Maravi

Zamtel is a monopoly, insists economist

Zamtel is a monopoly, insists economist
Written by Chiwoyu Sinyangwe
Wednesday, December 17, 2008 6:17:44 AM

ZAMBIA Development Agency (ZDA) chief executive officer Andrew Chipwende is exhibiting a very poor understanding of competition issues by saying that Zamtel is not a monopoly, UK-based economist Chola Mukanga has observed.

Reacting to Chipwende’s observation last week that Zamtel was not a monopoly, Mukanga said higher costs of entry into the international gateway (IGW), coupled with the political stance preventing emergence of alternative gateways were some of issues that made Zamtel have monopolistic control of the international avenue system.

Last week, Chipwende said Zamtel was not a monopoly and that any of the two mobile companies operating in the country could access the International gateway provided they paid the required statutory entry fee of US $12 million.

But Mukanga observed that in terms of distortion of competition, all the experts in the industry including the World Bank agreed that Zamtel distorts competition, beyond control of the gateway.

“Andrew (Chipwende) is exhibiting a very poor understanding of competition issues. It is true Zamtel is not a statutory monopoly because the gateway is liberalised,” Mukanga said.

“The point is that the higher cost of entry into the international gateway, coupled with the political stance preventing emergence of alternative gateways such as a quasi planning restraint - even if you can pay the IGW licence fee, the government is unwilling to give you the licence, prevents other players from emerging in the international segment market. This makes Zamtel a de-facto monopoly.

As for who "controls" the IGW, Chipwende would do well to familiarise himself with previous submissions from the Zambia Competition Commission (ZCC) like the 2003 submission to the Select Committee on Transport and Communication which stated that ‘the position of Zamtel means that it has the power to prevent, restrict or distort competitor access to this essential infrastructure such as the IGW which was built with public funds’.”

And Mukanga, who welcomed the government’s initiative to do a comprehensive evaluation of Zamtel and exploring partial privatization as one of the alternatives, urged the government not to just focus on Zamtel strategy saying there was need to come up with a holistic communication strategy for the country.

“The government needs to take a step back and ask tough questions about the communication industry and where Zamtel fits in, before proceeding with restructuring the parastatal. This should be done through formal conversations with Zambian infrastructure experts at home and abroad,” said Mukanga.

Chipwende last week said he did not agree that Zamtel was a monopoly because anyone could access the IGW, arguing that the Communications Authority (CA), and not Zamtel, controlled the IGW, adding that Zain Zambia and MTN Zambia’s failure to access the IGW was as a result of their failure to pay the reqired entry fee.

Labels: ANDREW CHIPWENDE, CHOLA MUKANGA, MONOPOLIES, ZAMTEL, ZDA

posted by MrK @ 6:35 AM