Econet must be compensated for their Infrastructure but…..

Opinion, Malvern Mkudu

The announcement by government that it is done with Statutory Instrument 137 of 2016, the law that will compel Telecommunication companies to share infrastructure has provoked different responses from different sections of society.

Some people have expressed outrage in what they are calling ‘nationalisation of private property’. Many people feel that the government wants to reap where they did not sow and public sympathy is with Econet who have invested a lot of money in building the telecoms infrastructure. The company claims they have sunk billions of dollars in infrastructure.

Of course on the face of it, Econet seems the victim of a government that’s ‘nationalising private capital’. However a closer look at the things involved gives a much different picture. Yes the money sunk into this project in equipment and paying for licenses belongs to the shareholders of Econet but the spectrum that makes everything possible is a public resource and not the private property of anyone individual or company. Paying for a license doe not give a telecoms company exclusive ownership of the frequency used to operate mobile phones.

In response government has said that this new arrangement will result in lower costs which will translate to lower service costs for the consumer. There may be enhanced competitiveness although on the flip side we could see efficiency declining.

While the debate seems to be focusing on boosters only, the government also has its eye on the fibre optic laid underground by Econet through Liquid.There is a lot of money to be made from this investment.

There is a strong case for infrastructure sharing in Zimbabwe because much still needs to be done to increase the penetration of mobile services, particularly in rural areas. High cost of network infrastructure is a hurdle in making services more available to marginalised communities. To recover their investments operators resort to high pricing making the technology out of reach to the poor of the poorest.

According to the ITU “sharing mobile infrastructure is an alternative that lowers the cost of network deployment, especially in rural areas or marginal markets. Mobile infrastructure sharing may also stimulate migration to new technologies and the deployment of mobile broadband. It may also enhance competition between mobile operators and service providers, when safeguards are used to prevent anti-competitive behaviour.”

Infrastructure sharing has been implemented in European countries and it has produced some results. ‘Given the high cost of obtaining 3G (IMT-2000) licences, many European operators have also been considering sharing active infrastructure for 3G mobile services. An example is the agreement between Orange and Vodafone to share infrastructure in the United Kingdom and in Spain, while managing their own traffic independently and remaining competitors at the wholesale and retail level.’

I am not sure whether this can work here considering that some entities such as Netone who are run by government appointees may introduce inefficiencies in the partnerships.

I have been captivated by the argument that infrastructure sharing  is equivalent to ‘nationalisation of private property’. Those making this argument  have not made  a distinction on what they mean by private property. Is it the money Econet put to build the infrastructure or the frequency that Econet uses to provide the service?

Telecom spectrum is a frequency band regulated and allocated by the government of the country. The country also has to adhere to regional standards around the governance of use of the spectrum. We are talking about a finite resource which has to be regulated and optimally used to the benefit of all citizens and not for profit on one individual or entity.

One observer says  “Spectrum is the lifeblood of the telecoms industry.  ‘As more consumers buy smartphones, which  use 24 times more data than a traditional cell phone, and tablets, which can consume 122 times more data than old traditional phones, there is a greater need for spectrum.”

Where will this spectrum come from? Much of the spectrum is already being used by the national broadcasters and other government departments. Clearly spectrum is a scarce resource and unless if digitisation creates more ‘white spaces ‘there will soon be a spectrum shortage.

Spectrum is therefore a public resource that Econet and other telecoms company have obtained licenses to exploit. They are making money off a public resource. Spectrum is the most important ingredient in the telecoms business such that if Econet feels aggrieved the license to exploit the spectrum can always be granted to other players. Econet has invested heavily in other infrastructure and they must either be rewarded for it or at least allowed to benefit from their capital outlay but they must never be allowed to hold the whole nation hostage.

Econet borrowed heavily to acquire infrastructure that makes it possible for consumers to enjoy the service. They have also paid very huge sums in licenses. Despite receiving huge sums in licenses government has done very little to invest in infrastructure to improve service and make it more accessible to the rest of the country.

The telecoms have already made money out of their investment which probably explains why the shareholders are not crying too much. The company has made billions out of a public resource and now they understand that the situation cannot continue unhindered.

What we are witnessing is state capitalism at play and the government is now moving to make a killing from where they did not sow. We must begin demanding that the government account for the billions it is making and will make from this new arrangement. Secondly we must watch closely that these telecoms companies together with government do not collude to shortchange the consumers of the services.

Ultimately whether infrastructure sharing works or not the important point to make is that Econet or any other telecoms company only put in money and physical infrastructure to provide a service but the spectrum that forms the cornerstone of this business is a public resource. While Econet is entitled to compensation for its investment the public is entitled to enjoyment of the public resource, the spectrum. As such the spectrum must never be allowed to be privatised by any one person or company.

 

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