Telcos divided over minimum on-net tariff proposal

Business News of Wednesday, 4 March 2015



Adom News can confirm that smaller telcos in the country, led by Airtel Ghana, are seeking cover under the National Communications Authority against low tariff promos by the bigger telcos while Vodafone and Tigo fight back.

Airtel actually wrote to NCA and proposed a number of regulatory regimes including controls on off-net (calls from one network to another) and on on-net (calls within same network) tariffs and the need to declare a significant market player (SMP) as a tool to control competition.

Subsequent to Airtel’s proposal, NCA implemented a 4Gp per minute minimum interconnect rate, which was accepted by all, and then asked each telco to do their respective position papers on the on-net bit.

Meanwhile, the telcos were not aware that it was Airtel that made the proposal to the regulator.

It turned out that, market leader- MTN- took a neutral position, apparently because it has the numbers to survive whether on-net is controlled or not. Meanwhile, second and third largest telcos- Vodafone and Tigo- were opposed to it. Glo hurriedly joined Airtel in supporting the proposed protectionist policy.

But the irony of the whole matter is that the smallest telco, Expresso is said to be opposed to the move to control on-net tariff, which is meant to protect smaller telcos.

NCA still went ahead and proposed a minimum on-net tariff of 4Gp per minute and that has divided the front of the telecom industry to the extent that two of the telcos are currently in court fighting the move.

Adom News has since spoken with an official of Glo on grounds of anonymity, who said Glo had no idea it was originated by Airtel. They thought it was an NCA policy and “we do not want to be seen as opposing the regulator.”

The Glo official, however, stated that “we think it is not good for the consumer and the regulator to be seeking the interest of the consumer. This industry is already over regulated,” the Glo official said.

The Head of Legal and Corporate Affairs at Airtel Ghana, Hannah Agbozo admitted that Airtel did write to the NCA and made those proposals to ensure the general sustainability of, and fair competition in the industry.

She told Adom News Airtel is more than happy to be associated with initiating such “laudable” policies that promises to secure the future of the telecom industry because “we think NCA cannot supervise the collapse of this industry.”

Hannah Agbozo explained that, currently, even though most telcos in the country are not profitable, telcos with the larger number of customers are engaging in “predatory pricing” and that is forcing the smaller ones to also reduce their tariffs in order to keep their customers.

“The bigger telcos are actually using their promotions to price under cost for on-net calls because they know they can depend on the interconnect payments from the smaller telcos to survive. But the smaller telcos do not have that luxury, so there is need for the regulator to step in and stop the unfair competition practices,” she said.

Whereas she agreed that there were too many telcos in a small market like Ghana, and so eventually some might collapse, she thinks the collapse of weaker telcos should be allowed to happen naturally, under fair competition conditions, and not be forced by predatory pricing or what she called a clubbing effect.

Hannah Agbozo pointed out that the telecom industry is a capital intensive one and heavily dollarized, where almost 100% of its implements were imported. And there is an added challenge of high cost of fuel under the “dumsor” situation. So the price war is actually threatening to collapse the industry.

“If I was NCA, I would step in and control the situation because under such circumstances, all the necessary legal instruments and international best practice rules exist for any regulator to intervene and ensure fair competition and sustainability,” the Airtel Legal Director said.

Hannah Agbozo said Airtel is also convinced that eventually the NCA would have to declare a significant market player (SMP) and use it as a tool to control competition in the larger interest of the entire industry.

“But until we declare an SMP, I think the control of on-net tariff is a lower hanging fruit that promises to yield some immediate positive results, so we support the NCA in going for that option,” she said.

Meanwhile, Vodafone and Tigo have taken the matter to the Electronic Communications Tribunal seeking to thwart the move because they believe it is not in the interest of the consumer, who deserves the freebies if a telco can afford it.

The tribunal is yet to set a date for hearing to begin.