By TECHNOLOGY TIMES Reporters
Lagos. May 27, 2013: MTN Nigeria has opened talks with the telecoms industry regulator to seek “gradual implementation” of punitive measures imposed on the mobile phone company for alleged use of its dominance of mobile voice telephony services to unfairly compete in the Nigerian telecoms market.
The Nigerian Communications Commission (NCC) is adamant that MTN Nigeria must comply with the market dominance declaration that comes into force on May 1, this year ordering the mobile phone company to peg a uniform tariff for its on-net and off-net calls, among other stringent regulatory measures.
Tony Ojobo, Director of Public Affairs in NCC told Technology Times exclusively at the weekend that the telecoms regulatory authority is looking into a formal request submitted by MTN Nigeria for “a gradual and progressive implementation of the determinations by the Commission.”
MTN Nigeria is yet to comply with the measures stipulated by NCC but has gained an audience with the leadership of the regulatory agency over the determinations seen as a major shakedown of the market influence of the mobile phone company market ranked number one by subscriber numbers in the telecoms market.
The telecoms regulator says it will not rescind the determinations as requested by MTN Nigeria but has set up a Committee to look into other requests by the company including phased execution of key sanctions against imposed on its operations in the wake of the determinations.
“Determination of dominance against MTN Nigeria stands and we do not plan to rescind it”, Ojobo told Technology Times while adding that a Committee has been set up to look into the company’s other requests “as they are now asking for gradual implementation.”
Eugene Juwah, the Executive Vice Chairman of Nigeria Communications Commission (NCC), who announced the “Determinations of Dominance in Selected Communications Markets in Nigeria” that comes into force from May 1, this year, says that the decisions were taken after findings from a KPMG study to check abuse of dominant market power by operators and ensure that Nigerian consumers get a better deal.
Juwah says that the KPMG findings reveals that MTN Nigeria has 44 per cent market share of the mobile voice telephony market which further unveils there is also a wide differential of about 300 per cent between on-net and off-net calls on its network, with the implications that is “indicative of the likely establishment of a calling club for MTN subscribers.”
NCC says that MTN Nigeria’s operations are coming under stricter regulatory scrutiny to guard against abuse of its market position in the mobile voice telephony underscoring that the determination is part of a widespread shakeout in the telecoms market where anti-competitive market practices by the big players have stifled open competition.
Meanwhile, MTN Nigeria has said that it has not requested NCC to rescind the determination noting that if all efforts underway to seek a regulatory review of the determinations fail, it would be left with no choice but to comply with the determinations.
Funmilola Omogbenigun, General Manager, Corporate Service of MTN Nigeria, who denied that the company has asked the NCC to rescind the determinations in an email response to Technology Times, says that, “We have not sent such a request to the NCC. We have sought a meeting with NCC to discuss and seek clarification regarding the directive issued by the NCC further to the Declaration on Dominance.”
She also faults allegations that MTN Nigeria’s control of over 70 per cent of telecoms traffic has allegedly been used for unfair market influence in the Nigerian telecoms market.
“We are not aware of any allegations of unfair market influence by the NCC or indeed any other complainant”, Omogbenigun says noting that the operation of an on-net calling plan cited by the regualtor is commonly practised by operators in the telecoms market.
“All operators have an on-net community. MTN is no different”, she adds while also clarifying the nature of requests made by the mobile phone company to the industry regulator.
“Our request was for a meeting and clarification. The NCC has met with us and they have responded to our request for clarification”, she says.
On the other hand, NCC image maker, Ojobo says that NCC made the request for the determinations to be rescinded, “but the Commission said, no.”
According to him, MTN Nigeria requested for a meeting and in that forum and several key decisions emanated from the encounter between the leadership of the two entities.
Ojobo told Technology Times that the Commission’s main concern is that it has been established by KPMG that MTN Nigeria has significant market power and the determinations measures were taken so that, “the market is not unnecessarily influenced by just one operator.”
He adds that MTN Nigeria agrees with NCC in terms of the percentage of market share for mobile voice telephony that they control and “there is no dispute about that.”
According to him, what the mobile phone company is now asking is “gradual implementation of the determinations.”
Explaining the disputed issues further in an interview with Technology Times, Wale Goodluck, the Corporate Service Executive of MTN Nigeria says the moratorium sought by the mobile phone company was to meet with the regulator and iron out the gray areas of the regulator’s determinations.
MTN Nigeria’s concern is that the process leading up to the announcement of determinations by NCC this year departed from the process earlier embarked upon by the regulator where previous determinations established the non-existence of dominance in the mobile voice telephony market segment at the time.
The company says that in previous determinations that established the lack of market dominance, the process adopted took into account comments from industry stakeholders, the convening of public hearings and several inputs from the industry before a final decision was announced by NCC.
“What has informed the departure from this process?”, says Goodluck who reckons that NCC cannot unilaterally issue a direction without making this known to the affected party, asking them to stop and if by then they do not, they can go ahead and issue a direction based on the provisions of their existing competition regulations.
“We are not saying that we cannot comply but we are seeking clarifications on several other areas”, says the MTN executive.
The implications of designating MTN Nigeria a “Dominant Operator” in the mobile voice segment of the Nigerian telecoms market is that NCC will now impose regulatory sanction under which the regulator will now enforce and implement Accounting separation of the South African mobile phone company, the regulator says.
NCC says it will take steps to collapse the on-net and off-net retail tariffs for MTN Nigeria whereby the differences between the two rates will become and remain the same.
MTN’s operations in Nigeria will also come under stricter regulatory scrutiny as the newly-designated dominant operator will be required by NCC, “to submit details on specific aspects of its operations from time to time as the need arises.”
Following the ruling, NCC says that it will also undertake “a determination of pricing principles to address the rates charged for on-net and off-net voice calls for other operators.”
The regulator says that MTN Nigeria and Globacom also stifle competition in the upstream segment of wholesale leased lines and transmission capacity where they have been jointly declared dominant operators.
According to the NCC, they “jointly control about 62% of the public terrestrial transmission infrastructure which is a bottleneck resource in the provision of voice and data services. There are concerns that operators playing in the wholesale and retail sub‐segments of these markets have the leverage to “squeeze” the margins of their competitors who are also their customers.”
Following this, the segment will be subjected to a price cap for wholesale services and floor caps for retail to be determined soon by NCC.
NCC says it is also implementing an accounting separation for the joint dominant operators and will also require them to submit details of their operations for regulatory scrutiny