Who is dominating who around here?

January 17, 2010

Although hardly discussed, one major source of consternation to many telecommunication regulators is the subject of market dominance. Seems harmless enough to start worrying about until a nasty dominant operator appears on the scene and starts to throw its commercial weight about. For a host of reasons, players are quick at perceiving a regulator as weak when the latter fails to install appropriate systems and controls to ensure that firms which see themselves as big in the midst of others do not abuse their market power. This failure of the office and power of the regulator sometimes results in an imbroglio which sets firms against one another. It starts becoming an issue when such bellyaches become headaches and the forces of stress and distress set everybody and especially the consumers against the regulator.

The need to curtail dominance primarily stems from the necessity to achieve long term and sustainable competition in the market.

In monopoly Nigeria of those days it was government itself that was the culprit. That is to say it was a straight fight between government, the operator, and its citizens, the consumers.

In the early days of regulation in Nigeria, NITEL was the first among unequals and but for the good side of corruption (corruption too has its good side after all !) which brought it to its knees, its dominance, essentially due to its monopoly, would have known no bounds. In the heady days of the military and at the height of NITEL’s monopoly, one soldier-minister, decided that users of a telephone exchange which got burnt down at the hands of its operators should pay for its restoration. The time of this aberration coincided with the tenure of a Chief Executive who was noted for his campaign that ‘telecommunications is a natural monopoly’ doing all within his power to ensure the emerging competition which was at the time embryonic was thoroughly stifled.

Today, NITEL is comatose and everybody, it seems, has put this in the trash can of their memory even though all these happened less than 20 years ago.

So who is dominating who now?

In environments where the regulator is either smart or sufficiently experienced, it makes the dominant operators tariff and other indices of assessment subject to its own approval while other operators may just be allowed some bench mark within which to maneuver on tariff as a mere publication may be required to move within the approved limits. The solution begins from defining who the dominant operator is and that is what makes the subject interesting (difficult really) to handle.

In one particular market in Asia, academics were brought in by a regulator to help fine-tune the definitions and framework to determine who the dominant operator was but when the internal combustion of politics set in and the heat became intense, the men of books opted for a return to the serenity and the familiarity of their university campuses.

Sometimes some folks either naively or mischievously confuse the terms ‘dominant operators’ and ‘incumbents’ in markets which liberalized from a monopoly as did several across the globe.

Pose the question differently, is there a dominant operator in Nigeria?

Very good question which no one has posed and no one has answered until about now.

An advert is already in the media reporting that the Nigerian Communications Commission is now posing the question and seeking answers. The advert says the Commission seeks comments on issues related to whether certain companies are exercising dominant market power with the purpose (and effect) of substantially weakening  competition in these markets. For now, it has chosen to shine its torch on two markets -: The Mobile and The Internet Connectivity markets.

Chances are that the Commission must have been reacting to simmering discontent which is now coming to the boil and can no longer be ignored.

It may be a wild goose chase, but a nice one nevertheless.

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