The Communications Regulatory Authority of Namibia (CRAN) has recommended the full privatisation of state-owned enterprises, MTC and Telecom Namibia, in a move meant to create fair competition in the country’s telecommunication sector.
The authority also recommended the splitting of national broadcaster, NBC, into an open access broadcasting infrastructure company and a public content entity, arguing such a decision will address issues of potential predatory pricing and competition.
In the case of NBC, the benefit of this approach is the reduction of digital infrastructure costs, which will facilitate the transition to digital terrestrial sound and visual broadcasting.
This is contained in the CRAN draft Market Saturation report that is currently open for public scrutiny.
CRAN is therefore of the view that competition in the ICT sector may be increased by liberalisation of market entry, which would involve removing barriers to entrants and allowing new players to enter the market.
This CRAN says, can be achieved through reducing licensing requirements, simplifying regulatory frameworks, and promoting foreign investment.
“This could promote competition by creating new market players. MTC and TN would potentially compete more with each other if owned by different private sector companies compared to the current situation where both are controlled by the state,” the report said.
“Generally, the telecommunication sector can be made more competitive through private investments by reducing state-ownership. Alternatively, competition may be revived by attracting direct foreign investments through issuing a licence with bundled spectrum that does not have an ownership restriction.”
CRAN drafted regulations on how to level the ground in the telecommunication and broadcast industry where anti-competitiveness exists due to the dominance of public enterprises such as NBC, MTC and Telecom Namibia.
CRAN’s market saturation report emanates from a survey undertaken in 2022 on what more can be done to incentivise private sector investment in Namibia, the risk that exists in Namibia that public enterprises (PEs) squeeze out private investment in the information and communication technologies (ICT) sector.
“This happens through various mechanisms such as setting prices that are too low for competitors for new entrants to match. In addition, they use exclusive contracts with suppliers or customers, for instance, Telecom Namibia and MTC had such an exclusive agreement with NamPower, for dark fibre lease for many years, thus cutting out any other potentials,” stated the report.
“The opening of NamPower fibre services to all licensees based on open access principles may also serve as a model for all state-owned critical infrastructure. This may require that open access principles are also enforced in cases such as infrastructure sharing and rights of way, and this can be done by making it a default business practice instead of being the exception,” the authority recommended.
In addition, the draft report found that such dominant companies also use political connections to gain favourable treatment from the regulator.
“With telcos often being among the biggest tax payers in a country, lobbying ICT ministers and other politicians is quite common. Using its political connections to gain favourable access to state assets, such as NamPower fibre cables, roads and rails,” it adds.
Other factors include favorable terms for access to loans due to state ownership and a track record of the state bailing out PEs if they fail. “As a result, PEs can maintain their position in the market and reduce the opportunities for private investors to enter and compete.”
Thus, the authority warns that a lack of private investments can be harmful to the overall economy as it may lead to inefficiencies, reduced innovation, low quality of service and higher prices for consumers.
“The problem of access to capital for the private sector is exacerbated by the 51% foreign ownership requirement that limits the pool of potential investors and thus also potential private capital. Large mobile operator groups, such as MTN, Orange, Airtel and Vodacom, typically require management control over their investment,” the authority stated.
Infrastructure sharing was another setback, whereas dominant telecommunication companies do not want to allow the usage of their equipment which then makes it difficult for start-ups or private investors to set up as it is costly, thus limiting their scope of investment.
However, the authority asserts that sharing of infrastructure would mean promoting competition, reducing costs, and improving access to telecom services where duplication of infrastructure is not economical.
“Sharing infrastructure can help improve the quality of service for consumers, particularly in areas where multiple providers share the same infrastructure. This can result in faster and more reliable connections, as well as reduced environmental impact of building and maintaining network infrastructure, particularly in areas with limited space or sensitive ecosystems,” reasons CRAN.
Overall, stakeholders pointed out that CRAN could take a more active role in addressing complaints of anti-competitive behaviour and more interventions when it comes to protecting consumer interests.
This was said with specific reference to the conflict of interests arising from the City of Windhoek administering rights of way while at the same time competing as a licensee.
