It is estimated that some 4.2billion people [or 56%] of the world’s population, in the last few months, have experienced some sort of lockdown necessitated by the global covid-19 (coronavirus) pandemic.
The virus that emerged from Wuhan in China spread to over 180 countries resulting in border closures, restricted travel, banned public gatherings, closure of schools and activation of emergency powers across several countries to force a lockdown of major cities; social/physical distancing, once a concept that one would want to keep in the shadows, has now become a virtue with stay-at-home directives being complied with without hesitation by millions of people.
With no solution in sight and a vaccine months, or even years away from production, the virus is causing havoc with businesses being crippled, economies in recession, global leaders hopelessly lost and citizens losing hope of a turnaround anytime soon.
As families keep hope alive at home and children look forward to returning to schools, what has kept businesses in contact, friends communicating, families speaking to each other, colleagues following up on work and our kids studying and doing school work are the internet and mobile communications.
As we navigate a very difficult phase in our lives – a phase Martin Wolf describes in his opinion piece in the Financial Times as a “Great Shutdown” – the internet and mobile device remain supreme and offer us some relieving convenience and comfort given the constricted physical environment created by the aforementioned lockdowns and related measures; thus keeping us all in communication with each other.
Today, I write to celebrate the people, the trailblazers, the visionaries through whose tireless efforts delivered to the world the internet and mobile communications. I celebrate Ghanaian men and women who, through years of sacrifice and pain, ventured into the unknown, investing in a new unheard of business venture and technology, looking towards an unknown and uncertain future. In acknowledging these people, both international and local, I intend to also suggest some few ideas on how we, in Ghana, could make our telecommunications sector competitive for our indigenous operators to survive and thrive.
Centuries ago, when someone had to send a message, the message had to be delivered by courier either on foot or on horseback. It took days, weeks and sometimes months to deliver one message. But, in 1858 the Queen of England, Queen Victoria, and the President of the United States of America, President James Buchanan, communicated for the first time through the transatlantic telegraph cable. That occurrence was a major milestone in technology as it opened the door for great technological advancement in the world.
Queen Victoria’s message, that took 20hours to transmit, was a pointer to what telecommunications was going to do for the world. That breakthrough demonstrated the power of the human spirit to deliver, with our hands, whatever the mind can conceptualise. It was the efforts of entrepreneurs and engineers from two nations, supported with resources and appropriate policies put in place by their governments, backed by visionary leadership at the topmost levels of government and industry that made the transatlantic telegraph cable a reality. The Queen’s cable message ended with a statement and I quote –
“This telegraph is a fantastic instrument to diffuse religion, civilisation, liberty and law throughout the world”
Global Giants never to be forgotten
The United States of America’s [USA] Department of Defence [DOD] has been a major research and funding hub for many of the most radical innovations in the telecommunications space. The world owes the United States and its department of defence, in particular, major appreciation for their continuous investment in research (although originally intended for the use of the USA exclusively) that has brought about major breakthroughs in innovations in telecommunications.
The history of the origins of the internet is traced to the United States Army’s efforts to create a seamless interconnection of computer networks and a strong desire for quick transmission of information. Researchers in the United States and Europe saw it as a great tool in sharing research information gathered and stored in big mainframe computers. Such information, when needed for research by another group elsewhere, had to be stored on floppy drives or magnetic tapes and sent through courier. Alternatively, the person desiring the stored information had to physically travel to the location where the mainframe computer was located to be able to access the required information. Even though a lot of researchers, scientists and entrepreneurs had made efforts and played varied roles in getting two computers to communicate, 1969 was a significant year for the internet as Leonard Kleinrock and his team of researchers had a major breakthrough when they succeeded in creating a two way computer communication network.
This breakthrough inspired many scientists and researchers to experiment further on how to create the mechanism for expanded use of an interconnected model of computers. None was successful, though, in designing and conceptualising a framework for the internet until two men Vinton Gray Cerf and Robert Elliot Khan (globally recognised as the fathers of the internet) developed the open architecture framework and the set of protocols that then defined the modern internet and allowed computers and systems all over the world to be able to communicate with each other. The global acceptance given to their open architecture framework and protocols officially signalled the invention of the modern internet in 1982 and its widespread adoption beginning in 1993.
Electronic mails [E-mails] would then start to flow between computers with a second major breakthrough coming seven years later when Sir Tim Berners Lee invented the worldwide web (www) and, together with the earlier works of Cerf and Khan, gave the world a tool that has been, and continues to be, the dominant shaper of how we learn, live and work.
