Etisalat Nigeria, one of the top four mobile operators in the country, has dragged the Nigerian Communications Commission (NCC) before a federal government high court in Lagos for favouring its rival, MTN Nigeria, by reversing its 2013 Market Dominance Determination (MDD). According to Etisalat, the development is causing it and other telecom operators to lose revenues running into billions of naira.
Etisalat Nigeria is seeking judicial review of certain actions taken by the NCC which, it believes, is in contravention of the Determination of Dominance issued in April 2013.
In a motion ex parte filed by Mr. Kola Awodein (SAN) on July 15, 2015, Etisalat Nigeria is seeking an order for a judicial review of NCC’s decision approving and allowing a 30 per cent differential between the on-net and off-net retail voice tariff for MTN Nigeria. The approval is said to be in contravention of the obligation imposed on MTN Nigeria under the Determination of Dominance Regulation to collapse its retail voice on-net and off-net tariffs and ensure both tariffs are at par.
In 2012, the NCC conducted a study to assess the level of competition in the Nigeria’s telecoms industry. The Commission thereafter issued a regulation entitled ‘Determination of Dominance in Selected Communications Markets in Nigeria (DDSCMN),’ dated April 25, 2013, wherein it declared MTN Nigeria a Dominant Operator in the Retail Mobile Voice Market segment of the telecommunication industry and directed the firm to immediately collapse the differential between the on-net and off-net retail voice tariffs.
The NCC, just before the 2015 elections, reversed the decision without due consultation with industry players and gave the dominant operator, MTN, concessions which were contrary to the directives of the NCC’s regulation on dominance, an act which was in contravention of its very own policy. NCC’s decision to grant MTN Nigeria a 30 per cent concession is being challenged as the decision was made without the NCC undertaking a public review of the market in consultation with industry stakeholders as is required under the provisions of the National Communications Act 2003 and is, therefore, a breach of due process.
This failure of the NCC to follow due process has raised concerns amongst industry stakeholders as the NCC has an obligation to promote fair competition and prevent the misuse of market power or anti-competitive practices by any licensee. Investors craving regulatory certainty to guide their investment decisions will certainly be disturbed where the industry regulator undertakes far-reaching industry decisions without transparently engaging with industry stakeholders that may be affected by its decisions.
Efforts to get a reaction from Mr. Tony Ojobo, director, public affairs, NCC, to the claim by Etisalat failed as several calls to his phone line were not answered and text messages were not replied. Also, Ms. Funmi Onajide, general manager, corporate communications, MTN Nigeria, did not reply to an email sent to her.
Etisalat Nigeria has in this case called on the federal high court to review the legality or otherwise of NCC’s action approving the on-net off-net differential tariffs. NCC’s chief executive, Eugene Juwah, had in April 2013 ordered MTN Nigeria to “implement accounting separation, collapse its on‐net and off‐net retail tariffs” as well as “submit details on specific aspects of its operations from time to time as the need arises.” Juwah had noted that NCC’s Competition Practices Regulations (CPR) key findings showed that “the mobile voice market is not effectively competitive and is still highly concentrated with an HHI of 3063. MTN has a 44 per cent market share of subscribers within this market. There is also a wide differential (of about 300 per cent) between on‐net and off‐net calls and this is indicative of the likely establishment of a calling club for MTN subscribers.”
We Are Not Aware Of Pending Suit – NCC
NCC spokesman, Tony Ojobo, in a telephone interview with LEADERSHI Friday, said the commission is not aware of the pending suit.
Ojobo had in another statement in April 2013 said the Commission had engaged KPMG Professional Services inv2012 to carry out a study on assessment of the current level of competition in the industry, and the report was that “the mobile voice market is not effectively competitive.”
Ojobo said NCC had determined dominance in the mobile voice market and the wholesale leased lines and transmission capacity market.
“The necessary regulatory tools to correct current and potential anti-competitive practices such as predatory pricing, margin squeezes and cross-subsidisation by any of the operators with dominant position in any of the market segments or sub-segments are to be applied by the Commission,” he noted.
In a paper presented at the 2015 Commonwealth Broadband Forum in Abuja last month, the CEO of Etisalat Nigeria, Matthew Willsher, identified the current situation where most of the telecom sector revenues and profits go to one operator while others struggle to survive as being largely responsible for the broadband investment deficit and resultant low broadband penetration in Nigeria.
He said that the presence of several struggling operators, many of whom are barely active, in an industry the size of Nigeria was indicative of serious underlying issues with value distribution across the industry.
“This is highlighted by the concentration of 70 per cent industry revenues and probably all of the industry’s net profit in one operator to the detriment of the rest of the industry,” they noted.
Wilsher called for tailor-made regulations to enable unprofitable operators compete more favourably in order to attract a greater share of the currently lopsided value in the industry.
“It is perfectly normal to have asymmetric regulation in a market where one operator holds the sort of market share and significant market power – and pertinent to ask is whether Nigeria can learn from the success of other markets in restricting dominant players in the interests of the industry and the country in general,” he said.
The Nigerian telecom market is segmented into voice, data, upstream and downstream services. The voice market and the data market have mobile and fixed sub-segments.
The sub-segments of the upstream market are spectrum and frequency services, tower services, network services, wholesale broadband/internet services and wholesale leased lines and transmission capacity services while handsets/devices and applications/contents make up the sub-segments of the downstream market.
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