Abstract
A little over a decade ago, the telecommunications sector in Sub-Saharan Africa was still characterised by poorly developed infrastructure, primarily concentrated in urban areas, and poor service provision with less than 1% of the population accessing telecommunications services. In 1994 the telephone penetration rate in Africa was 1.5 main lines per 100 people compared to the United States with 65 main lines per 100 population and OECD countries with 47 main lines. When one took into consideration the fact that 40% of the telephone lines were concentrated in a single country, South Africa, the penetration rate in individual countries in the region was even smaller. Fast forward to 2016, the telephone penetration rate in Sub-Saharan Africa stands at approximately 82 telephone subscribers per 100 inhabitants. In contrast to the situation a decade ago where most telephone line subscribers on the African continent were located in South Africa as well North Africa, the current data reveals increased access to telecommunications services in Sub-Saharan Africa countries. More importantly, the current penetration confirms that the telecommunications reforms that began to take place in Sub-Saharan Africa in the mid-1990s have significantly transformed the sector. The telecommunications reforms that facilitated the transition from monopoly to competition have enabled a great portion of the population to access telecommunications services.
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Notes
- 1.
Uganda is cited as an example. Statistics from 1997 indicate that even though the capital city Kampala had less than 10 percent of the population, it had 70 percent of all subscriber lines in 1997, while the Eastern and Western regions of the country, home to more than 50 percent of the population, only had 20 percent. See Mary Shirley, Fred Tusubira, Luke Haggarty, and Frew Gebreab, ‘Telecommunications Reform in Uganda’ (2002) World Bank Working Research Paper No.2864 9.
- 2.
Eli M Noam, Telecommunications in Africa (Oxford University Press 1999) 3.
- 3.
Ibid.
- 4.
ITU, ‘Key 2005-2016 ICT Data for the World, by Geographic Regions and by Level of Development’ <http://www.itu.int/en/ITU-D/Statistics/Pages/stat/default.aspx> accessed 15 June 2017.
- 5.
Ibid.
- 6.
It should be noted that most of the monopoly telecommunications operators were state-owned with the exception of Canada and the United States where the telecommunications services were provided through privately owned monopolies.
- 7.
Kevin G Wilson, Deregulating Telecommunications: US and Canadian Telecommunications, 1840-1997 (Rowman and Littlefield 2000) 89.
- 8.
Jacques Pelkmans and David Young, Telecoms-98 (Centre for European Policy Studies 1998) 19.
- 9.
Damien Geradin and Michel Kerf, Controlling Market Power in Telecommunications: Antitrust vs. Sector-Specific Regulation (Oxford University Press 2003) 1.
- 10.
Jean-Jacques Laffont and Jean Tirole, Competition in Telecommunications (MIT Press 2000) 3.
- 11.
The European Union started its liberalisation policy based on Article 106 (3) of the TFEU.
- 12.
ITU, ‘Key 2005-2016 ICT Data for the World, by Geographic Regions and by Level of Development’ <http://www.itu.int/en/ITU-D/Statistics/Pages/stat/default.aspx> accessed 15 June 2017. However, it should be noted that several countries (Botswana, Cape Verde, Côte d'Ivoire, Djibouti, Gabon, Gambia, Ghana, Mali, Mauritius, Namibia, Seychelles, and South Africa) have a penetration rate of more than 100 percent, while other countries have less than 30 percent penetration rate. For example, Eritrea, 7 percent, Central African Republic, 26 percent.
- 13.
GSMA, ‘Africa Now the World’s Second Largest Mobile Market’ GSMA Press Release (London, 9 November 2011) <http://www.gsma.com/newsroom/press-release/africa-now-the-worlds-second-largest-mobile-market-reports-gsma/> accessed 15 June 2017.
- 14.
Mark D J Williams, Rebecca Mayer, and Michael Minges, Africa’s ICT Infrastructure: Building on the Mobile Revolution (World Bank 2011) 79.
- 15.
The limited use of fixed-line infrastructure stems for the fact that the fixed-line network is poorly developed in the region.
- 16.
ITU, ‘Key 2005-2016 ICT Data for the World, by Geographic Regions and by Level of Development’ <http://www.itu.int/en/ITU-D/Statistics/Pages/stat/default.aspx> accessed 15 June 2017.
- 17.
Ibid.
- 18.
In other regions of the world, particularly in developed jurisdictions, the majority of the population accesses internet through fixed wireline. In the European Union, the popular DSL technology-based broadband internet is provided through landline copper lines. In the United States the key medium is the cable lines built up by cable TV operators.
- 19.
ITU, ‘Study on International Internet Connectivity in Sub-Saharan Africa’ (March 2013) 3 <www.itu.int/en/ITU-D/Regulatory-Market/IIC_Africa_Final-en.pdf> accessed 15 June 2017.
- 20.
Ibid.
- 21.