Another global giant, recognised as the father of the mobile phone device and mobile telephony technology, is Martin Cooper, who in the mid 1970’s led the team of engineers at the Motorola Corporation to invent mobile telephony, placing the first ever mobile phone call and advancing his research a decade later and taking the technology to market to create the mobile telephony industry we see today. Motorola unfortunately failed to keep up with the pace in incremental technology advancements, holding on too long to the analogue technology discovered by Martin Cooper, and losing market share initially to Nokia, which also lost it to Samsung, Apple and Huawei; these three companies control close to sixty percent [60%] of the global market.
Touch screen, Global Positioning Systems (GPS) and Siri, the virtual assistant on your phone that gives you quick and easy access to navigating your phone, are all outcomes from the USA department of defence research funding.
On the back of the radical innovations resulting in internet and mobile phone technology have been many incremental innovations creating products and services on the discoveries, inventions and foundations of the five global giants in the internet and mobile space – Kleinrock, Cerf, Khan, Lee and Cooper.
Secondary innovators began to emerge using the core of the internet and the mobile telephony protocols to create new services and applications that have consolidated our new ways of learning, living and working and truly creating a global village of instantaneous communication and information sharing.
According to Brett King, in his book “Branch Today, Gone Tomorrow”, television took about (25) years to reach critical mass; personal computers fifteen (15) years and the internet and mobile phone close to twelve (12) years to reach critical mass. Looking at user numbers and the point at which secondary breakthroughs became sustainable, it is instructive to note that it took less time than expected for secondary innovations to reach critical mass largely because the primary platform was already in place. Facebook, founded in 2004, took about seven (7) years to reach critical mass. Whatsapp and Instagram, founded a year apart took about five (5) years to reach critical mass. Twitter, although still struggling, has in the last few years been significantly popularised by US President, Donald Trump, who uses it daily to communicate his thoughts and actions and also to defend his decisions.
As the Covid 19 pandemic spread, and families stayed at home, roads deserted, aircraft parked, schools, churches and non-essential offices and physical business and social interactions came to a standstill, it was the internet, the mobile phones, whatsapp, facebook and zoom that kept us all connected. One wonders how we would have coped without the internet and the mobile phone. How were “men of God” going to preach to us without Facebook and Youtube? How were our meetings going to happen without Zoom and how were we going to keep in touch with friends, family and colleagues without whatsapp?
On the global front, the world must appreciate and celebrate the young men who sacrificed their time and energies to create the various platforms that today offer us some level of comfort and convenience even in this challenging novel corona virus [Covid 19] infested world. To Brian Acton and Jan Koum, we salute your determination that brought us whatsapp. To Eric Yuan who created Zoom, Mark Zuckerberg, Eduardo Saverin, Andrew McCollum, Destin Moskovitz and Chris Hughes whose understanding and collaboration brought us Facebook and Kevin Systrom and Mike Krieger, whose sense of imagination resulted in Instagram, we salute and say “Ayekoo”.
Back Home [in Ghana]: – Monopoly and Duopoly
A little over two decades ago, making an international call in the comfort of one’s room was just a dream. To speak to someone overseas, you had to go and book the call at Ghana Telecom, Accra Central, and be given a date to come make the call. On that day, you would join a queue and when it came to your turn, you would enter one of the booths where everyone within the hall would be privy to your conversation. Telecommunications in Ghana was in the hands of only one entity – the Ghana Post and Telecommunications Company – a giant, very deeply asleep, under utilising its resource base and feeding off the little revenue generated by the state.
Under His Excellency President John Mahama, former President of the Republic of Ghana, but then as Deputy Communication Minister and later as Minister for Communications, major reforms were carried out in the telecommunications sector leading to the decoupling of post and courier services from telecommunications services and resulting in the Incorporation of Ghana Telecom and the promulgation of Act 505 to create the Ghana Postal Services Corporation in 1995.
Around the same time, Ghana had fallen in love with the Malaysians and saw two major Malaysian investments in telecommunications and media coming into Ghana. One was Telecom Malaysia taking up a 30% stake in Ghana Telecom including management of the entity. The other was the use of the huge assets and resources of the Ghana Film Industry Corporation to enter into an arrangement with Media Prima of Malaysia to create TV3 with the Malaysians taking up a 90% stake in the newly created entity.
