In adherence to the Telecommunications Competition Directive No. 798/2021, the Ethiopian Communications Authority (ECA) has conducted a comprehensive market review study of the Ethiopian Telecommunication sector. This study, aligned with legal and regulatory frameworks, aims to evaluate the competitiveness of various markets within the mobile telecommunications value chain and assess the need for ex ante regulation.
The objectives of the study include identifying relevant markets susceptible to regulation, examining competition dynamics, and proposing pro-competitive remedies where necessary. The approach mirrors international best practices and key articles of the Telecommunications Competition Directive.
Ethio Telecom and Safaricom Telecommunications Ethiopia PLC actively participated in providing crucial input for the study, sharing essential data and insights. Stakeholder consultations with these operators further enriched the study by gathering feedback and ensuring diverse perspectives were considered, enhancing its validity and relevance.
The study identified several markets susceptible to ex ante regulation, including wholesale transmission markets and wholesale access to cell site passive infrastructure markets. Ethio Telecom was designated as having Significant Market Power (SMP) in various wholesale markets, prompting the proposal of remedies such as price controls, mandatory agreements filing, and non-discrimination obligations.
In 2022, ECA mediated an interconnection agreement between Ethio Telecom and Safaricom Telecommunications Ethiopia PLC, setting termination rates subject to revision based on a cost study. The objective behind implementing cost-based rates is to establish a level playing field among operators, promoting fair competition and benefiting consumers with competitive prices and choices.
The decision to utilize a Top-Down Fully Allocated Cost (TD-FAC) model for the cost study reflects ECA’s commitment to fairness and non-discrimination, as mandated by the Telecommunications Lawful Tariff Directive. Ethio Telecom and Safaricom were actively engaged in providing data for the model’s development, ensuring accuracy and reliability.
Based on the costing study, ECA has determined Mobile and Fixed Termination Rates (Interconnection Rates) for a period of five years, aiming to gradually reduce rates to foster competition. These rates, outlined in Table 1 of the determination, signify a commitment to promoting a competitive telecommunications market in Ethiopia.
The implementation of cost-based termination rates represents a significant step towards fostering fair competition, preventing anti-competitive behavior, and ensuring consumers benefit from a vibrant and innovative telecommunications sector. ECA remains dedicated to upholding regulatory standards that promote economic growth and consumer welfare in Ethiopia’s telecommunications industry.
