Lack of competition blamed for soaring data prices

Obrein Simasiku

Lack of competition in the telecommunication industry as well as the state’s involvement within the available operators is flagged as major factors driving data prices higher in Namibia making it unaffordable for an average person. Namibia slipped in the African Affordability ranking from 4th cheapest in the first quarter of 2016, to 33 cheapest country in the first quarter of 2021 for 5Gigabyte per month.

“Namibia lost its leading role in Africa because of state-driven consolidation in the sector and the significant reduction in competition. To this end, we have made recommendations on how to address these matters, which includes the privatisation of Mobile Telecommunications Limited (MTC) and Telecom Namibia, reduction of voice and data tariffs, and the operationalisation of the universal service fund. Broadband prices are high and download speeds low in comparison to other SADC countries,” conceded the Communications Regulatory Authority of Namibia (CRAN) Chief Executive Officer Emilia Nghikembua upon inquiry.

She added that Namibia can only redeem itself by restructuring the sector and devising ways to attract private sector investment and to improve the level of competition.

A Country Private Sector Diagnostic report, done by World Bank Group, revealed that Namibia’s mobile broadband adoption is 36% and smartphone penetration of 53% lags behind its regional peers which stands at 52% and 65%, respectively.

The report further indicated that weak market competition in the broadband market is costly, whereas one-month gigabyte of prepaid data in Namibia costs an average of U$8,3 (N$131.47) compared to U$4.7 in South Africa and U$4.3 in Democratic Republic of Congo. To this the World Bank recommended that market concentration should be reduced, while facilitating the entry of new operators which could enhance investments and technology, thus improving service delivery and affordability.

“Our sector review report issued in 2021, already flagged most of the findings in the World Bank report. It also shows that while the rest of Africa has seen rapidly declining mobile broadband prices, in Namibia, prices have increased. The report also found that our ICT sector was one of the leaders in Africa as recently as five years ago,” said Nghikembua, acknowledging some of the shortcomings.

In terms of interrogating barriers why new entrant operators into the telecommunication markets are not flouring, the CEO said, CRAN conducted preliminary research by studying the preceding Sector Review Reports and international best practice. And through this investigation, it was determined that the envisaged market study on the telecommunication and broadcasting markets must be based on a fixed data set, particularly the number of Telecommunications and Broadcasting Service Licensees currently in the market.

“The aim of the study is to determine the current level of competition in the market, market saturation, and any existing barriers to entry,” she explained.

According to the CEO the authority has taken another measure by effecting a moratorium on the issuance of Telecommunications and Broadcasting Service Licences from 01 October 2022 to 30 September 2023, this was subsequent to various stakeholder consultations undertaken in 2021, which implored CRAN to conduct a market study.

“Therefore, it is apposite that CRAN maintain a still market, in terms of market players, while conducting the study. The moratorium will allow the Authority to conduct a study to establish the causes of market barrier and failure,” she remarked.

CRAN’s review, according to Nghikembua, established that the ICT sector revenues’ shareholder’s equity and assets valued in US dollars declined between 2012 and 2020, while net profits increased slightly. She added even though such is happening, it is not in the best interest of the shareholder [government] and the county at large, as this defeats the purpose of accessing affordable high quality broadband, which is deemed an employment opportunity and an economic growth point.

“The ICT sector enables other economic sectors by facilitating access to information and the coordination of economic activity. To achieve high broadband speeds and quality of service, and their associated economic benefits and substantial investments are required,” she urged.

By Observer