To get the sleeping giant – Ghana Telecom – to wake up, an attempt was made to deregulate the fixed telephony sector with the award of a second national license to another sleeping giant, Western Telesystems Ghana Limited (Westel) creating a duopoly and offering other service providers some options to opt for services from two competing sleeping giants. Westel metamorphosed into Zain when it was acquired by Celltel International which later sold it to Bharti Airtel and rebranded Airtel until its recent merger with Millicom leading to the creation of Airtel-Tigo
A new arrival on our shores – Mobitel/Mobile Services
Whilst all of these reforms and acquisitions were taking place, an analogue mobile license had been issued to Millicom, and in 1992, Ghana welcomed its first mobile network. Millicom entered the Ghanaian market with Ghana’s first analogue mobile service branded Mobitel which was to become the change maker in how Ghanaians consume telephony services. In that year, only a few elites could afford a mobile handset and even subscribe to a post-paid mobile service demanding the payment of a deposit. Millicom attempted to start a GSM service in Ghana around 1996 and imported into the country GSM equipment without authorisation from the National Communications Authority [NCA]. As a result, the equipment were seized by the State and not released until after the launch of Scancom’s GSM service branded Spacefon in late 1996. Celltel, owned by Prince Kofi Kludjeson, was also awarded a mobile license in the mid 1990’s and went into a Joint venture arrangement with Hong Kong-based Hutchison Telecom International to roll out mobile services using CDMA platform, one of the best platforms for data services. With Mobitel and Spacefon competing in the elite space, Celltel was the choice for the middle and upwardly mobile class. Indeed, my first mobile phone service subscription was with Celltel.
Ghana Telecom, the sleeping giant of Ghana with incumbent authorisation for mobile services, launched its mobile service branded Onetouch in late 2000. Glo, as you may know, was the last GSM service to be launched in Ghana.
Today, Ghana boasts of a thriving mobile industry with over 41 million mobile telephony subscriptions and penetration in excess of 138%. Fixed telephony subscriptions have been at almost same level for over a decade at less than 300,000 lines. Mobile data continues to dominate in the data space with over 28 million subscriptions to mobile data service on the second and third generation platforms and a further 1.4 million on the fourth generation platform. Sadly, the fourth generation broadband wireless space, originally awarded to indigenous operators like Surfline and Blu Telecom, is now dominated by global multinationals bringing to the fore policies and regulatory practices that have consistently, over the years, favoured foreign multinationals.
Leadership of the Trio
In appreciating our trailblazers in the mobile telecom industry in Ghana I want to mention three people (groups) in particular who I think championed, and are the architects of, the growth and success the industry continues to chalk years after they had left the roles they then occupied.
First His Excellency, the former President, John D. Mahama; for his visionary policy initiatives that began the reforms in the industry and led to the decoupling of Ghana Post and Telecommunication leading to the creation of Ghana Telecom (now Vodafone), the creation of a second operator –Westel (Now merged with Tigo forming Aitel/Tigo) and the deregulation of the sector resulting in the licensing and authorisation of mobile network operators and many internet service providers.
If there is any one person who has influenced the telecommunications sector the most and engraved his works on the sands of time, that person must be His Excellency John Dramani Mahama, former President of the Republic of Ghana and current flag bearer of the National Democratic Congress [NDC].
Under his leadership, initially, as a Deputy Minister and subsequently, as a Minister of Communications, various critical reforms needed for the sector were carried out. As Vice-President and later President, investments were made in strategic telecommunications infrastructure needed to expand and to ensure that quality services were made available to all Ghanaians. These interventions also served as enablers for economic activities in the telecommunications sector. The strategic projects conceptualised and implemented under the leadership of former President Mahama include:
- The Eastern Corridor Fibre optic network serving 120 communities from Tema through Ho to Bawku, with extension to Yendi and a link to Tamale.
- A national Data Centre in Accra with a real-time secondary Data Centre in Kumasi
- A Business Process Outsourcing Center fully resourced as a plug-and-play facility for the BPO industry
- An ICT park in Tema, fully completed, resourced and being used by key mobile network operators [MNO’s]
- A modern, state of the art office complex for the Ministry of Communications and agencies under the Ministry
- An ultra-modern office complex for the NCA serving as its headquarters in Accra; and modern office complexes in the regional capitals
- Automation and digitisation of government services involving the deployment of intra city fibre, LTE platforms and applications including e-cabinet, e-health, e-register for Registrar Generals Department, e-immigration, and the deployment of a government online services platform for one stop delivery of government services
- An e-transform platform involving the digitisation of parliament, the judiciary and many other strategic institutions
- Construction and deployment of over 40 Community information centres, over 20 Enhanced Community information centres and 9 regional innovation centres offering people in underserved and deprived communities’ opportunities to access services online.
