Pan-African group warns against emerging monopoly in telecom sector

A Surfshark 2022 Digital Quality of Life Index shows that Uganda is home to the second-most expensive internet in the world, after Ivory Coast. PHOTO / EDGAR R. BATTE 

What you need to know:

  • The emerging monopolistic tendency is most visible in the dominance of two telecoms that share between them more than 95 percent of the market share 

Regulators must do everything possible to break up the ugly monster of monopolies and duopolies that are chocking innovation in ICT and telecommunication sectors, Alliance Against Monopoly, a Pan-African anti-dominance group has said.

Commenting about the Uganda National IT Survey 2022 report by National Information Technology Authority Uganda (NITA-U), Dr Omife I Omife, the Alliance Against Monopoly Africa advisory director, said regulators must cut the monopolistic hydra, whose tentacles continue to block innovation and competition, especially in the telecom sector. 

“Over the last decade, market mergers in Uganda and the region have created a potentially dangerous ‘cartel’ made up of one dominant tower provider with 90 percent control of the market and two telecom providers with about 95 percent of market share. These wield so much power over the market, bordering on regulatory capture that it has become difficult for any new players to penetrate the market and provide innovation and competitive pricing,” he said in a statement at the weekend.  

Specifically, he noted, regulators must scrutinise the merger plans between American Tower Corporation (ATC) and Eaton Towers, saying the plan which grants ATC 90 percent control of the tower market, is a “killer grit of monopoly that will be detrimental to the overall interest of Uganda”. 

“The monopoly that we are creating in ATC will, in many ways, destroy the market and create distortions that work against economic development and slow down growth,” he said, noting that the  recent court cases and complaints to the regulators in Uganda and the Comesa Competition Commission documents monopolistic cartel-like behaviours with some telecoms colluding to lock out new entrants from the sector.

For instance, Dr Omife noted, in one case, a tower provider and telecom provider consented to a Right of First Refusal arrangement in which the telecom would not allow other tower builders to build towers unless the tower company had been offered the opportunity first. 

“Reciprocally, the tower companies are allowing telecoms generous anchor-tenant benefits and pricing while ‘punishing’ other tenants on the same towers with crippling tariffs, which make it difficult for other non-anchor mobile network operators to compete.

It is not therefore by accident that most of the new [telecoms] in Uganda have closed shop within the first three years of operation, while these too-big-to-handle players are reporting hundreds of billions in profit. Are we, therefore, surprised that Uganda is home to the world’s most second expensive Internet?” he wondered.  

However, he commended Uganda Communications Commission for nullifying the Rights of First Refusal but urged regulators to be more proactive, rather than waiting for complaints from aggrieved parties. 

The arrival of the 4th Industrial Revolution, which largely depends on the internet, had fundamentally altered the way people live and do business but Uganda risked squandering the opportunity due to the emergence of profit-first monopolists,  who are making it difficult for businesses, schools and households to access affordable internet.

Expensive Internet

The NITA-U study indicates that the cost of access to internet is the single-largest barrier to connectivity for majority of Ugandan businesses, households and individuals with household-level internet access still severely limited. 

The report indicates that 94 percent of households have no access at all across the country with at least 37 percent of households without access citing cost as the biggest hindrance while 48 percent cite the cost of equipment.

The study further indicates that while  55 percent of businesses have internet access, 44.7 percent said they did not have access due to the high cost of internet services and equipment.

Therefore, Mr Omife said the internet, just like other vital resources and infrastructure such as water, energy, healthcare, education and transport must be delicately protected, from the excesses of capitalism, noting that regulators must take keen interest in the regulation of the communications sector to control end-user costs

Another study -  the Surfshark 2022 Digital Quality of Life Index - shows that Uganda is home to the second-most expensive internet in the world, after Ivory Coast. 

The study, which ranked Uganda 116th out of 117 nations surveyed, indicated that on average, Ugandans work an average of two weeks to afford the cheapest fixed broadband internet bundle. 

Exiting telecoms 

It is not therefore by accident that most of the new [telecoms] in Uganda have closed shop within the first three years of operation, while these too-big-to-handle players are reporting hundreds of billions in profit. Are we, therefore, surprised that Uganda is home to the world’s most second expensive Internet?” he wondered. 

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