Market Reform and Regulation
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United Nations Conference on Trade and Development (UNCTAD 2007, p. 15): International call costs in Zambia are among the highest in the region, not all connections (incoming and outgoing) are successful and calls are often of poor quality. This has been frequently cited by investors as contributing to the high cost of doing business in the country. All international calls are currently routed through an international gateway operated by ZAMTEL. However, this gateway is unable to provide for the required traffic because of a lack of investment in equipment and the fact that ZAMTEL has no competition which could provide the incentive to do so.
Meanwhile, sudden changes to license fees increased market risk and uncertainty, creating additional barriers to entry. Many cases are seen in which governments or regulators have introduced significant changes to the charges imposed on operators for their licenses. In 2007, for example, the government of Benin increased license fees and imposed the new rates retroactively, ordering operators to pay fees of about $50 million in addition to the fees originally agreed upon at the time of license award (Global Insight 2007). As table 3.1 shows, there has been an overall move toward market liberalization throughout the telecommunications market in Africa, but countries have moved at different speeds, and competition has been introduced into some market segments faster than in others. Mobile markets were liberalized early on, but fixed-line and international gateways opened more gradually. Internet services are a mixed bag. Most countries introduced competition in the downstream parts of this market, allowing Internet service providers (ISPs) to build some of their own wireless infrastructure but also requiring them to use the incumbent operator’s fixed-line network. In countries where ISPs have always been allowed to provide data services such as Internet, they have often been restricted from providing voice services via the Voice over Internet Protocol (VoIP) (appendix table A2.2). For a full picture of the liberalization process in Africa, it is necessary to look at each of the major market segments separately.
Competition in Fixed-Line Markets The fixed-line market is one of the least competitive in the region’s ICT sector.4 This is partly because of the exclusivity periods granted to incumbent operators, but even where such periods have expired or never existed, effective competition has not always developed. Among those