- Extension of mobile telephone and data services to over 60 under-served and un-served communities through a rural telephony project executed under GIFEC and uniquely customised for our local environment.
- Successful implementation and deployment of Ghana’s Digital Terrestrial Television network across the country.
The National Communications Authority (NCA) has had seven Director-Generals with John Kofi Gyimah as its first Director-General in the mid 1990’s. No one, however, has had longevity of tenor, shaped and influenced the industry more than the late Major (Rtd) John R. K Tandoh and his team of directors. The late Major (Rtd) Tandoh, together with a team I refer to as Ghana’s Golden Generation of progressive regulators – Bernard Folson, Joshua Peprah, and the late Major (Rtd) Adansi – were an independent minded team with huge experience and exposure who, together, championed major initiatives in the sector. It is a team we have found extremely hard as a country to replace. Today, we have a regulatory authority operated like an agency under the Ministry of Communications and engaged in partisan politics and with policies aimed at killing the businesses of entrepreneurs and investors associated with their political opponents. As an operator and a two time President of the Ghana Internet Service Providers Association [GISPA], I encountered and engaged the NCA on countless occasions and found the team headed by late Major (Rtd) Tandoh principled, progressive, and independent minded. In my candid view, it is the best regulatory team we have had since the creation of the NCA.
Third on my list and selected from Corporate Ghana is Ahmed Farouk. Farouk, the longest serving Chief Executive Officer [CEO] of Scancom, has been one of Ghana’s leading corporate executives in the mobile telephony industry. He led Scancom’s transition from Spacefon to Areeba and then to MTN, seamlessly ensuring protection and maximisation of shareholder value. Farouk was ruthless and so radical in his approach. His primary focus was growth and in his period as CEO of Scancom, he embarked on an expansion drive to get MTN presence everywhere in the country. He introduced innovative products and rolled out pricing structures that dazed competitors. He was the first to challenge the duopoly, meeting conditions early in his tenor to secure MTN a gateway. He went on an aggressive brand building strategy connecting the youth to the brand and making Spacefon and its successor Areeba, a lifestyle even before the arrival of MTN. His growth strategy included investments in entertainment and the arts and an annual international musical show that brought global icons like Boys 2 men, Shaggy and many others to Ghana.
In his aggressive pursuit and execution of his growth strategy, Farouk, at a point even blocked Vodafone (then operating as Onetouch) access to MTN’s (then operating as Spacefon) gateway. Mobitel was first to launch, had all the market to itself but led passively with characteristics like a sheep. The emergence of Spacefon and. in particular the appointment of Ahmed Farouk, changed the landscape completely and as Spacefon began to make strides, it was clear a “lion” had taken over leadership.
Jim Collins, the best-selling author of “Good to Great” and a globally revered thought leader puts it rightly when he says “greatness is not a function of circumstances. Greatness, it turns out, is largely a matter of conscious choice, and discipline”. Spacefon, Areeba and now MTN did not become a dominant player with over 55% of the market share by chance. Farouk worked at it, leading the team to put up the right building blocks that today has earned them over 55% of the mobile subscription market and over 90% of the mobile money market.
The greatness of Scancom did not happen by accident. It was through deliberate, conscious and strategic efforts and I dare say a disproportionate amount of that success is attributable and traceable to the leadership of Ahmed Farouk.
MTN Holding Significant Market Power
A few days ago, I read in the print media and on some online portals, that the Honourable Minister for Communications has directed the National Communications Authority to enforce the Significant Market Power provisions of the Electronic Communications Act 775, 2008. The enforcement of the relevant provisions including clause 20 sub section 8 of the Act will be interesting to watch in the coming days.
Significant Market Power, as defined in the Act, means where a network operator or service provider, either individually or jointly with other operators or providers, has a position that allows it to behave in a way that is appreciably independent of its competitors and customers. Applying the law, however intended to make lame competitors wake up and stifle the growth of another entity, is however wrong and will create further problems instead of solving it. I acknowledge that MTN indeed has significant market power. In the coming days we will interrogate how that power is being used and whether MTN has indeed abused that power or behaving in a way that threatens customers and competitors.
