Viewpoint: Debate on Dominance in Telecoms Needs a Sober Approach in Kenya

Friday, September 11, 2015

Despite the hyped 87 per cent mobile phone penetration rate as of March 2015, the reality is that Kenya's unique subscriber base is probably around 45 per cent, meaning more than half of the country lacks "real" access to mobile services.

That's the big picture within which to frame any discussions around the new information and communication regulations, and any debate around dominance in the telecommunications sector in Kenya.

To quote from the International Telecommunications Union – "The application of competition laws rests largely on two fundamental concepts – market definition and dominance".

The first concept is based on the idea that the market must first be defined – as a relevant market – before a determination can be made as to whether or not a firm is dominant.

It is also this market, rather than the entire sector, that is best subjected to a market concentration analysis. Without getting into the detail, each market is generally defined in product/service and spatial/geography terms.

Simply, a firm cannot be declared dominant without reference to a specific economic market. Market regulator, the Communications Authority of Kenya (CA) has made this point in two recent press statements – giving market examples such as mobile voice, fixed voice, data, voice termination, narrowband/wholesale broadband Internet, SMS and mobile money.

To analyse whether there is dominance in a market, economists use the Helfindahl-Hirschman Index (HHI)-a widely used measure of market concentration. It is a scientific indicator of the amount of competition among firms in a given sector.

An HHI of 0 implies a super-competitive market with a large number of players (perfect competition), while 10000 represents pure monopoly.

In Senegal, Orange, which had 62 percent market share was declared a dominant operator and necessary regulatory measures instituted. Airtel was in 2013 declared a dominant player in Niger, Chad and Congo where its market share stood at 61.4, percent, 53 percent and 38 percent respectively. The regulator acted on these operators to level the playing field.

 

Source: allAfrica (link opens in a new window)

Categories
Technology
Tags
mobile phones, telecommunications