Regulating The Telecom Market and Competition in Ethiopia

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2024-05

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Addis Ababa University

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Telecommunication sector having been operated via age old monopolies its transition to competitive service delivery necessitates sector regulation to correct market failures manifesting as natural monopoly, network effects, economies of scale and scope, and sunk costs. Economic sector regulations operate to create an effective competition that serves to correct market failures, level playing fields, control, and sanction anti-competitive behaviors. Ethiopia despite being among the pioneering nation to institute telecom service, it has guarded the sector from competition for 125 years, operating under a state-owned monopoly, Ethio Telecom. But following the political change and adoption of new economic policy it has fully opened its telecom market for foreign and domestic competition, which lead to market entry of Safaricom Ethiopia. The change has also provided for adoption of new liberal regulatory frameworks that resulted in adoption of the Communication Services Proclamation and the institution of the Ethiopian Communication Authority, mandated as the exclusive economic regulator of the sector. This study examined this unprecedented leap in competition regulations by analyzing legal and institutional frameworks of the newly instituted competition regulations in Ethiopia‟s telecom market. Accordingly, the examination identified application of Ex-ante regulations to safeguard, and promote competition, correct market failures, and create a level playing field. Towards this the ECA conducted a market review into relevant telecom markets upon which it identified and designated the operators that hold market power. The designations entailed institution of remedies like obligation to supply, wholesale price control, mandatory filing of access agreements, reference offer, potential accounting separation, non-discrimination obligation, and access to information to control dominance. Holding dominance is also regulated against engagements in anti-competitive acts of refusal to supply, undue discrimination, bundling and tying, predatory pricing and margin squeeze perpetrated to detriment of operators and consumers. Further, the examination also identified challenges of the regulatory framework. Where legal gaps in specifying repercussions and sanctions for anti-competitive acts, lack of clarity in policy instruments, and institutional incapability‟s with lack of resources, functionality, experience, and structural independence were found as its dearth.

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