I don’t think MTN became great overnight. It was through conscious efforts and execution of a strategy within a well understood business environment. It is wrong to punish greatness. How do you punish an athlete who sleeps 4 hours a day, working tirelessly and hard to consistently win a gold medal as his peers sleep 8 hours a day and use the rest of the time partying and committing an hour only for training? There is a growing perception that the Minister’s directive is targeted and intended to punish MTN following MTN’s refusal to respond positively to Kelni GVG’s request for information. We must reward performance and not create an impression that we are allergic to institutions delivering consistent exceptional results over time. The Ministers directive must be effectively managed and implemented with transparency and fairness otherwise, this might backfire.
How do you use policy and regulations to correct an imbalance of MTN’s dominance over Glo, for example, when the latter has no appetite at all to compete? How do you intend to use policy to get a conservative entity like Airtel/Tigo, happy with what they have and consistently posting losses in a high profit sector like this to wake up? How do you get Vodafone, with the best mobile money platform, partly owned by the State, with the largest asset base in the telecommunications sector, the first to land an undersea fiber optic cable in Ghana, and for many years the only gateway to the international world and part of a global entity whose footprints extend beyond Africa, to embrace their greatness and wake up from their slumber to compete just with the implementation of a policy and regulatory directive?
When MTN were planning and working so hard to put up an office space befitting of their status, others were relocating from owned premises into rented offices paying huge sums in rent and renovating the place at amounts that could put up another office complex. When MTN were working on mobilizing resources including loans to expand their networks and acquire the 4G licenses, others who were offered same licenses refused because their mother company indicated they were not interested in the licenses. When others were busy recruiting locals, training and investing in them to be exceptional workers, others were using their resources in recruiting expatriate Ghanaians at huge cost to the company who unfortunately failed to deliver. When events that MTN were title sponsors of lost its relevance, they pulled away only for competition to jump to sponsor these events when it was clear that the events had lost their place in driving customer acquisitions and retentions. Policies and regulatory interventions must aim at making markets more competitive and for entities with appetite for success and desire to be great to compete. However when others are not ready and willing to compete despite the opportunities and an enabling environment to do so, policies to limit the leader from becoming greater might hurt the market and impact on revenue to the state.
MTN does not only hold a significant market power but is also a significant revenue generator for the State. I am of the view that dominance of one entity in the telecommunications space is not healthy for the industry. However, the approach must not be to punish greatness resulting from years of right leadership, choices and deliberate strategy to be the leader. The Minister must reflect on her directive and approach and change her outlook from one intended at breaking up MTN to one aimed to resetting the rules in the telecommunications sector for indigenous operators to thrive and be competitive especially in the data space where reforms are truly needed.
Africa and Ghana welcomes the internet
In sub Saharan Africa a young graduate of the Massachusetts Institute of Technology (MIT) – Ayisi Makatiani, despite an enviable offer from a Silicon Valley entity, left Boston and headed for his home country Kenya to start an internet business incorporating Africa Online, as an African brand, with the primary purpose to empower Africans. That vision, in the early 1990’s, extended beyond Kenya into twelve other African countries including Ghana being the first major internet revolution across sub Saharan Africa.
In Ghana the internet evolution was championed by Prof Quaynor and his young engineers at the NCS, Mawuli Tse the founding CEO at Africa Online Ghana, Leslie Tamakloe of Internet Ghana and Richard Hlomador of KNET.
Later on people like myself, Kweku Boadu, and Estella (now of Google) joined the fight to get internet everywhere in Ghana. We encountered policy makers who were far behind the vision of the creators of the internet. Dial-up was the medium and with Ghana Telecom being the only provider of landlines, our businesses were subjected to unimaginable risk and uncertainty. Policies were anti private sector and not using Ghana Telecom or Westel for international bandwidth services demanded a payment of a by-pass fee, equivalent, and in some cases, even higher than the cost of the international bandwidth itself.
Technology entrepreneurs emerged in the 1990’s with Electromode assembling computers of high quality here in Ghana and K-Net leading the deployment of the first wide area network [WAN] for a bank and for some mining firms operating in very remote sites. ADSL was started by Internet Ghana, an indigenous local technology firm. As the industry began to grow, our indigenous telecom entrepreneurs, who were showing signs of growth and success were frustrated by policy and regulatory bodies and some targeted for closure. Government, investors and banks seemed allergic to success of our own and rather than supporting indigenous operators to grow, policies and regulatory practices favoured foreign entities resulting in a situation where our internet and mobile space is today owned and controlled by foreign multinationals.
