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Why Airtel wants a share of Safaricom 4G frequency

Airtel Kenya chief executive Adil El Youssefi. BD GRAPHIX
Airtel Kenya chief executive Adil El Youssefi. BD GRAPHIX  

CEO Adil El Youssefi fears letting big rival hog limited high-speed Internet licence will help it consolidate its market dominance and force out the smaller players

The Communications Authority of Kenya (CA) has, in a gazette notice, indicated that it intends to issue Safaricom a licence to operate high-speed (4G) Internet.

The announcement has caused unease for Safaricom’s main competitors, Airtel and Telkom Kenya. The two say the CA should lead in negotiations for a spectrum sharing formula among the telecommunications companies.

The Business Daily sought Airtel Kenya CEO Adil El Youssefi’s views on the issuing of this important frequency licence and how it will impact the telecommunications industry.

What is Airtel Kenya’s take on the proposed allocation of the 800 MHz (4G) frequency licence to Safaricom?

We do not agree with the process that was followed in allocating the best 4G LTE spectrum to the dominant player as this goes further to reinforce and entrench their dominant position.

Our position is that the only LTE 800 MHz spectrum available in Kenya should be subjected to sharing with other operators and the commercials for sharing should be regulated before the dominant player can use the spectrum commercially because Safaricom will have monopoly as regards the 4G spectrum on the 800 MHz band.

The 800 MHz band enables an operator to roll out 4G services in a less costly manner because it provides good network coverage with fewer radio infrastructure (radio base stations ) than the 1800 MHz.

It also provides much better indoor coverage than the 1800 MHz band. There are enough devices with 800 MHz capability to enable economies of scale for device manufacturers and therefore it is possible to offer affordable devices to consumers.

Airtel is advocating active sharing as this enables each operator to control their own quality of services instead of wholesale sharing where other operators will have to rely on the quality of service of Safaricom in which case quality differentiation will not be possible.

How will the allocation impact on other operators?

Other operators will be locked out of the 4G competition space because Safaricom will have a monopoly in the use of the provision of the 4G services using the 800 MHz spectrum.

This will cement their already dominant position and will stifle competition with consumers being the ultimate losers.

There is no sharing agreement yet, which is a great concern for us and our position is that Safaricom should not be allowed to launch commercial services in the 800 MHz spectrum band before the sharing agreement is approved by the regulators and signed with the other operators.

If they are allowed to launch commercial services before the sharing agreement being done, they will have the fast mover’s advantage in the market and they will reinforce their dominance, which is not conducive for the market and consumers. We have tried to get them to discuss this matter with us to no avail.

What is Airtel’s proposal on future frequency allocation?

In a case that involves spectrum that is limited and can only be given to one operator, the other affected operators should be given an opportunity to give input on how this limited resource should be allocated and the conditions precedent.

Secondly there should be spectrum caps as has been done in other countries to ensure that one operator does not abuse their dominance through the use of spectrum.

How is allocation of the 800MHz frequency licence likely to alter the competitive landscape in the sector?

How can the dominant player with 88 per cent revenue market share, 67 per cent customer market share and 100 per cent of the profit of the industry be allocated the only 800MHz 4G spectrum in the country without taking into consideration the grave impact it will have on decreasing the level of competition?

Kenya will officially have a 4G monopoly in the country! And we will be back 20 years to the past when there was only one provider in Kenya with high prices, low quality and limited reach. Once again, if the dominance issue is not addressed, Kenya will end up with a monopoly.

As an industry we need to urgently address all these barriers which are limiting the effectiveness of the smaller player to compete with the dominant player.

Unless we do so in an urgent manner, there could be more exits after those of Essar in 2014 and the recently confirmed one of Orange this year.

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