Helen Nyambura-Mwaura and Simon Akam, ‘Telecoms Boom Leaves Rural Africa Behind’ Reuters (Johannesburg, 31 January 2013) <http://www.reuters.com/article/2013/01/31/us-africa-telecoms-idUSBRE90U0MK20130131> accessed 15 June 2017.
- 22.
Martin C Stewart-Smith, Industry Structure and Regulation (World Bank Publications 1995) 22.
- 23.
Philip Cerny, ‘The Deregulation and Re-Regulation of Financial Markets in a More Open World’ in Philip Cerny (ed), Finance and World Politics; Markets, Regimes, and States in Post Hegemonica Era (Aldershot Edward Elgar 1993). Also see Damien Geradin and Michel Kerf, Controlling Market Power in Telecommunications: Antitrust vs. Sector-Specific Regulation (Oxford University Press 2003) 2, providing a similar argument in the context of the telecommunications sector by stating the need for regulatory oversight in the liberalised telecommunications sector.
- 24.
Damien Geradin and Michel Kerf, Controlling Market Power in Telecommunications: Antitrust vs. Sector-Specific Regulation (Oxford University Press 2003) 2.
- 25.
Interconnection rates can have an impact on competitiveness of a mobile market due to network effects. Network effects occur when the value of a product or network to a user changes as the number of users of the product or network increases. In the context of the telecommunications sector, the more subscribers a network has the more valuable its network is as a subscriber can communicate with more people. Since new entrants usually have a smaller network than incumbent operators, if interconnection rates are set too high, a customer will prefer to join the larger network which offers connection to more people. One the other hand, if interconnection rates are set too low, there will be less incentives for the provider of interconnection to maintain and upgrade its network affecting quality of telecommunications services. Regulation of the interconnection should therefore find the right balance between the two competing interests.
- 26.
This is the case in Ivory Coast, Ghana, and Uganda, where scarcity of spectrum for mobile services in the GSM frequency bands has hindered market entry. See ‘Cote D’Ivoire: Warid Telecom Pays for Licence but Can’t Get Enough Spectrum to Operate’ Balancing Act (13 March 2009) <http://www.balancingact-africa.com/news/en/issue-no-445/top-story/cote-d-ivoire-warid/en> accessed 15 June 2017; ‘Spectrum Unavailability and Review of Guidelines Delayed Globalcom’s Operations in Ghana says Minister Iddrisu’ Balancing Act (2 September 2011) <http://www.balancingact-africa.com/news/en/issue-no-570/telecoms/spectrum-unavailabil/en> accessed 15 June 2017; and Julius Barigaba, ‘Uganda: Country cannot take more GSM operators says UCC’ The East African (Kampala, 25 August 2008) <http://www.theeastafrican.co.ke/news/-/2558/462354/-/s2iw2ez/-/index.html> accessed 15 June 2017.
- 27.
‘Superior spectrum’ refers to the spectrum in the GSM frequency band, 900 MHz band which is more efficient than the alternative 1800 MHz band. Operators with spectrum holdings in the 900 MHz band invest less in base stations since lower frequency bands offer higher transmission ranges than higher frequency bands.
- 28.
For example, in Uganda, UCC data, see UCC, ‘Usage of Frequency Bands as at December 31st 2012’, reveal that some telecommunications operators have spectrum holdings in the 900 MHZ band while other telecommunications operators have been assigned spectrum in the 1800 MHz band.
- 29.
‘MTN, Vodacom in Clear on Collusion Charges’ Techcentral (23 March 2011) <http://www.techcentral.co.za/mtn-vodacom-in-the-clear-on-collusion-charges/22038/> accessed 15 June 2017.
- 30.
In 2011, the South Africa Competition Tribunal adjudicated over the issue in Competition Commission v Telkom SA Ltd 11/CR/Feb04 [2011] ZACT 2 finding Telkom SA liable under the Competition Act 1998.
- 31.
‘Internet Ghana Takes on Ghana Telecom over Anti-Competitive Practices’ Balancing Act <http://www.balancingact-africa.com/news/en/issue-no-263/internet/internet-ghana-takes/en> accessed 15 June 2017.
- 32.
Particularly in the mobile market where subsidiaries of multinational telecommunications groups have taken control. In most countries the former monopoly operator continues to dominate the fixed-line market.
- 33.
Sanjaya Lall, ‘Multinationals and Market Structure in an Open Developing Economy: The Case of Malaysia’ (1979) 115(2) Weltwirtschaftliches Archiv 325; Magnus Blomström, ‘Foreign Direct Investment and Productive Efficiency: The Case of Mexico’ (1986) 35(1) Journal of Industrial Economics 97; and Selim Raihan, ‘Foreign Competition and Growth: Bangladesh Manufacturing Industries’ in Paul Cook, Raul Fabella and Cassey Lee (eds), Competitive Advantage of Competition Policy in Developing Countries (Edward Elgar Publishing 2007) 281.
- 34.