In 2005, Internet Ghana introduced unto the Ghanaian market asymmetric digital subscriber line (ADSL) – a technology that uses existing fixed telephone lines to transmit data faster than a traditional dial up technology can deliver.
Internet Ghana flourished and began to take leadership of the internet space. Top Government officials, on seeing the success of Internet Ghana, began to manipulate processes at Ghana Telecom – beginning with delays in installations, removal of copper lines and introduction of same services targeted at already existing clients of Internet Ghana. Ghana Telecom initiated practices that were clearly anti-competitive. Whiles all the frustrating actions were taking place, some key government appointees and officials, behind the scenes, started scheming to acquire Internet Ghana and when the owners refused to sell, a plan was unleashed against the company, resulting in a collapse of the ADSL business of Internet Ghana and the demise of the company.
Internet Ghana sued Ghana Telecom/Vodafone and after 12 years of legal battle, the court, a couple of months ago, ruled in favour of Internet Ghana. Months after the ruling, Ghana Telecom/Vodafone continues to engage in all sort of practices intended to get Internet Ghana to accept a lower amount than awarded by the courts.
Collapse of Ghana’s Indigenous Telecommunications Industry
An analysis of mobile subscriber base, including those registered for Mobile money and data services, indicates that a significant majority of mobile and internet users in the country are millennial and new generation with no real-life experience on how the country and communication was without the mobile phone and internet. I was speaking to a number of millennials the other day and many of them had not heard and or even read about Network Computer Systems or Celltel. To a substantial number of them, their birth and transition into adulthood coincided with mobile services and internet reaching mass market and they, therefore, have no appreciation of the difficulties and the challenges that some visionary Ghanaians went through to get our beloved motherland to be part of the mobile and internet world.
Most people are unaware that the trail blazers of the exceedingly high mobile and internet penetration are indigenous technology entrepreneurs who, three (3) decades ago, defied the risk and uncertainty and invested time, energy and resources into an unknown journey to bring the internet home to us. It was an enterprise that involved sacrifice, loss and deprivation of personal comfort to, not only bring the internet to Ghana, but to also create the necessary awareness using diverse platforms to educate people to embrace the benefits of the internet.
A decade ago, there were about 60 active internet and connectivity service providers in Ghana. A number of them, including Africa Online, had offices in most parts of the country and were heavy in investing new technologies and platforms to serve the people. New frequencies were issued by the NCA for introduction of wireless services in the 1700MHz to 1800MHz frequency bands. I-Burst and infinite wireless connectivity services were introduced to the delight and convenience of Ghanaians. A few years after, new policies were introduced and new licensing introduced in the 2600MHz band for what was branded as Broadband Wireless Access. Four entities were licensed namely – Surfline, Gold Key, Broadband Home and Blu Telecom. A one-time non-refundable license fee of US$6M was paid by each of the operators for the spectrum allocated. Annual regulatory fee was 1% of revenue and annual universal license fee (payable to GIFEC) also pegged at 1%. The license tenor was for ten years and conditioned only for provision of data and non-interconnect voice services.
As a two-time president of the Ghana Internet Service Providers Association, I know, for a fact, that the internet industry employed over 4,000 direct employees a decade ago and outsourced installations and retailing services engaged a little over 1,000 people. Today, the number of people engaged by the internet, connectivity and broadband wireless access service providers, including outsourced personnel, is less than 500; the result of an industry collapsed by unfavourable government policies and regulations over the years.
Today, Ghana’s indigenous industry, that served as the springboard for the telecommunications industry and did all the heavy lifting, is in a distressed state. Most of the promising indigenous service providers have collapsed while others have had to enter into draconian relationships that over time, have diluted their interest to immaterial levels. We currently have about five active internet and connectivity service providers and one very active broadband wireless access provider. Some of them are in huge debt, struggling, grasping for salvation and at the point of capitulation.
The promulgation of the Electronic Communications Act 775, of 2008, was the beginning of the collapse of the indigenous internet, connectivity and broadband access industry. The Act introduced a regime of universal licensing for Mobile Network Operators [MNOs] to provide an end-to-end solution of telecommunications service and full spectrum of voice, data, and connectivity services to all categories of consumers including individuals and corporates. The award of universal licenses to the mobile operators, all of them foreign owned and controlled with access to huge resources from within and outside the country, made it very difficult for indigenous operators with weak profitability, deteriorating cash flows and declining customer and revenue base to attract the needed resources to expand their network and infrastructure to be able to compete.
