While nobody is against fair competition in the market place, there is a
need to be concerned when an entity by virtue of its ambitious expansion plans
ostensibly develops into a monopoly. That appears to be the implication of the
recent development in the telecommunications sector, which has been celebrated
for its competitiveness since the deregulation policy of the early 2000s.
MTN’s recent
acquisition of Visafone Nigeria gives it access to valuable 800 MHz spectrum
band which will enable it provide 4G LTE services. The 800MHz spectrum band is
currently characterised by the presence of numerous sub-scale players who have
been unable to utilise the spectrum efficiently. This acquisition places MTN in
the enviable position of being the only GSM operator with access to this
spectrum and thereby growing into a behemoth.
From a dominant player to a full blown monopoly, the Nigerian
telecommunications consumer will be the ultimate loser. If a single operator
owns all the variables in the market in which it plays, the consumer is left
with little choices with the absence of real competition engendering high
tariffs and possible poor quality of service.
The Nigerian telecommunications scene, specifically the GSM/CDMA
telephony sub-sector, is dominated by four GSM service providers namely, MTN,
Airtel, Glo and Etisalat, alongside CDMA operators which have mostly been
forced out of business by alleged non-competitive regulations which favour the
GSM service providers.
According to
industry analysts, issues such as interconnect fees and limited coverage areas
pushed the CDMA operators to the back seat despite offering cheaper call rates.
Interconnect fees favour the networks with larger huge subscriber base. In this
regard, MTN Nigeria and Airtel (then known as Econet) are better placed having
enjoyed first mover advantage as pioneer GSM service providers in Nigeria.
The 800 MHz
spectrum band is characterised by the presence of sub-optimal licensees who
have largely been inactive over the last eight years. For the few who have
remained active, their performance has been sub-optimal and most lack the
financial capacity to deploy services and thus compete effectively with a
behemoth like MTN. Re-farming the 800MHz spectrum to make it available for
operators who have demonstrated the ability to deploy telecommunication
services appeared to be a challenge for the Nigerian Communications Commission
(NCC), the industry regulator, as the current licence holders in the spectrum
band have been unable to meet their roll-out obligations.
Over the years, MTN has spread its tentacles across the Nigerian market,
moving from offering just telephony services to being a one-stop
telecommunications service entity. The quest to increase its market share has
thrown up an unhealthy trend which, if unchecked by the industry regulator, may
lead to a complete monopoly and a throwback to the pre-GSM era when the
government corporation, NITEL dispensed service at its whim and caprices. This
situation, industry watchers say, will not offer the Nigerian subscriber the
viable options that an open market economy throws up.
In 2006, MTN
Nigeria acquired VGC Telecoms, a CDMA entity with a growing subscriber base in
the Lekki/Victoria Island/Ajah axis of Lagos State. MTN Nigeria purchased VGC Communications
Limited (VGCCL) for $70 million (N9.3 billion). VGC has since been subsumed
into MTN Nigeria, giving the company the advantage of providing both CDMA and
GSM services, unlike other GSM operators.
Visafone
only obtained approval for the additional spectrum this year, and two months
later it sold the asset. MTN’s access to sub 1GHz spectrum to the exclusion of
other leading operators provides it with an unfair competitive advantage in the
data market where it can easily deploy its size and profitability to further
entrench its dominance in the market and stifle other players’ ability to
compete. Given that it has already been declared dominant in the transmission
market, MTN’s ability to control both spectrum and access at prices it dictate
to industry and consumers makes this an unhealthy development, for which the
consumer will be the ultimate loser.
This
advantage poses a real threat to the viability of Nigeria’s telecommunication
industry as it potentially leaves it with a single dominant player in both the
retail voice and data markets. In the long term, the Nigerian subscriber will
pay for this in the form of higher tariffs, poor quality of service levels,
little or no incentive for innovation and a bully service provider due to the
lack of competition in the market.
There is an
urgent need for close regulatory scrutiny by the NCC in line with what obtains
for any dominant operator in any market. The NCC must carry out an urgent
review of the acquisition to ensure that such purchase does not give MTN an
unfair advantage in the industry, which may be detrimental to the growth of a
viable and healthy telecommunications industry in Nigeria.
Moses
Kwambe is a consumer rights advocate
based in Lagos
ITREALMS ... everything news digitally!
No comments:
Post a Comment