Fostering Affordability of ICT Access in Developing Countries Through Infrastructure Sharing: The Devil Is in the Detail

Fostering Affordability of ICT Access in Developing Countries Through Infrastructure Sharing: The Devil Is in the Detail

Ngonidzashe Zanamwe (University of Zimbabwe, Zimbabwe), Benard Mapako (University of Zimbabwe, Zimbabwe), Taurai Rupere (University of Zimbabwe, Zimbabwe) and Benny M. Nyambo (University of Zimbabwe, Zimbabwe)
DOI: 10.4018/978-1-5225-3179-1.ch004

Abstract

Infrastructure sharing has been viewed as a plausible route to affordable ICT access in the wake of duplication of ICT infrastructure in developing countries. In spite of this belief in its effectiveness, getting ICT operators to share infrastructure can be inhibited by several challenges relating to regulatory approach, competition between players, and lack of consensus between regulators and business. This chapter uses evidence from Zimbabwe to assess how infrastructure sharing can be implemented in developing countries where coverage competition is yet to give way to service provision-based competition in the wake of disproportionate investment by network operators. It suggests that instead of push factors alone, infrastructure can best be shared when business' commercial interests and regulators' quest for affordable universal services coincide to form a win-win situation built on both push and pull factors.
Chapter Preview
Top

Introduction

Infrastructure sharing has been seen as a way of improving the affordability of ICT access, enabling faster rollout and reducing environmental degradation (Hatsu, Mabeifam and Paitoo, 2016; Namisiko, Sakwa, and Waweru, 2015; Mahendra, 2013; ICASA, 2015). In developing countries, it is considered as a way of ensuring Return on Investment (ROI) on ICT infrastructure in sparsely populated rural areas (ICASA, 2015). Regulatory bodies and consumer pressure groups applaud it for fostering universal access and affordable access cost. In spite of these advantages, it is inhibited by the competitive strategies often employed by Mobile Network Operators (MNOs) that aim quick ROI.

This situation is worsened by the nature of the mobile ICT sector, which includes high capital intensity and high operating cost. While both Capital Expenditure (CAPEX) and Operating Capital Expenditure (OPEX) are high, the tariffs tend to keep reducing as hardware and software technologies improve. This has also happened against a background of tightening ICT regulation that has seen the introduction of stricter cost models. It is also happening against a background of fast depreciation of capital infrastructure as technologies get phased out after short lifespan and newer ones get introduced due to rapid changes in technological innovations (Mahendra, 2013). This motivates MNO to seek quick ROI by beating competitors who may be lagging behind in infrastructure investment.

The need to manage the conflict of interest between regulatory bodies’ quest for affordable and universal access and the MNOs’ quest for profit and ROI has resulted in the use of several levels and models of infrastructure models. These levels can be broadly classified as passive, active and backhaul models of infrastructure sharing (KPMG, 2009) and they can be implemented using mandatory or optional and voluntary approaches. These challenges are worse when trying to enforce infrastructure sharing in an asymmetrical network among existing MNOs who view network coverage as a competitive urge as opposed to situations where a state-owned network is to be shared. Asymmetric networks are dominated by one network that owns disproportionally more infrastructure than others (Garcia & Kelly, 2016), as is the case in Zimbabwe.

While infrastructure sharing is seen as a way of reducing CAPEX, OPEX and hence telecommunication tariffs and concomitant environmental degradation emanating from infrastructure duplication, Postal and Regulatory Authority (POTRAZ) is not finding it easy to get stakeholder buy-in. This in spite of the fact that the Telecommunications Act of 2001 empowers them as the regulatory board to direct and compel licensees on issues of national interest. Cognizant of the negative effect of high intensity of regulation on infrastructure investment, regulators tend to be cautious. For instance, POTRAZ took some commendable best practice steps to establish the appropriate way of introducing mandatory infrastructure sharing in Zimbabwe. These include a consultative survey, followed by consultation paper and a stakeholder workshop. During this process, the biggest MNO and Internet Access Provider (IAP) Econet Wireless and Liquid Telecoms, pulled out of the process because it threatened their interests.

The two ICT giants are jointly owned by the self-exiled Strive Masiiwa who according to Velamuri (2003) fought a four-year legal battle against the state for it to acquire a mobile network license. Econet Wireless Zimbabwe is the only privately owned MNO after the acquisition of Telecel in 2016 by the state. It is the highest tax-payer (Takavarsha & Makumbe, 2012) and it owns about 53% of the base stations in Zimbabwe (POTRAZ, 2016).

Complete Chapter List

Search this Book:
Reset