracts by which governments have allowed private firms to build up the network but all assets must be transferred to public ownership before operating. This paper is a partial PhD thesis on ‘Regulatory Reform of Telecommunications in Developing Countries: A Case Study of the Fixed-Line Telephone Network in Thailand’, School of Economics, the University of Adelaide. The author is grateful to Assoc Prof Christopher Findlay in providing comments and advice on this paper. She is also grateful for the support of Centre for International Economic Studies (CIES) in publishing this paper. She, of course, is solely responsible for any errors and shortcomings in this paper. Are Build-Transfer-Operate Regimes Justified? In recent years, the introduction of a build-transfer (BT) regime is one of the regulatory reforms that has emerged in some developing countries, for example, Indonesia, Lithuania and Thailand. The BT regime has been modified into several forms, for example a build-transfer-operate (BTO), a build-operate-transfer (BOT) and a build-lease-transfer (BLT). The main objective of this paper is to examine whether this approach is justified. Because telecommunications in Thailand is regarded as a leader in the use of BTO arrangements, it therefore has been chosen as a case study in this paper. It is found that the structure of telecommunications market is unlikely a natural monopoly, which implies that BTO regimes do not provide cost saving.