With the promulgation of Act 775, international bandwidth wholesale providers became retailers of the service and got into direct competition with their customers – the indigenous service providers. Operators with mobile infrastructure across the country, who were providing indigenous service providers with co-location services to enable indigenous service providers reach their customers across the country and for domestic last mile services, became competitors. Domestic backhaul/last mile charges were even priced at rates higher than international bandwidth thus killing the appetite of indigenous operators for around-the-country services.
The NCA also introduced a licensing regime for tower and cell site infrastructure services with licensing fees beyond the reach of indigenous operators; and so entities like Eaton Towers and America Towers entered our land “flowing with milk and honey”, and with extensive tower/cell sites network already in place, they gracefully grabbed the opportunity to milk some of our resources. The MNO’s offloaded the burden of managing their sites to the infrastructure services provides. Suddenly, under the watch of the regulator, co-location, that was costing indigenous operator’s the equivalent of about US$400.00 per month went up five-fold. With MNO’s now in direct competition with ISP’s, the ISP revenue started declining and cash flows became a challenge, resulting in a situation where most of these indigenous operators were unable to meet the high cost of co-location resulting in the gradual and progressive collapse of a previously flourishing sector.
There is no way a rat will survive a wrestling match with a cat. Indigenous internet and connectivity service providers are surely not in a position to compete and win against multinational MNOs without policies and regulations to allow them a turf and space to compete in.
In addition to the above, all landed undersea fiber optic cables offering high speed international bandwidth belonged to, or involved a consortium of the MNO’s and were landed with the primary purpose to aid their business and not to enable the growth of the sector. SAT3, the first fiber-optic to land in Ghana, was an international consortium involving Ghana Telecom/Vodafone and for a long time, was a monopoly with draconian prices. It took the GISPA years of negotiation with government to get prices within reasonable levels. Glo 1 belongs to Glo, an entity whose license for mobile voice services the NCA must revoke for its passive and unwilling nature to compete. MTN’s interest is in the West Africa Submarine Cable (WASC). Main One is perhaps the only undersea fiber-optic cable operator with no affiliation to any of the MNO’s.
A number of other challenges confronted the indigenous service providers including high and unregulated trunk and backhaul charges, high licensing fees and unfavourable license conditions, unregulated retail rates disguised as wholesale rates, lack of access to medium and long term bank financing and high taxes and duties on core equipment and customer premises equipment.
Policy and regulatory steps to restore Ghanaian Indigenous Presence in the Telecommunications space
MTN, Ghana’s leading telecommunications service provider, is the first mobile network operator to be listed on the Ghana Stock Exchange [GSE]. The initial public offering offloaded a third of ownership of MTN to Ghanaians. The IPO, in 2018, offered close to 128,000 individuals and 500 corporate institutions a stake in MTN and fulfilled a policy initiative by His Excellency former President John Dramani Mahama to ensure that, at least a 30% ownership of all mobile network operators by Ghanaians. This policy initiative, however, did not materialise by chance. It was a deliberate policy choice grounded in a regulatory condition for the award of 4G license to the mobile operators. The policy initiative and the growth and appetite of MTN aligned to make the policy a reality. With interest in both Ghana Telecom/Vodaone and Airtel, processes had commenced for the strengthening of the financial performance of these two entities for a possible listing on the stock exchange for ordinary Ghanaians to own a part of the two entities as part of the vision of H.E the former President to ensure local ownership in the telecommunications space. The states interest in the two entities were to be divested to locals through the GSE.
There is the need for urgent changes in policy and regulations to reset the rules for the telecommunications sector and to reorganise the sector to bridge the inequalities in growth opportunities, control the dominance of multinationals over indigenous service providers, and also drive industry, innovation and telecommunications infrastructure offering connectivity access to the unserved and underserved, working towards the aspiration of meeting sustainable development goals 9 (nine) and 10 (ten), set forward by the United Nations General Assembly.
The telecommunications sector must be reorganised and redirected by a significant market power regulatory initiative aimed at correcting an imbalance in market share and dominance in the mobile voice and data space, I am of the view; however, targeting this at MTN’s market leadership is unwise and retrogressive in nature. Policy and regulatory interventions can reset market rules and create an enabling framework for expansion and growth but it cannot redefine organisational desires, ambitions, strategy and competitiveness. It cannot refocus organisational purpose and change culture. While others continue to sleep with pride, MTN continues to work with purpose, pursuing growth and dominance into the foreseeable future.
