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| NCC CEO, Eugene Juwah |
NCC report declares MTN dominant operator
Says there is insufficient competition in voice segment
By: Obinna Chima
As Mobile Number Portability (MNP) takes off, a survey has
shown that only very few mobile phone subscribers in the country would be
willing to take advantage of the service, which allows them to switch from one
GSM network operator to another.
The independent survey coincides with the one conducted by
the Nigerian Communications Commission (NCC), which in a report uploaded on its
website last weekend, showed that MTN Nigerian Limited which controls 44 per
cent of the mobile voice market in Nigeria is the dominant operator, signifying
there is insufficient competition in the voice segment of telecoms sector.
Financial Derivatives Company Limited (FDC), an economic and
financial advisory firm, in its monthly report for April, hinged its findings
on subscribers’ scepticism over number porting on the poor quality of service,
which cuts across all networks in the country.
MNP, which started last Monday, is a process that allows
subscribers to migrate from one network to another, in search of better service
quality and cheaper tariffs, while still retaining their original phone
numbers, irrespective of the network the subscriber chooses to migrate to.
The NCC, which said no fees would be charged for the service
by operators, however stated that subscribers could only port their numbers
once every 90 days.
There are four major network operators in the country,
namely: MTN, Airtel, Etisalat and Globacom.
But the FDC argued: “Very few Nigerians may be willing to
switch networks,” insisting that the quality of service would be the defining
factor in attracting customers.
The financial advisory and research firm explained: “A
survey of mobile phone subscribers reveals that the quality of service is the
defining factor in determining customer loyalty.
“With a subscriber base of 114 million, 90 per cent of
complaints are usually about poor quality of service (QoS). As a result, many
subscribers own several SIM cards from different service providers due to the
dissatisfaction with services provided.
“A dissatisfied customer shifts to being a disloyal customer
and then switches networks.”
The FDC further revealed that MTN dominates the market with
about 44 per cent of the total market share.
“With the introduction of the MNP service, the switch
between networks has been made easy. Usually, the trend is for network
subscribers to move from the large networks to the smaller networks.
“This leads to a congestion of small networks that will need
to upgrade software to accept a larger capacity.
“Increased network congestion leads to lower service quality
(increased call drops, network errors, etc) and a flight back to the bigger
networks.
“The customer flight back is usually more than the initial
volume. Thus with the ease in switching networks, the net gainers are the
larger networks who at the end have an increase in subscriber base,” FDC
observed.
Although the launch of number porting was not extended to
Code Division Multiple Access (CDMA) operators like Visafone and Capcom, which
recently bought over Starcomms, Multi-Links and MTS First Wireless, NCC said it
would shift its attention to CDMA operators soon.
NCC, however, in its report titled “Determination of
Dominance in Selected Communications Markets in Nigeria”, confirmed MTN’s
dominance in the voice segment of the telecoms market, concluding that “the
mobile voice market is not effectively competitive and is still highly
concentrated with an HHI of 3063.”
In the report, the industry regulator added that “there is
also a wide differential (of about 300%) between on-net and off-net calls and
this is indicative of the likely establishment of a calling club for MTN
subscribers.”
As a result of the determination of MTN’s dominace, the
commission resolved in the report that the “dominant operator in the mobile
voice market shall be required to adhere to the following obligations:
• The commission will immediately enforce and implement
accounting separation on the dominant operator
• The differential between the on–net and off-net retail
tariffs will be immediately collapsed. The tariff for on-net and off-net will
be the same, and subject to periodic review.
• The commission may require the dominant operator to submit
details on specific aspects of its operations from time to time as the need
arises.
In addition, the commission shall make a determination of
pricing principle to address the rates charged for on-net and off-net voice
calls for all other operators.
On the fixed voice market, NCC said: “Though Starcomms, with
about 33 per cent market share of subscribers, has the highest market share
within the fixed voice market, it is not considered to have significant market
power in this market as it has consistently lost market share over the past
three years.
“The fixed voice market has been in decline since 2008 and
has lost 70 per cent of its market over that period.”
In the report, NCC said the mobile data market had grown
considerably over the past five years and accounted for about 99 per cent of
the total data market in the country.
“The GSM operators lead this market segment. The major
competition concern is that the wholesale providers of bulk bandwidth also
plays in the retail mobile data market and potentially stifle competition in
this market.
“The study however concluded that no operator is dominant
within the mobile data market,” NCC indicated in the report.
The report further showed that MTN and Globacom jointly
control 62 per cent 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,” the report said.
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