Rise up against anti-competition

THERE are two possible economic explanations to the current stalemate in telecommunications interconnectivity between Telikom PNG Ltd and DigiceI.
They are zombie and first-mover game.
First, a zombie is a brain-dead person on life-support.
In a similar vein, the fixed domestic and international line networks of Telikom are deteriorating, thus affecting the cash flows and the economic value of these assets. Thus, Telikom’s going concern in the long-run is uncertain without the monopoly.
To rectify this long-run uncertainty, the Government has decided to infuse and merge Digicel into the fixed line network to rejuvenate and sustain the economic value of the assets and cash flows of Telikom, using fixed line access fees paid by Digicel.
It has thus created a zombie (Telikom) and life-support (Digicel), which is essentially a mega-monopoly in disguised form.
Second, the first-mover (Digicel) sets a competitive call rate. Telikom must match the rate to remain competitive.
After the game is played many times over, only one will emerge as the winner (Digicel).
Telikom knows that it cannot match the fierce price war brought on by Digicel. It decided not to play the game to its detriment. Instead, it wants to convince Digicel that it should fix the call or access rate, whichever is mutually agreeable.
This would explain why Telikom is delaying interconnectivity throughout the nation.
Digicel is reluctant to agree to set a price as it is price-fixing, which is illegal by anti-competition laws in the (developed) countries in which it operates.
Price-fixing has serious economic and social consequences. The price of refined oil from the Napanapa oil refinery was agreed to and fixed by the Government and InterOil, which is causing serious economic and social damage.
The people and businesses must rise up against this form of anti-competition in PNG.

Economist
Via email