Some telecom industry stakeholders have dared to suggest in some circles that government's telecom industry policies have either deliberately or accidentally created a situation where all telcos in Ghana now work for MTN, and that is why MTN is the only profitable telco in the country.
Whereas that remains highly controversial and debatable, it brings the matter of significant market power (SMP) or dominant player (DP) in Ghana into sharp focus.
For a while now, there has been a silent debate among industry stakeholders as to whether it is time for Ministry of Communications (MoC), through the National Communications Authority (NCA), to start implementing antitrust and unfair competition laws to ensure fair game in the telecoms industry. That process would have to begin with declaring an obvious market leader or leaders as having significant market power (SMP) or being a dominant player (DP) based on some specific indicators.
Per a report by Study Group 3 of the International Telecommunication Union, declaring a telecom operator a DP or having SMP, and subsequently applying the appropriate antitrust regulations in that regard, goes a long way to prevent subtle monopoly, create an enabling environment for efficient market competition, encourage innovation, help all market players to expand the set of products and services available to consumers, gives consumers choice, and most importantly protects consumers from being exploited and abused by the dominant player or players.
The ITU however, acknowledges that whereas the anti-trust laws regarding SMP may have their foundation in European Union’s 2002 Common Regulatory Framework for Electronic Communications Services, each country has its own interpretation and implementation of SMP measures, based on their own indicators and regulations for determining which player is an SMP.
Ghana telecoms laws on significant market power (SMP) are captured in the Electronic Communications Act, 2008, Act 775, Section 101 – “Interpretations”, Section 6(3) - “Obligation of Individual Licensees”, and Section 20(8 and 9) - “Interconnection”.
Section 101 gives a very scanty and vague definition of significant market power. It states as follows: “significant market power means where a network operator or service provider either individually or jointly with other operators or providers, has a position that allows it to behave in a way that is appreciably independent of its competitors and customers.”
The definition is very vague indeed, in that it is not a straight forward thing to determine whether one network or the other is “appreciably independent of its competitors and customers”. The law does not define what “appreciably independent” means. It, therefore, leaves room for the NCA to undertake some exercise based on some indicators, either designed locally or borrowed from international practice, to determine whether indeed any of Ghana’s telecom operators have significant market power.
It appears the framers of the law did not anticipate the maturity of the industry to the extent that there could be a significant market power. And the industry regulators, who have proposed a lot of amendments to the law just to make more money off service providers for the state, are also refusing to see that there is a need for the law regarding SMP to be properly defined, based on what pertains in the market now?
SMP study report
But there is reliable information by some industry stakeholders that in Ghana, the NCA actually engaged a private industry researcher to look at whether the conditions exist for any player to be declared an SMP so that the necessary anti-trust laws can be activated. The researcher is said to have long submitted their report, which suggests the conditions do exist. Some industry stakeholders have been wondering why the NCA has not bothered to implement the recommendations of the report till date. The NCA has also refused to respond to requests from this writer for information about the said report.
There may be other genuine considerations why the NCA has not even coughed about that report, but this is a national debate that must be made open at some point in the interest of the survival of the industry and the general public as the ITU report suggests.
While the full content of that report still remains classified, it is not a secret that as of July 2019, MTN Ghana has over 52% voice market share, over 60% data market share (including 4G), and a whopping 94% Mobile Money market share.
MTN is the only profit-making telco in Ghana today, and it keeps gaining many heads starts ahead of the other players. For instance, MTN was the first to go 4G because the spectrum was too expensive for the others. MTN has even extended its 4G lead by buying out another 4G spectrum license holder, while other players are actually merging just to survive.
Over 70 per cent of all phone calls in Ghana terminate on MTN, so when they do the interconnect fees reconciliation, every telco has to pay MTN but MTN pays no one.
Some independent experts believe, under such circumstances, MTN must be declared a significant market power or a dominant player, then the regulator would apply the appropriate antitrust and anti-competitive laws, the object of which would be to prevent MTN from using its heavyweight to bully other players.
Here is what the law says about the obligations of player declared as SMP: Sections 6(3) and 20(8 and 9) also sets out the obligations of significant market power, once a telco is declared to be one. For the avoidance of doubt, let's state the law as is.
Section 6(3) states that “Where an operator has significant market power, as determined in accordance with the criteria set out in this Act, the operator shall make available to other operators of electronic communications networks of providers of electronic communications services, technical deployment of equipment and other information relevant to the other network operators or service provider.
Section 20(8) says “A network operator or service provider who has significant market power shall:
a) Disaggregate its network or its service or its network and service and on a cost-oriented basis specified by the Authority (NCA) establish prices for its individual elements and offer the elements at the established prices to other operators and service providers.
b) Publish, in the manner specified by the Authority the prices, technical, commercial and other terms and conditions pertaining to its offer for elements of interconnection, and
c) Permit other network operators and service providers to have equal access to directory listing without unreasonable delay, in accordance with requirements specified by the Authority.
Section 20 (9) states “Where a network operators or service provider who has significant market power fails to comply with its obligations, the Authority may notify the network operator of a deadline with which it has to comply and if the operator fails to comply within the deadline given, the Authority may apply to the High Court for an order to compel it to comply.
So with regards to bundles and prices for instance, if MTN is determined to have SMP, they would have to separate data services, from call and SMS services and price each separately. All this mush up bundles that combine data with on-net and off-net call minutes plus SMS, would all have to be collapsed. The idea is for them not to give offers that price our competition.
