DETERMINATION OF DOMINANT
POSITION
SECTION 78(4) OF THE
COMMUNICATONS ACT, 8 OF 2009
(‘THE ACT”)
THE ICT INDUSTRY – WORLD WIDE
Information
Technology
ICT Industry
Broadcasting
The new
converged
space.
Telecommunications
THE ICT VALLUE CHAIN
Broadcasting
Information technology
Content
Professional
Network
Software
services
services
Are we ICT
players or
not?
Telecommunications
Network
Terminal &
Access
provider
peripheral
networks
& carrier
equipment
New services are generally high growth but low margin.
We are entering a post voice digital era
SMS/MMS
and other
Mobile Data
60%
50%
Internet
Advertising
EBIT Margin
40%
30%
Mobile
Voice
PSTN
Voice
IPTV
Advertising
Mobile
Music
Mobile
B/Band
Online
Gaming
20%
10%
Mobile
Advertising
B/Band
Access
IT
Services
20%
IPTV
Online
Music
Mobile
TV
VoIP
40%
60%
80%
100%
Compound growth / annum 2007 - 2012
Source: Gartner/IBM
LICENSE
• Telecom in terms of Section 45 of the Act, holds a technology
neutral license to render telecommunication services.
• This license is similar to which has been issued to AOL, MTC
and WTN.
Therefore:
The market definition to be relevant to the new converged ICT
industry.
Relevance of
class of
service?
Requirements of Section 78(4) for determination of a licensee to
be dominant
a)
b)
c)
d)
Licensee in question has such a share of the market in the class of
telecommunications services in question, that it is able to act independent of its
competitors;
The licensee controls some infrastructure that is necessary for the provision of
the services in question;
The licensee is dominant as provided in paragraph (a) and (b) in respect of a
class related services (which need not be telecommunications services) and the
licensee can use that dominance to exercise power in the market for the
telecommunications services; or
The licensee in question has a position in a market in another country or a
relationship with providers in another country that can be used to exercise
market power in respect of the relevant class of telecommunications service in
Namibia.
Relevance of
class of
service?
HOW DOES TELECOM NAMIBIA COMPARE WITH THE ABOVE?
a)
Does not have a significant share in the market;
b) Yes, it does control some infrastructure that is necessary for the provision
of the service by virtue of history and our previous statutory duty of social
responsibility;
c)
Telecom is not able to dictate the market due to insignificant amount of
customers and low profit margins.
d) Telecom further does not have a position in a market in another country
in comparison to MTC who:
Continue…
• Have a 34% foreign shareholding;
• Has the back up of a strong matured player in Portugal
• Has access to their intellectual property;
and WTN who:
• Operating in regional markets – South Africa, Zimbabwe,
Zambia and Angola.
Telecom has equity in Communitel in RSA, a very small entity and
does not have any significant impact in the RSA market.
MARKET SHARE
In general a company/firm is considered to be dominant based on its
market share.
In this respect CRAN should in order to determine the dominant position not
look at the individual services provided by the different carriers but look at
dominance as one i.e compare market power of MTC vs Telecom and also
compare financial statements.
TELECOM
MTC
Revenue
1,454,957
1,159,683
EBIDA%
53.2%
24.5%
Customers
1,854,700
213,665
COMPARISON TELECOM VS MTC
100%
90%
80%
70%
TN
60%
MTC
50%
40%
30%
20%
10%
0%
Turnover
EBITDA
Customers
SUMMARY
Being
marginalised as
an infrastructure
provider.
• We are now in an era where fixed and mobile networks have converged
and an ICT industry at play. Infrastructure as such becomes irrelevant.
• We are also witnessing a service and technology neutral licensing regime.
Infrastructure as such becomes irrelevant.
• As a result, Market power becomes blurred and and therefore Telecom
Namibia does not consider itself having market dominance. Infrastructure
alone cannot determine market power.
Class of fixed line
infrastructure is
not relevant
CONCLUSION
The preferred Approach
• The Botswana definition preferred.
Dominant position? means a situation in which one or more
enterprises possess such economic strength in a market as to allow
the enterprise or enterprises to adjust prices or output without
effective constraint from competitors or potential competitors;
More in favour of Approach 1
• The ICT Regulatory Toolkit should define all players in the ICT industry.
Based on annual financial statements, market share based on turnover can
be determined easily.