To relevantly adapt the words of our revered and cherished first President, Dr Kwame Nkrumah, the attempt to protect and use regulatory intervention to strengthen the other MNO’s will be meaningless unless it is linked with the total reorganisation and restructuring of the market rules for indigenous internet and connectivity players to remain relevant and competitive in the sector. Policies and regulations in the near future must aim at indigenous ownership of the 5G licenses and a full participation of that space by Ghanaian majority owned enterprises.
A number of policy and regulatory initiatives are required to restructure the market rules to make indigenous players relevant and balance the inequalities in the market.
Below I share just three of the many initiatives currently on my mind:
- The current structure of the market will, over time, result in the total collapse of the indigenous telecommunications sector. Domestic internet and connectivity service providers cannot compete with multinational MNO’s in pursuit of the same individual and corporate customer. MNO’s must compete in the mobile internet arena and some space created for indigenous service providers to compete in the corporate and institutional arena for data services. Mobile operators must exit the fixed internet and corporate connectivity space and focus on delivering mobile voice and data solutions.
- Indigenous providers of telecommunications services are at a disadvantage attempting to survive in an industry with a value chain fully controlled by MNO’s. All suitable co-location sites are owned by the big infrastructure service providers owing a lot of their success to the MNO’s. Gateways to the internet are owned by MNO’s and fiber optic networks for both International and domestic transmission are also owned by the MNO’s. MNO’s therefore operate as both wholesalers and retailers in the market. As a result, MNO’s and a number of multinationals landing fiber are in control of infrastructure and thus practice discriminatory pricing policies and use their resources as weapons against hopelessly battered local operators.
Section 22 of the ECA of 2008, Act 775, however, places a responsibility on the NCA to ensure that access to international transmission capacity is made available to all service providers in a cost based, transparent, and non-discriminatory manner. Just as the NCA sets interconnect rates to avoid confusion in the mobile space, NCA must, as a matter of urgency, establish rules under that clause to set international transmission rates and ensure indigenous operators have access, and at reasonable rates, to international transmission capacity landed in Ghana by the big multinationals.
- It is time to evaluate the conditions for the award of the Broadband Wireless Access license to the four indigenous players. The license conditions making it impossible for BWA’s to offer interconnect voice services until their services are available in all two hundred and sixty (260) districts and their inability to partner other MNO’s through a channel of wholesale arrangements are stringent and, under the current circumstances, draconian conditions that must be reviewed.
Observing the market, I see Surfline, for example, as the only one of the four that has, under very difficult conditions and environment, soldiered on, trying to live above water. Although they have scaled their business down and closed some of their service centers, the firm still continues to hold high the flag of the BWA providers and despite all the bruises, pains and difficulties, the firm continues to breathe and is still visible with a presence in some of our commercial centers and towns.
Surfline has shown much more commitment than Glo and yet policies and regulatory licensing condition still continue to choke hold the firm, limiting their potential and capacity to compete and grow. The Ministry of Communications and the NCA need to be progressive and creative with policies and regulatory interventions that benefit the Ghanaian, offer indigenous operators a space to breathe and survive and enhance competitiveness of the sector and not use the laws discriminatorily to collapse entities of perceived political opponents. Surfline must be supported through right policies and regulatory interventions to enable the firm survive and grow to its full potential.
Ghana is one beautiful country blessed with talents in the telecommunications and ICT space. Properly nurtured, channelled, resourced and directed within the right environment and with necessary support, our young men and women are capable of driving the Ghanaian economy on the back of ICT. Their creativity in developing various applications and diverse social media platforms can compete any of the applications and social media platforms coming out of Silicon Valley. Everything, however, begins with putting the right policies and regulations in place.
The National Information Technology Agency (NITA) and the Ghana Investment Fund for Electronic Telecommunications (GIFEC) are two institutions with adequate resources to partner indigenous operators in extending telecommunications services to every Ghanaian and in providing the grounding support to our young, creative, hardworking and intelligent ICT minds in driving our economy on the back of a strong locally owned and controlled ICT space.
It is my fervent hope that the Ministry of Communications and the National Communications Authority shall tap into this moment of great need for Ghana’s indigenous telecommunications service providers and create the environment needed to both honour the labour of our indigenous trailblazers and to ensure that these service providers take their rightful place in the sector.
The writer is Ato Sarpong, a Chartered Accountant and Business Executive. He has served as a Deputy Minister of Communications of the Republic of Ghana and is the author of two life-changing books, “Living Beyond Today” and “Appetite for Wealth”.