What next after MTN, utl duopoly?

By Stephen Ilungole, Kezio Musoke and David Muwanga

ANALYSIS

The duopoly period, which gave MTN and uganda telecom (utl) exclusive licences to run as the only national operators ended on Monday.

The five-year exclusivity rights offered the duo licences to compete without geographical limitations.

They also had the only rights to provide fixed lines, data bases, international gateway connections and Internet connection alongside mobile phone communications.

The expiry means the telecommunications industry will be opened to full competition.

Celtel, currently providing only mobile phone services, has been anxious about duopoly’s expiry. Celtel stands the highest chance of upgrading into a third national operator.

Public expectations are high that another mobile operator would be licensed to join the three giants.

The expectation is heightened by the belief that more operators will create stiff competition, which would bring down call tariffs, which are currently prohibitive since the increase in excise duty on airtime from 10% to 12%.

A source at Uganda Communications Commission (UCC), the regulators, say the industry can absorb more operators. The source said the duopoly licence could not be extended.

“Our survey shows that there is room for more operators. Demand for telecom services is still available,” the source said.

Early last December, UCC held a stakeholders’ meeting to discuss the post-MTN and uganda telecon duopoly era.

But the meeting turned out to be a review of the general telecom policy.

Little was discussed on the post-duopoly era after the current giants requested for another private meeting with UCC.
The public has never known the outcome of that meeting.

Since Monday, all the three giant mobile operators’ executives have been engaged in long meetings, probably to make new strategies.

Fred Mwale, the UCC corporate affairs officer, said on Tuesday, “UCC is waiting for political direction. It is only the works and communications minister who has a prerogative to make a ruling.”

John Nasasira, the works minister, said recently at a national ICT symposium in Kampala that conditions for bringing on a new operator from July, 2005, will be based on one who can provide adequate and affordable bandwidth and not one who can simply provide access to telephones like it is the case today.

Bandwidth is the amount of data that can be transmitted in a fixed amount of time.

According to Research ICT Africa, by the end of 2004, the usage of Internet bandwidth in Uganda was 25Mbps.

This is insufficient in mature economies because the 25 Mbps are be insufficient for even a single academic institution like Makerere University.

“The issue of exclusivity cannot work in such a situation,” Nasasira said then.

David Turahi, the works assistant commissioner for communication, said on Tuesday, the licensing of the third national operator had been delayed by a telecommunications policy awaiting Cabinet’s approval.

He said despite the delay, the Government wanted a third national operator.

This, he said, would provide small aperture terminals to bridge the coverage gaps left by the giant providers.

The third national operator’s licence was supposed to have been issued between July, 2005 and June, 2006.

However, the existing national operators claim no new entrants can join the industry where 30% of a phone call goes to tax.
They also claim the market is already saturated.

MTN sources said the current operators had heavily invested in infrastructure.

The source said this would shrug off competition from the new entrants, making their survival tough.

Tim Bahrani, the Celtel managing director, said yesterday, “If you associate this with the rigorous obligations in the contracts, I cannot see any large players coming in the future. The return on investment will be minimal.”

“The end of the duopoly means nothing to us. We are already the third national operator only that the UCC puts some limits on the technology to be used in the communication infrastructure.”