Telkom has criticised the roaming deals Vodacom and MTN have initiated with smaller networks and claims that ICASA should investigate these deals in more depth.
Speaking at the Mobile Broadband Services Inquiry public hearings, Telkom argued that these do not make sense as roaming deals in the traditional sense.
“One thing that is very clear is that these are not normal roaming deals,” said Telkom.
“A normal roaming deal is one where a small operator – usually a late entrant into the market – has access to a larger fully-rolled out network for a transitional period.”
“These deals use the reverse logic – a large operator accesses capacity on a smaller operators network.”
Telkom also noted that this has ultimately linked the larger and smaller networks together much more closely than would usually be the case.
The four deals that Telkom was referring to are:
- Vodacom–Rain: 1,800MHz and 2,600MHz
- MTN-Cell C: 900MHz, 1,800MHz, and 2,100MHz
- MTN-Liquid Telecom: 1,800MHz
- Vodacom-Liquid Telecom: 3,500MHz
Telkom argued that these deals distort the perceived spectrum to which MTN and Vodacom have access.
“They have effectively taken smaller players out of the market – certainly as infrastructure competitors,” argued Telkom.
The dynamic by which these deals affect Vodacom and MTN’s access to spectrum is visualised below.
Spectrum a key tool in driving competition
Telkom argued that spectrum can be used by ICASA as an important tool to ensure that the mobile broadband market becomes more symmetrical moving forward.
It noted that spectrum affects competition in the following ways:
- Reduced network build costs
- Better coverage
- Superior in-building penetration
- Faster speeds
- Ability to roll out new generations of mobile technologies
Therefore, Telkom argued, spectrum should have been integral to the Mobile Broadband Services Inquiry.
It added that this inquiry, if it were to treat spectrum as such, would have a major influence over the ITAs – which have already been unveiled.
It said that while ICASA has made a mistake by not considering this, it is not too late for it to make these changes.
“Pro-competitive regulation is needed to support growth in sustainable and effective competition, as was previously shown by the regulation of termination rates,” Telkom said.
“This inquiry should have properly considered the role of spectrum and informed the ITAs accordingly. Failure to do so has undermined the credibility of the inquiry and ITA processes.”
“The ITA process has to fully take into account the findings of the Mobile Broadband Services Inquiry.”
How to regulate MTN and Vodacom
Telkom said that, rather than looking at the amount of spectrum a mobile network owns, any regulations should take into account the amount of spectrum to which networks effectively have access.
It added that MTN and Vodacom currently benefit from first-mover advantage, which over time has resulted in them getting control over the best mobile sites.
It argued that they have preferential spectrum assignments – with the most viable challenger, Telkom, not having any sub-1GHz spectrum.
This, combined with MTN and Vodacom’s aforementioned sharing deals and a lack of pro-competitive regulations, results in these network operators being dominant in the mobile broadband industry.
Give everyone access to all towers
Additionally, Telkom argued that MTN and Vodacom have major advantages in the industry thanks to their dominance over the tower business.
“There is a highly unbalanced market for sites, and Vodacom and MTN are far ahead of other MNOs,” said Telkom.
It argued that this means commercial negotiations are one-sided and leave smaller players at a disadvantage.
“Core problems related to “feet dragging” by incumbent MNOs – operational terms are worse for third party access seekers than for their own internal businesses.
Telkom suggested that ICASA should consider the separation of Vodacom and MTN’s site businesses from the rest of their business, coupled with regulatory controls that prevent these new site businesses from discriminating against other MNOs.
“This would be straightforward to do and would have a profound impact on the industry,” said Telkom.