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A and U
The era of digital transformation and technological progress is the central theme in contemporary societies.
What is the vision and role of the state in the field of telecommunications? How does privatization influence competition?
The term dominant operator (U), attracts or avoids an oligopoly in the national market (U – A) Is it a futuristic and strategic approach of the government?
Unfortunately, the state has provided little or no visibility about its intervention against competition in telecommunications in Angola.
There is basic traditional legislation on government intervention in optimal market decisions and fair competition and some norms such as:
– Cost-oriented price cap regime for dominant operator cases and conditions on tariffs
– Interconnection regulations (the problem of sharing infrastructure between operators) and access with their administrative, commercial and technical conditions
– Licensing and multicarrier for long distance telephony
– Portability? Is there any intention or necessary condition to promote and implement the concept of number portability in the final consumer's choice?
– Specific regulation of competition.
The economic foundation applied in other sectors of activity, likewise for telecommunications, can be defined by two basic forms of government intervention to promote competition:
– Acting on anti-competitive behavior with excessive and predatory prices (a certain duel of new repetitive services with balanced prices between operators, but with a reduction in the quality of service can already be noticed). The service offers and tariffs are heading towards the prediction of a real lack of knowledge of the functioning and objectives of the two operators.
– Act on the structure, avoiding companies that achieve dominant positions.
The creation of operating rules could define, for example, that U can be and is exclusive in the relevant voice telephony market given its geographical reach and A compete more fairly and subsidized by the state with fixed telephony.
Under normal conditions and from what can be seen, there are projects defined both in the U and in the A, to penetrate the digital market in subscription cable TV, thus putting pressure on companies dedicated solely to this branch of activity.
The State (regulator) must avoid the definition of Dominant Operator in the relevant market (services that integrate the market and geographic reach), applying equitable and specific regulations directed at this operator, avoiding the abuse of a dominant position.
There are already strong signs of the interchangeability phenomenon from the point of view of supply. The operators involved are having quick reactions, however, costs and qualities are not important.
It is necessary to prove in good faith that consumers change a service because of price variations and so the state conducts prospective studies on variations in consumer behavior and decisions. Would we be facing a future oligopoly or a hypothetical monopoly with constant price changes among competitors?
What would be the impact of a new operator? For this application, it would be necessary for the initial price to be fixed at values close to the prices of current competitors, as found. And how is ROI?
Where is M in this context? Will you join one of them? Will it be permanently extinct? The most likely would be to merge with the A and thus take advantage of the existing infrastructure, thus putting pressure on the U and creating an open and competitive environment.
Geographical reach remains one approach of the so-called dominant operator, while the other protects itself with flexible pricing.
Although there are slice of the pie indicators between the three major operators, the guidelines remain that the U will continue over the next 5 – 8 years to dominate the market for the following reason:
– A company with less than a 25% share is unlikely to have significant individual power in that market.
– If participation exceeds 40%, this is an indicator value to be taken into account in relation to significant power, and the behavior of that company must be analyzed in detail.
– When there are market shares greater than 50%, in general, there is significant market power that is difficult to overcome.
Recommendation: compare the market concentration percentages with the Herfindahl-Hirschman Index HHI to see the concentration between the recently released table of total active subscribers vs. the three operators.
