NCC refutes existence of collective dominance in Nigeria’s telecoms market

. . . Small operators groan, claim it could drive them out of business
Ben Uzor Jr
Despite the fervent clamour from smaller and new operators about the realities of collective dominance alleged to be prevalent in Nigeria’s telecommunications market and the possibilities of it driving them out of business, the Nigerian Communications Commissions (NCC) has downplayed the issue accusing the concerned parties of misinterpreting the basic proposition surrounding the subject.
Collective dominance refers to a situation whereby the dominant players in a particular industry agree to deliberately conduct their business in a manner that lessens competition from smaller operators by way of entry barriers, structural links and cooperation agreements amongst firms etc.
Contrary to the views of these concerned parties especially Code Division Multiple Access (CDMA) operators that willful conspiracy and collusion amongst big operators would be necessary for such dominance to be established, the telecom regulator argued that tacit collusion may occur without any conscious strategic decisions among dominant players in the telecoms industry.
Furthermore, the evidence of collective dominance could exist without any direct confirmation of deliberate anti-competitive behaviour by any one or more players if market conditions led the leading firms to make certain business decisions that had the effect of diminishing the opportunities of smaller competitors. To this effect, such decisions would not necessarily be illegal by prevailing competition law standards in many countries, nor contrary to acceptable business practices.
But more importantly, if market conditions led to collective, non-coordinated behaviour by some operators which lessened the competitive viability of smaller operators, it might be possible to conclude that there is a degree of tacit collusion due to joint dominance, the commission added.
According to a new report released by the NCC and accessed by BusinessDay yesterday, “the commission has determined that no group of two or more licensees currently holds a position of joint or collective dominance in that market. The commission has not found conclusive evidence that any of the mobile licensees are engaging in conduct which has the purpose or effect of substantially lessening competition.” Moreover, MTN, Zain, Globacom as well as beleaguered NITEL who are opponents of the finding of collective dominance maintained that collectively the three largest operators have steadily lost market share recently, particularly with the emergence of the CDMA carriers.
On their argument, there are currently 11 licensees in the market, including CDMA, as well as Unified Access Service Licenses (USL) that allow operators offer extensive array of mobile services, indicating a robust level of competition with little opportunity for tacit collusion. “The newer operators may even have an advantage over established GSM providers; vigorous competition is leading to innovation, lower prices, and network investment; tariffs have come down significantly and there are a variety of choices. Also, average revenue per minute is also declining”, they claimed in the report.
On the other hand, Etisalat, ZoomMobile and Smile submitted that collective dominance was present, laying claims to artificially high pricing of leased circuits, refusal to collocate on reasonable terms, predatory pricing of off-net calls and termination rights, and unwillingness to support number portability as symptoms of collective dominance. According to them, this could invariably impair smaller operators’ ability to compete, further asserting that the regulatory framework for CDMA and GSM entrants had not been symmetrical and as a result, CDMA player had been placed at a disadvantage.
In response to these claims the telecom regulator stated: “The most direct way to determine the possibility of collective dominance is to observe the market behaviour of the accused firms. The commission would expect to find such trends as uniform and increasing tariffs for Mobile Telephone Services, leading to comparable revenue-per-minute for all companies.
“The commission would expect declining quality of service throughout the networks as a result of shared decision-making not to invest in costly network improvements The Commission might also expect to find evidence that barriers erected to prevent competitors from utilizing and sharing active network support infrastructure resulted in slow build out, lack of service differentiation, and piecemeal growth”, the commission concluded.