competition


The first part of the Quartz article is the usual complaint about Whatsapp getting a free ride. While they may be eating into the messaging and voice revenues of mobile networks, OTTs like Whatsapp aren’t completely bad for business. They can help fuel data consumption—a growing revenue stream for network operators if exploited well. South Africa’s third largest network, with 19.6 million subscribers by the end of 2014, saw an opportunity a year ago by zero-rating Whatsapp on its network for close to a year.
In the early years of TRAI, the Authority had to defend itself against strictures from India’s Comptroller and Auditor General that it was not maximizing revenues to the government, connectivity be damned (relevant to present day debates on spectrum prices). I had to convince Sri Lanka’s Auditor General that we should pay replacement costs to those who vacated frequencies, not depreciated costs. They perform a valuable function, but they do not always inhabit the same universe as the reformer. This is additionally supported by the Kenyan AG wanting a nationwide fiber network to start covering operational costs in its first years. I do not know the details, but not it would be good if the Kenyan AG engages in conversation with infrastructure experts to see what a reasonable time frame would be.
It appears that getting sites to build towers is one of the biggest barriers to rapid rollout of mobile networks in Myanmar. One operator, MPT, has an advantage in that it owns land in all major population centers. The claim that they are examining tower quality before offering sharing is one that I would take with a grain of salt, were I the regulator. The sooner the assessments are completed, the easier life will be for its competitors. So I can imagine the priority being given to this task.
That’s the first page of the new international call charges announced by Telenor Myanmar. Compared to the dollar a minute (900 Kyat) charged by MPT prior to the entry of competitors, this is very good. The last time we collated international voice prices was in early 2012. But even in relation to that ancient table, one can see that the currently announced prices can come down further. The single most important factor affecting international call prices is competition in the market for international calls.
Incumbent telcos see competition as an unmitigated evil. But what happens is that competition energizes the market and creates new demand. If the incumbent is decently managed, it can catch some (and possibly most) of this demand. After all, it is the known brand. And competitors have their own problems in the start-up phase.
Bright people go into engineering in countries like Myanmar and Sri Lanka. Engineers manage incumbent telcos. When I came to Sri Lanka as the regulator in 1998, I was surprised by some of the things my bright engineer friends said about losing market share. They talked as though this was something that could be stanched. I had to tell them that market share would necessarily have to go down because that’s what competition does.
I think it’s perfectly alright for consumers to boycott various products. That’s almost part of consumer sovereignty. When we buy one thing, we don’t buy its substitutes. But the 969 boycott in Myanmar has an added twist. The anti-Muslim hatemongers are asking their followers to refuse to answer calls from Ooredoo numbers.
On the face any money coming into Myanmar to help develop its creaking infrastructure is good. When the money is given on concessionary terms, it appears even better. But it is important to look beyond appearance. Will it harm competition, which is the government’s chosen (and proven) instrument to develop the ICT infrastructure? Japan said Saturday it will extend a total of ¥10.
If not for a degree of regulatory duplication, it’s possible that the AT&T breakup that transformed the entire telecom environment would not have happened. On the other hand, it’s the general competition regulator who did the job that the sector regulator failed to do. Nevertheless, countries that have limited human resources to deliver effective regulation and have a need for certainty, cannot afford duplication and forum shopping. Here is an interesting reflection from Payal Malik and a colleague on the current situation in India: The Supreme Court in Subrata Roy Sahara vs Union of India lamented the posturing antics of litigants aimed at forum shopping. It has stated that such antics result in cases “which ought to have been settled in no time at all, before the first court of incidence, [being] prolonged endlessly, for years and years, and from court to court, upto the highest court”.
Thaung Tin, Myanmar’s Deputy Minister of Communications and Information Technology, who formerly chaired KMD Group, a local computer training company, is a key figure in the ongoing telecom reforms. Here, he responds to questions from a journalist about the challenges MPT, the government-owned company, and the new licensees face. User rates are always increasing in Rangoon, meaning demand is increasing but supply can’t follow it. Whenever we’ve been issuing mobile phones [SIM cards], internet users are quickly increased as well. So when Telenor and Ooredoo start working, they can take up the demand in Burma.
Africa lags far behind in every front of ICT indicators, according to the latest report of ITU. Subsequently a recent study of Analysis Mason said, “Every African country has international fibre connectivity, but lack of competition at the national level is keeping prices high.” The study has detected that 35 of the 48 Sub-Saharan countries have no competition among national fiber providers. Eight have limited competition – that is, two providers besides the mobile companies, usually the incumbent fixed-line operator and either the government or the electricity transmission company. Only five countries (Kenya, Nigeria, South Africa, Zambia and Zimbabwe) can be said to have effective competition among multiple players.
Reforming MPT is essential to ensure its survival in the face of skilled and well-endowed competitors. Is a partner from a high-cost, high-price telecom market the best way to do this? Japan’s KDDI Corp and Sumitomo Corp are likely to partner of Myanmar’s state-backed telecommunications operator to expand services in one of the world’s least-connected countries, a Sumitomo official said. Sumitomo’s deputy general manager in Myanmar, Soe Kyu, told Reuters the companies were jointly invited into “exclusive” talks about becoming the international partner of Myanmar Post and Telecommunication (MPT), sharing its existing licence. No further details on the likely partnership were revealed.
In November 2013, the Myanmar Ministry of Communication and Information Technology called for comments on a set of draft rules that would govern the liberalized telecom sector. LIRNEasia submitted Comments on Draft Rules Dec 2013_1 covering all but one of the topics.
Not the most perfect summary, since I did the interview with half my mind on the need to get to the airport in time for my flight out.
Governments like subsidies. We do not mind, as long as they do not harm competition and are deployed intelligently. One big complaint we had about the Indian Universal Service Fund was that it was not being used (as was the even bigger fund accumulated by Brazil). The Indian government responded with a USD 4 billion plus plan to roll out fiber to village cluster level. That will be among the policy initiatives that will be discussed at ITU Telecom World Forum, 21 November 2013 in Bangkok.
It’s been a few weeks since this presentation, developed on the basis of work Tahani Iqbal did while she was at LIRNEasia. It had one piece missing, the importance of timing. This was pointed out by my colleague M. Aslam Hayat. If MNP is introduced when a new and hungry entrant comes into the market, it could make a difference.