Monopolies keep Africa in the fibre slow-lane

Competition in many parts of Sub-Saharan Africa on fibre has bought lower wholesale prices and these have in time led to lower retail prices.

The margins of competition may be contested but not the idea itself. Africa’s monopoly slow lane for some of its larger markets is to be found in Central Africa.

Russell Southwood looks at a battle happening in Cameroon over fibre competition.

Cameroon is hanging on to its monopoly state provider Camtel and the net result is that the country has some of the highest international and national wholesale fibre rates on the continent.

The country refused World Bank funding because it would have meant creating a separate wholesale consortium offering competitive prices.

Its power utility AES Sonel has long harboured an ambition to enter the national fibre wholesale market and the evidence from many countries elsewhere on the continent is that this would lead to lower prices.

Now the regulator ART (which is not known for its independence) and the Government are trying to prevent it from getting a licence. In these circumstances, it is hard to take seriously any government rhetoric about wanting to become an information society and e-government.

So let’s look at the detail of the case. AES Sonel has laid over 700 kilometres of fibre because as most power utilities do, it wants to be able to manage and control its power network using fibre.

The network was started in 2011 and has 96 strands. Globally in competitive markets, it is accepted that rather than simply lay just enough for this task, additional capacity can be included at very little additional cost. It applied for a third category licence to become an independent provider of wholesale fibre.

A source at MINPOSTEL said:”We asked them to focus more on electricity and donate their surplus fiber optic facilities to the state.”

It felt that telecoms should remain in the hands of telecoms operators and that this particular function should remain a monopoly of the state.

Camtel’s monopoly in this area was covered by decree 005/MPT of 18 May 2001. This concession by decree was renewed every two years until 2007 so there is currently no law protecting its monopoly except “the Government says so”.

In 2009 MTN Cameroon attempted to see whether the monopoly could be made to disappear in practice by starting to roll-out an 81 kms link in Douala.

The regulator ART closed this project down with the threat of heavy fines. In June 2013 ART issued a warning to local ISP Creolink and AES Sonel to stop offering wholesale fibre to the telecoms market.

In November, AES sold the business outright to the UK based investment fund Actis. Before Christmas last year AES Sonel had another run at getting a wholesale fibre licence. In the current discussion, AES Sonel has taken several MINPOSTEL officials to Brazil to show them a network they already operate as a wholesale operator.

It could as easily taken them to any number of African countries where this kind of third party carrier competition is already working well.

An ART spokesperson clearly flagging its response told a local paper: “These threats of sanctions are more pressing and meetings are currently increasing , as MINPOSTEL is closely following this issue.” AES Sonel denied that it had been threatened with the sanction of “heavy fines”.

In lock-step, the regulator and Government seem to be arguing that AES Sonel should not have built the fibre in the first place and if it persists with the licence application, the inevitable consequence will be a big fine.

In other words, back off if you want to lead a quiet life, a form of state sponsored bullying that rather cuts across the notion of independent regulatory frameworks.

There is no law or decree covering Camtel’s wholesale monopoly (that also includes the international landing station but that’s another story) so opening up wholesale competition would both improve Camtel’s less than perfect service and see prices drop sharply.

The Government wants AES Sonel to hand over its fibre capacity to Camtel to maintain the monopoly.

Wake up, Mr President and do the right thing for your citizens.

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Monopolies keep Africa in the fibre slow-lane