Major shake up in telecom charges pending

Even as the fierce debate set off by Monday’s announcement by the National Communications Authority that it is classifying MTN Ghana as a near-monopolist rages as to its fairness to the largest mobile telecoms operator, attention is now shifting to its implications for telecom tariffs payable by customers of all four networks. The reclassification of MTN as a Dominant/Significant Market Player (SMP) gives the NCA, as the telecoms industry regulator the authority to make MTN adjust its tariffs.

However, users of telecom services have started worrying as to the direction of the impending tariff changes. While classification as a SMP is usually done to protect customers from monopolistic pricing, in this case it is being done to protect MTN’s competitors – Vodafone, Airtel Tigo and Glo from predatory pricing by the former, used to win market share from its competitors and to force them into economically unviable tariffs just to keep them in the market.

Instructively, the NCA claims that MTN is the only of the four network operators that is profitable currently.

Fears are now increasing that consequently, the NCA will, among other things, force MTN to raise its on-net tariffs – that is charges on calls and other services executed within MTNs own network – to prevent it from offering on-net charges that are significantly lower than charges by its competitors, who are forced to pay more than half of their revenues from their charges to the network where the call or other service terminates; in Ghana’s current circumstances, this mainly being MTN.

Since MTN has a 55.95 percent market share in voice telephony and a 72.01 percent share of the data market, forced increases in MTN’s on-net tariffs would result in generally higher telecom costs for the average user in Ghana.

In similar fashion, MTN will be forced to raise the costs of its product and service bundles to prevent it from pricing its competitors out of the market as the NCA claims it is currently doing.

Many consumers are already complaining that it is they that deserve protection from MTN’s position as a dominant player, not its competitors, but they are going to be faced with higher charges to protect those competitors. They argue that current regulations, particularly number portability provides them with adequate protection already against any efforts by MTN to take advantage of them with regards to pricing.

However NCA and Ministry of Communications chieftains insist that MTN’s increasing market dominance could eventually be used against the best interests of those same customers, because if left to continue to the point where the competition is virtually eliminated altogether, there would be nothing to stop MTN from setting its tariffs arbitrarily in order to earn supra-normal profits. They explain that the reclassification of MTN as a SMP is meant to forestall such a situation before it happens.

Under the tenets of the Electronic Communications Act 2008 (Act 775), MTN will have 30 days to submit a new tariff plan to the NCA and 90 days to actually implement it. This means new higher tariffs on majority of telecom products and services in Ghana – that is those offered by MTN – could begin as early as October this year.

It is still unclear how MTN’s competitors will react to the opportunities about to unfold for them, but since they are not making significant profits currently, it is unlikely they will try to accompany enforced higher tariffs by MTN with lower on-net tariffs within their own networks. Even if they did the effect would be much smaller than the impact of tariff hikes by MTN since they all have much lower market shares. Between them the three competing networks control just 44.05 percent of the voice telephony market and 27.99 percent of the data market.

Curiously though, the market in which MTN has its strongest dominance – mobile money – with over 90 percent market share will not be affected by the NCA’s initiative since that market is regulated by the Bank of Ghana, which so far has not indicated whether it will follow the NCA’s lead.

Source: goldstreetbusiness.com

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