Some telecom industry observers and even players have dared to suggest in some circles that government’s policies for the telecom industry has deliberately or accidentally created a situation where now, all telcos in Ghana work for MTN, and that is why MTN is the only profitable telco in the country. Very controversial and debatable suggestion for anyone to make.
But while you ponder over that, let me quickly say that I have a feeling that this recently “no expiry on data bundles” policy directive from the Ministry of Communications threatens to further deepen the gap between MTN and the other telcos, to the advantage of MTN and the detriment of the others.
Here is my long explanation, that would eventually speak to the earlier suggestion that all telcos in Ghana are working for MTN.
For a while now, there has been a silent debate as to whether it is time for Ministry of Communications (MoC), through the National Communications Authority (NCA), to start implementing antitrust 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 parameters.
Per a report by Study Group 3 of the International Telecommunication Union, declaring a telecom operator a DP or 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 by the dominant player or players.
The ITU however, acknowledges that whereas the anti-trust laws regard DP and 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 for determining which player is an SMP.
There have been overwhelming suggestions that in Ghana that the NCA actually engaged a private industry expert 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 written 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. There may be other overriding considerations for which the regulator has not coughed about that report. Admittedly, it takes very a complex set of processes to actually arrive at a decision on who is a significant market power.
While the public does not know the content of that report, it is not a secret that as of July 2019, one player, MTN 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 head 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% 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 heavy weight to bully other players. For instance, because the interconnect fee reconciliation favours MTN, they can implement pricing strategies (and they allegedly do) 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 interconnect 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 keep their original numbers, so that works for MTN as well.
When this happens, 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 telco 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 pursue policies that would 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. Another example is ensuring that the price at which spectrum is sold to MTN, 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.
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 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 favor 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 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.
The silent debate is 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?