International Gateway Monopolies Stifle Growth & Damage Competitiveness
01 February 2007
1st February 2007 - London: In more than 70 countries there is a monopoly supplier of international gateway services, connecting domestic callers to international numbers, despite the long standing and clear economic and social benefits arising from competition in this key sector, according to a study by the GSM Association, the global trade association for mobile phone operators.
The introduction of competition into the international gateways market can reduce call prices by up to 90%[1] and double call volumes, according to the study, entitled "Gateway Liberalisation: Stimulating Economic Growth". Kenyan mobile operator Safaricom, for example, received an international gateways license in 2006 and was able to cut international call prices by 70%. Similarly, the price of international calls from Nigeria has fallen by more than 90% since liberalisation.
Consumers enjoy more reliable and cheaper services after the introduction of competition, according to the study, and the economy benefits from increased investment, job creation and export-led growth. By contrast, monopolies hold markets back, the study found. In Bangladesh, for example, where an international gateway monopoly is maintained, telecoms investment as a percentage of gross domestic product (GDP) is 70% lower and call prices are 2 to 3 times higher than the average for developing countries.[2] For Bangladesh-based businesses, competing in the global market, the cost of communicating is substantially higher, putting them at a competitive disadvantage.
"Since countries first began to introduce competition into the international gateways market more than 20 years ago, the trend has gathered pace and the benefits to consumers, business and governments in an increasingly global economy, are now beyond doubt," said Tom Phillips, Chief Government & Regulatory Affairs Officer. "But this study shows that as many as 70 countries have yet to recognize the importance of competition in this vital gateway to international markets. In a mobile-centric world, and particularly in developing economies, monopolies throttle development and add significant costs," added Phillips.
The study found that the old arguments used to sustain international gateway monopolies are simply no longer valid because, whether competition is outlawed or not, new technologies, such as VoIP[3] and VSATs[4], can bypass the monopoly, and can account for up to 60% of international call volumes, even though use of such technologies is often illegal. "The incumbent international gateway monopoly business model is past its sell-by date; governments should liberalise this market immediately and all stakeholders will benefit," concluded Mr. Phillips.
Download - Gateway Liberalisation- Executive Summary
Notes
[1] Call prices fell by over 90% in Nigeria when the gateway was liberalised
[2] Average calculated from the case study sample: Kenya, Malta, Morocco, Nigeria, Sri Lanka, Indonesia, Egypt, Bangladesh
[3] Voice over Internet Protocol, a category of hardware and software that enables people to use the Internet as the transmission medium for telephone calls
[4] Very Small Aperture Terminal, an earthbound station used in satellite communications of data, voice and video signals, excluding broadcast television.
Notes to Editors
Despite the benefits of competition, examples still exist of countries recreating monopolies. For example, four African countries, Benin, Central African Republic, Sierra Leone and Zimbabwe are currently reinstating international gateway monopolies in a bid to aid the incumbent fixed-line service provider.
About the GSM Association:
The GSM Association (GSMA) is the global trade association representing more than 700 GSM mobile phone operators across 218 countries of the world. In addition, more than 200 manufacturers and suppliers support the Association's initiatives as key partners
The primary goals of the GSMA are to ensure mobile phones and wireless services work globally and are easily accessible, enhancing their value to individual customers and national economies, while creating new business opportunities for operators and their suppliers. The Association's members serve more than 2 billion customers - 82% of the world's mobile phone users.
For further information contact:
Mark Smith
GSM Association
Email:press@gsm.org
David Pringle
GSM Association
Email:press@gsm.org
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