The National Communications Authority (NCA) is gearing up to start regulating the frequency with which telcos adjust their tariffs in the country, and this is specifically because of the emergence of MTN Ghana as a significant market power (SMP).
Traditionally, NCA does not regulate tariffs, but it has been compelled to initiate the process towards tariff regulation solely because of the existence of a significant market power (SMP) called MTN in the telecoms industry.
The NCA is doing this in pursuant of of Section 25(2) of the Electronic Communications Act, 2028, Act 775, which states as follows:
The Authority may establish price regulation regimes, which may include the setting, review and approval of prices by Regulation, where
(a) there is only one network operator or service provider or one network operator or service provider that has significant market power,
(b) a sole network operator or service provider or a network operator or service provider with significant market power and cross-subsidises network or service, and another electronic communications
(c) the Authority detects anti-competitive pricing or acts of unfair competition.
Since naming MTN SMP, the NCA has accused MTN of violating SMP rules at least once, when MTN prized its Data Zone bundles below the price the non-SMP telcos were offering for similar packages. MTN was then compelled to abolish those low-priced packages and raise the prices. Barring that, per (a) above, even the very existence of one SMP in the industry, gives the NCA the right to regulate prices.
Background
In June 2020, the NCA declared MTN Ghana SMP, saying that the telco had controlled over 75% of voice, data, SMS, mobile money and revenue share in Ghana’s telecoms industry several years prior. It therefore became necessary to name MTN SMP in order to implement the necessary measures to correct the market imbalance.
It has been more than three years since MTN was declared SMP, but the industry is yet to witness a single positive dividend. The status quo, in terms of the structure and trajectory of the industry remains unchanged in spite of the SMP declaration. In fact, MTN seems to be growing at a faster rate now than in the pre-SMP era.
For instance, three years after declaring MTN SMP, they increased subscriber base by 12%, while the non-SMP telcos supposed to benefit from the SMP regulatory interventions, lost subscriber base and market share significantly over the period. Again, the industry revenue numbers paint an even more problematic picture, as MTN is currently recording almost 90% share of total mobile finance revenues, for instance.
Already, the NCA has asked MTN not to have the lowest tariffs for any electronic communications services on the market. The directive was intended to make MTN relatively less attractive to Ghanaians. Indeed, it led to MTN increasing the prices of all its services, which generated a widespread outcry from customers, as was expected.
But the price increases did not and still has not necessarily made MTN customers move to other networks, largely because the non-SMP telcos are not investing enough to position their networks to offer better quality of service; and the NCA does not seem to pay attention to that.
Indeed, in February last year, NCA reported saving the non-SMP telcos a total of GHS86.6 million, which is 30% of moneys they were supposed to have paid to MTN as asymmetrical interconnect fees. NCA however stopped short of showing interest in how those telcos applied that money.
So, now the NCA is turning its attention on price regulation is the hope that it will make the SMP declaration yield some dividends, by way of correcting the market imbalance.
The Guidelines
To concretize its hold on tariff adjustments in the industry, NCA has published a document titled GUIDELINES FOR THE PUBLICATION OF TARIFFS AND TERMS AND CONDITIONS (BUSINESS RULES), for which it is seeking public input for the final regulation that will, for the first time, empower it to control the frequency with which telcos change tariffs.
A very critical part of the regulation would be to ensure that the SMP – MTN does not price any products and services, whether a stand alone, a bundle or promotional package, below what other telcos are offering. This is intended to prevent MTN from outpricing the small telcos out of the market.
Per the draft guidelines, however, MTN cannot price any of its products and services more than 10% higher than the highest price other telcos are offering. This is to ensure that MTN does not also take undue advantage of its SMP status to exploit its customers.
The draft guidelines states that “the effective rate for IDD, roaming, legacy, bundles and promotional tariffs of an SMP Player should not be the lowest in the industry at all times. In the event that an SMP player has the highest price, the difference between the tariff for the SMP player and the non-SMP player with the highest price should not be beyond 10%.”
Again, MTN would be required to always seek the approval of the NCA before making changes to the tariffs of any of its products and services, to ensure the tariffs of other telcos are not affected by those changes.
Smaller Telcos
On the other hand, even though the non-SMP telcos are allowed to change prices and only inform the NCA, they are also required to seek the NCA’s approval for any tariff adjustments that would mean their price is higher than that of the SMP.
In such circumstance, the NCA would have to be given 45 days’ notice to work with the telcos through the dynamics to ensure that the SMP’s price is not lower than that of the non-SMP.
This is also cast in law – Section 25(4) of Act 775 empowers the NCA to “prescribe a method to regulate the cost of the service for any public electronic communications service in which a service provider is dominant by establishing a ceiling on the cost, or by
other methods that it considers appropriate.”
So, the NCA, can, for instance, ask either the SMP or a non-SMP to fix their tariffs at a particular level in order not the create a situation where one or the other player is forced to also adjust their prices due to a change in tariff by the other.
It can also ask the SMP or non-SMP to fix its price at a particular level in order not to exploit customers unduly.
According to the NCA, all of these are in line with international best practice, and seeks to ensure that the rates provided by the SMP in particular, are fair, reasonable, and non-discriminatory, and non-exploitative, in accordance with Section 25(3) of Act 775.
The NCA said the guidelines were drafted in consultation with industry players, and now the rest of Ghanaians are required to read through it and make suggestions to ensure that the final set of regulations that come out, will meet the aspirations of the people of Ghana.
The public has up to March 8, 2024 (four days to go) to make their voices count on this matter.