On 29 November 2019, ICASA published its Discussion Document on the Market Inquiry into Mobile Broadband Services for public comment. According to the Discussion Document, the preliminary findings are as follows:
- Retail market: While there may be separate markets for voice, SMS and data services, it is likely that the competitive dynamics are similar across these markets, and they can, therefore, be aggregated for analysis. There are the market share and retail price evidence that suggests that these markets are ineffectively competitive in many cases. ICASA considers that entry barriers into retail markets are considerable since wholesale services are not supplied competitively. This is so in respect of the facilities-based entry and services-based entry. The market for site access, in particular, is highly concentrated in many municipalities, and full-coverage roaming services are only offered by two operators. ICASA considers that remedies in respect of these wholesale markets are appropriate to resolve ineffectively competitive markets at the retail level.
- Upstream market 1: Spectrum: ICASA considers a national market for spectrum to be an important input for the supply of mobile services. While the supply of spectrum is limited, there are no licensees that have substantially greater holdings than other licensees, and there are no licensees that have significant market power in this market. In addition, ICASA plans to assign additional spectrum by the end of 2020. There is, therefore, no need to impose pro-competitive licence conditions in this market.
- Upstream market 2: Site access: This market is ineffectively competitive, with very high levels of concentration in 226 out of 234 municipalities. A possible remedy to the observed impediments to competition in the site access market in South Africa is the re-drafting of facilities leasing regulations as contemplated by the Electronic Communications Act (ECA), together with more detailed guidelines. This would include a requirement to publish site information online, a time limit for the consideration of requests and rules around when site sharing should be considered technically and economically feasible. It would preclude the indefinite reserving of space on masts for the incumbent’s equipment and facilitate the quicker rollout of new sites by smaller operators. Accounting separation is also considered as a remedy, to improve transparency around the extent to which pricing is cost-based and remove the ability for large operators to disadvantage smaller rivals through site leasing.
- Upstream market 3: Roaming: These markets are ineffectively competitive as only MTN and Vodacom have substantial coverage in many municipalities. ICASA considers that it may be appropriate to mandate a roaming offer for parties dominant in particular geographic areas. Further, in respect of accounting separation, price regulation may be premature. However, in order to enhance transparency and ability for ICASA monitor, functional accounting separation should be implemented.
- Upstream market 4: Mobile virtual network operator (MVNO) / Wholesale access point name (APN): ICASA does not definitively define markets, assess the effectiveness of competition and significant market power and consider pro-competitive licence conditions where MVNO and APN services are concerned, since any competition concerns in this layer can be remedied upstream at the site access and roaming layers. Nonetheless, concerns have been raised in respect of MVNO and APN services. ICASA analyses MVNO and APN services together. There are indications that the supply of these services is ineffectively competitive since there is at present only one provider of wholesale MVNO services, even though all mobile network operators could offer these services and APN prices are high relative to retail prices. While ICASA is concerned about ineffective competition in markets for MVNO and APN services, it does not make a finding in respect of market power in this market. Any market power in the provision of MVNO and APN services is a result of market power at the sites and roaming levels and is likely linked to dominance in retail markets. Remedies imposed in those markets are likely to mitigate any market power for MVNO and APN services, and there is, therefore, no need to conclude on market power in respect of MVNO and APN services. ICASA considers that the remedies in markets for site access and roaming services are likely to improve competition in markets for MVNO and APN services. ICASA will monitor progress in the supply of MVNO and APN services while these remedies are in force, and reassess whether further intervention is needed if the upstream remedies are not effective.
The deadline for submissions is 45 working days from the date of publication of the Discussion Document. Further, according to the press release, the Competition Commission will be releasing its final report on the data services market inquiry on 2 December 2019.
The Discussion Document is accessible here.
Please note: The information contained in this note is for general guidance on matters of interest, and does not constitute legal advice. For any enquiries, please contact us at [email protected].