Predatory pricing by multinational corporations has been observed in other sectors in developing countries. See, for example, Magnus Blomström, ‘Foreign Direct Investment and Productive Efficiency: The Case of Mexico’ (1986) 35(1) Journal of Industrial Economics 97, with regard to multinational corporations (MNCs) in the manufacturing industry in Mexico; Richard S Newfarmer ‘TNC Takeovers in Brazil: The Uneven Distribution of Benefits in the Market for Firms’ (1979) 7(1) World Development 25, which explores the effect of foreign direct investment (FDI) in the Brazilian electrical industry noting that MNCs used predatory pricing as a means of gaining dominant position in the industry; and Maria C Lattore, ‘Multinationals and Foreign Direct Investment: Main Theoretical Standards and Empirical Effects’ UCM Working Paper 6/2008 23 <http://estudiosestadisticos.ucm.es/data/cont/docs/12-2013-02-06-CT06_2008.pdf> accessed 15 June 2017. Lattore’s article highlights two reasons why MNCs presence can lead to high market concentration in a given market: (1) they are more efficient than local firms; and (2) they can engage in conduct that restricts competition for example, predatory pricing sustained by their financial staying power.
- 35.
Sandra Marco Colino, Competition Law of the EU and UK (7th edn, Oxford University Press 2011) 348.
- 36.
Communications (Fair Competition) Regulations 2005, SI 2005/24.
- 37.
Telecommunications (Interconnection) Regulations 2005, SI 2005/26.
- 38.
Communications (Radio) Regulations 2005, SI 2005/23.
- 39.
This is according to UCC’s ‘List of Licensees’ <http://www.ucc.co.ug/data/smenu/80/List-of-Licensees.html> accessed 15 June 2017.
- 40.
Substantive introduction of competition in the telecommunications sector occurred in 1998 when a second national operator, MTN Uganda began to provide telecommunications services in the fixed-line market, competing against the former state monopoly operator, Uganda Telecom, and in the mobile market competing against mobile operator Celtel (now Airtel).
- 41.
Cheikh Tidiane Gadio, ‘Institutional Reform of Telecommunications in Senegal, Mali and Ghana: The Interplay of Structural Adjustment and International Policy Diffusion’ (DPhil dissertation, Ohio State University 1995).
- 42.
Mary Shirley, Fred Tusubira, Luke Haggarty, and Frew Gebreab, ‘Telecommunications Reform in Uganda’ (2002) World Bank Working 2864/2002.
- 43.
Lisa Thornton, Yasmin Carrim, Patric Mtshualana, and Pippa Reburn (eds), Telecommunications Law in South Africa (STE 2006).
- 44.
Chukwudiebube Bede Abraham Opata, ‘Telecommunications Law and Regulation in Nigeria: A Study of Universal Service Provision’ (PhD Thesis, University of Warwick 2010).
- 45.
Jerome Bezzina, ‘Interconnection Challenges in a Converging Environment: Policy Implications for African Telecommunications Regulators’ (June 2005) World Bank <http://event-africa-networking.web.cern.ch/event-africa-networking/cdrom/Worldbank/interconnectionFinal.pdf> accessed 15 June 2017; Nicola Theron, ‘The Competitiveness of the SA Mobile Market-Will the Entry of Virgin Mobile Increase Competition?’ (2006) Econex Research Note 4; Stephen Esselaar and Keith Weeks, ‘The Case for the Regulation of Call Termination in South Africa: An Economic Evaluation’ <http://www.ictregulationtoolkit.org/en/toolkit/docs/Document/4009y> accessed 15 June 2017; Nicole Theron and Johann van Eeden, ‘Asymmetric Mobile Termination Rates in South Africa’ (2011) Econex Research Note 21; and Christoph Stork and Alison Gillwald, ‘Mobile Wholesale and Retail Price Interplay: the Somewhat Contrary Case of South Africa in Africa’ (19th ITS Biennial Conference, Bangkok, November 2012).
- 46.
These similarities are highlighted in Sect. 2.4.
- 47.
- 48.
The reasons for the choice of Uganda for the case study have been explained in great detail in Sect. 1.2 of this study that defines the statement of the problem.
- 49.
Detailed characteristics are highlighted in Sect. 2.4 of this study.
- 50.
These characteristics particular to the telecommunications sector are highlighted in Sect. 2.3 of this study.
- 51.
The most notable features prevalent in the telecommunications sectors in the Sub-Saharan African countries are highlighted in Sect. 2.4 of this study. The sub-section emphasises how the market composition in Sub-Saharan Africa is different from that in developed jurisdictions.
- 52.
Appendix A of the study for the list of interviews.
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Alemu, R. (2018). Introduction. In: The Liberalisation of the Telecommunications Sector in Sub-Saharan Africa and Fostering Competition in Telecommunications Services Markets. Munich Studies on Innovation and Competition, vol 6. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-55318-3_1
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