Competition in Telecommunication Sector

The market in general

Historical development of Telecommunications Industry in Turkey

The liberalization of the telecommunications market firstly appeared in the United States of America in the 1980’s. Along with the liberalization, many countries began to privatize the telecommunications services in order to attract more investment. A similar process in our country was experienced with the abolition of monopolies in fixed telephone services in 2004. Firstly, long distance phone services were liberalized and after the liberalization of the local phone services, the liberalization of fixed telephone services market has been completed.

Because of a long history of state involvement in the economy, Turkey has been extremely late in recognizing the desirability of privatizing its state-owned monopoly fixed line company. Advisors to the government (most notably, the IMF) have had trouble convincing it of the linkages between communications privatization, increased competition, and economic development. After two unsuccessful efforts to privatize Turk Telekom, a third effort was successful in 2005 when a controlling 55% interest was sold to foreign investors. Additional shares were sold in a public offering years later. At the time of the privatization Turk Telekom a.k.a TT A.Ş was the only fixed line operator in the market. Currently in fixed line telephony, TT A.Ş’s fixed line operator Turk Telekom is the dominant operator.

In fact, the foundation of communication is as old as Turkish Republic. The Post, Telegraph and Telephone (PTT) General Directorate was established as a state-owned monopoly in 1924. It was particularly after 1980s that, there have been significant developments in the Turkish telecommunications sector with regard to the physical infrastructure and supply of services. By 1988, all Turkish villages had telephone service. In 2000, an independent regulatory authority, Telecommunication Authority, was established to regulate telecommunication...