Telecom sector needs more competition, not stability

The story of Rwanda’s telecommunications sector is almost of fairy tale proportions. Soon after the 1994 Genocide against the Tutsis, South Africa’s MTN group opened shop in 1996 and went on to enjoy a 10-year monopoly that helped them to capture a huge market share.

The story of Rwanda’s telecommunications sector is almost of fairy tale proportions. Soon after the 1994 Genocide against the Tutsis, South Africa’s MTN group opened shop in 1996 and went on to enjoy a 10-year monopoly that helped them to capture a huge market share.

However customers started enjoying the real fruits of the sector after 2006 when the sector was liberalised, allowing Rwandatel to join the GSM market. This compelled MTN to cut its rates by about 50 percent to consolidate its market share. Millicom trading under the TIGO brand in Rwanda joined the fray and literally muddied the waters with its attractive promotions that saw them surpass Rwandatel in subscriber numbers.
 
Rwanda Utilities and Regulatory Agency (RURA) promised to license a fourth operator if TIGO clocked 400, 000 subscribers.

However with TIGO now inching towards the 700,000 subscriber mark, RURA developed cold feet and decided not to award the licence. Their story is that this will not happen until subscriber growth and market share distribution have stabilised.

The issue of number portability has also been shelved until 2012 at a time when our Kenyan brothers have embraced the concept largely due to pressure from other competitors to break the dominance of Safaricom.

RURA targets 6 million subscribers by 2012. Yet basing on the current figures of 3.6 million, withholding the fourth telecom licence does not seem to serve this cause.

In my view, the market needs more competition and not stability if it is to grow. Further competition will certainly see different strategies being employed to attract and retain customers.
 
Currently what we have is three companies competing to offer basically the same services to the same market. Yet if we had more players in the market the game would be raised a notch higher, forcing companies to concentrate on niche markets and products.

The PricewaterHouseCoopers study, which was commissioned recently, should result in a significant reduction of the rather high interconnection fees.

Then we should have number portability as this will do away with the complacency of original players. With more competition, companies will work harder (and innovatively) to lure new customers and hence grow the market.

We shall also start seeing customers reaping benefits in form of better internet services, a sector that is still wrongly treated as a luxury service.

With the completion of the fibre optic network, we should be enjoying better internet speeds and at a much lower cost if this country is to achieve its goal of becoming an ICT hub.

More players will most likely embrace the growing international trend for smart phones like Blackberries, Iphones, Android phones and many others. All said and done, RURA is better off pushing for better deals for the customers instead of sympathising with the current telecom players. The recent growth in the market has been a result of competition and not stability.

ssenyonga@gmail.com

 

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