And again, the SMP must let the competition know all its strategies in detail, so they can prepare to remain competitive in the face of those strategies. MTN cannot spring surprises on the other networks if it is determined to have SMP.
For instance, because the interconnect fee reconciliation favours MTN, they can implement pricing and bundle strategies that will keep MTN customers calling only MTN customers, while customers of other telcos are forced to call MTN customers by virtue of their size. That way, they get to keep all the money their customers spend on MTN airtime, and they also make money from the other telcos through interconnecting fees.
Let’s break it down further. When MTN makes on-net (MTN to MTN) calls very cheap and make off-net (MTN to other networks) relatively high, MTN customers would love to make calls to other people on MTN more than to those on other networks, so they will encourage their friends and families to port to MTN. Secondly, because the other telcos are not profitable like MTN and therefore cannot afford to give the level of cheap prices MTN gives, their customers will find calls from their network to MTN too expensive so they are most likely to port to MTN so they can also enjoy the cheaper calls rates MTN offers. MNP allows them to port and keeps their original numbers, so that works for MTN as well.
When this happens, the greater majority of Ghanaians would be stuck with MTN products only, even if those products are not the most innovative. It virtually kills the will and even the opportunity of other telcos to innovate and win customers, because every innovation would either be out-priced by MTN or will make the other telcos less and less profitable, particularly if their innovation is to beat MTN on price. So the argument is that if MTN was declared an SMP, the regulator would be expected to apply the law pursue to ensure that MTN does not do unfair pricing to make the other telcos remain unprofitable.
There are many other antitrust regulations that can be applied in such and other circumstances, all with the object of ensuring no player is bullied and every player gets the opportunity to also rise out of obscurity, so to speak. But the most important reason is to prevent a monopoly and protect consumers from being abused.
Another thing that the regulator can do in the face of an SMP is to ensure that the price at which spectrum is sold to the SMP, for instance, should not be the same as it is sold to the others. It should be far less for the others, for obvious reasons. This matter came up strongly when the 4G spectrum was sold for US$67.5 million and only MTN could afford it. Even MTN said the price was too high, but the regulator felt no obligation to favour the others because it has not yet declared an SMP.
BUT! There is a BIG argument against declaring MTN an SMP and applying antitrust laws. The argument is that MTN, like many other big companies in Ghana and elsewhere, has made and continues to make relatively heavier investments than the others, and the company is what it is today because it believed in Ghana and kept investing heavily to ensure accessibility for a greater majority of Ghanaians. MTN did so, while the others were arguably being strategically careful about spending and probably hoping MTN would fail so they will either learn from MTN’s failure or jump in and cash in when MTN falls. Indeed, recently when MTN experience network challenges, some telcos designed their marketing messages around that, with the obvious intention of cashing in on MTN’s failure. It is part of the game.
I personally remember when MTN was investing heavily in mobile money and trying to tailor-make the processes to suit the Ghanaian market, the CEO of another telco openly condemned MTN's strategy as not being ideal and they boasted of pursuing the original mobile money blueprint to change the game. By the time that telco was launching their so-called ideal blueprint for mobile money, Ghanaians had already embraced the MTN strategy because IT WORKS for them. So why do we want the regulator to curtail MTN and favour this idealist telco CEO who obviously does not know what works for Ghanaians? That is a question that begs for answers.
But the most important question that formed the core basis of the anti-SMP proponents is this - what message do we want to give to potential local and multinational investors as a country - that when people bring money from the country and invest in Ghana, and become giants, we will apply antitrust laws to curtail their growth? That is also a question for all of us to ponder over.
While that question remains yet unanswered, it would appear that the recent directive from government for all telcos to remove expiry dates from data bundles would even give MTN a further advantage over the rest. For one, MTN has a wider range of data bundles than the others, for obvious reason, and it can give customers more options than the rest, under the no expiry date situation.
So it appears whereas the Ministry of Communications may have intended the no expiry directive to give Ghanaians freedom to use their data the way they want (which is good), it has created a situation where the runaway market leader can actually bully the other players and naturally pull their customers away. The point is that now no telco has the freedom to give heavily discounted time-bound data bundles any longer. So the telcos that can afford to give huge volumes of data for less, given that the data will not expire, will be the winners. MTN is arguably the only telco that can afford to do that for its huge number of customers because the money will remain on its platform anyway. Meanwhile, customers of all the other telcos will be calling MTN customers and the telcos will be paying to interconnect fees to MTN at the end of every month. That’s free money in MTN's pocket for no work done.
As a matter of fact, it appears that the suggestion that all telcos in Ghana are now working for MTN, may not be far from the truth; and this no expiry directive is likely to further worsen that situation for the other telcos, with MTN being the perpetual net winner. One would have expected that if government feels it is not really ready to declare a dominant player, it would also be careful what policies to pursue, not to further deepen the gap between the market leader and the other players.
But I also have a hunch that this no expiry on data policy directive could also be a trap for MTN. If they take full advantage of it and start engaging in the obviously anti-competitive practice, the regulator may just cite their conduct as a reason to declare them as SMP, and then activate the antitrust laws on them. So maybe MTN would need to tread cautiously.
The silent debate is however still on. The key stakeholders are shy to speak about it in strong terms publicly. But at some point, the debate would have to go public, given that the ITU acknowledges that declaring SMP and applying the appropriate anti-trust laws is the panacea to competitive safeguards to ensure the global maintenance of development of public and universal services, rather than creating exploitative monopolies.
But the question still stands, that based on the two sides of the argument advanced so far, would you say that indeed all telcos in Ghana are working for MTN?