Smaller Telcos Run To NCA For Cover

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 some official of Glo on grounds of anonymity and that official 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 should be seeking the interest of the consumer. This industry is already over regulated,” the Glo official said.

Meanwhile, an official of Airtel Ghana admitted that Airtel did write to the NCA and made those proposals to ensure the general sustainability of and fair competition in the industry.

The official said Airtel was more than happy to be associated with initiating such “laudable” policies that promise to secure the future of the telecom industry because “we think NCA cannot supervise the collapse of this industry.”

Proponents of a regulated on-net tariff argue 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,” they insist.

Whereas they agreed that there were too many telcos in a small market like Ghana, and so eventually some might collapse, they think 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.

They held that the ongoing price war is threatening to collapse the industry, particularly because the telecom industry is a capital intensive one and heavily dollarized, plus the added challenge of high cost of fuel under the “dumsor” situation.

The regulatory regime proponents believe all the necessary legal instruments and international best practice rules exist for any regulator to intervene and ensure fair competition and sustainability.

Their position is that ultimately, 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 then, it is right to regulate on-net tariff as a first step.

An independent telecoms expert, Eyome Ackah thinks anti-trust policies, like controlling on-net tariff and others, are necessary to ensure fair competition, particularly when they are meant to protect smaller players.

He believes extreme price war poses and danger to the entire industry and even to other players, like VAS players and others within the ecosystem, so it is important for the NCA to step in and sanitize the environment.

Another telecoms expert, Bob Palitz said on Facebook that there is a case for controlling predatory pricing in Ghana, and that was why. NCA reduced the interconnect rate years ago. But he doubts approach to regulating on-net tariff is right.

Some pundits have questioned why Airtel did not seek consensus on the matter at the Telecoms Chamber level, but rather rushed to the NCA for cover. But Bob Palitz think the Chamber is not the place to solve contentions between telcos.

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.

More Business & Finance »

This article has 0 comment, leave your comment.