An investigation has concluded that leading wholesale internet provider, Botswana Telecommunications Corporation Limited (BTC), acted in breach of the Botswana Communications Regulatory Authority (BOCRA) regulations by failing to avail wholesale services to other licensed operators using the same prices, processes and terms. BTCL has also been found to have been offering services only to its business and refusing to extend the same on a wholesale basis to other licensed operators. Staff Writers KEABETSWE NEWEL and BABOLOKI MEEKWANE report
According to a judgement issued by BOCRA on 13 August 2021, a company named Inq. Digital (Pty) Ltd, formerly known as Virtual Business Network Services (Pty) Ltd, had applied to become a retailer of the Very High-Speed Digital Subscriber Line (VDSL), which is far superior to Asymmetric Digital Subscriber Line (ADSL) in terms of data transmission rates, and BTCL refused to supply the VDSL services to Inq. Digital.
VDSL is the improved fixed broadband solution which has fibre to the cabinet access network and uses copper wire to deliver data service to the end customer. VDSL is therefore the improved version of ADSL and allows the network to deliver high speed data rates of up 50 Mbps.
BTCL is said to have refused to offer VDSL to Inq. Digital, allegging that it has taken a strategic decision not to offer VDSL as a wholesale service on the basis that the market is fully liberalised and Inq. Digital can use other methods such as radio, copper, and fibre ethernet-over-copper. Furthermore, BTCL argued that Botswana Fibre Network (BoFiNet), which is also a wholesale provider, could sell to Inq. Digital fibre and allow them to establish their own innovative VDSL network.
In essence, BTCL only offers ADSL at wholesale and has reserved the superior VDSL for its retail customers. This decision, according to the BSEL-listed telco giant, is a strategic business decision, hence its refusal to offer the service to Inq. Digital. This is despite the fact that BTCL underwent trials for the VDSL product to test it in the market and even sought approval from BOCRA, according to affidavits filed by BTCL.
Further, Inq. Digital alleges that the superior VDSL is offered to BTCL retail clients at a very cheap price or heavily discounted rates, compared to the prices offered at wholesale. Specifically, Inq. Digital alleges that BTCL charges 34 percent more for inferior ADSL wholesale services than the superior VDSL retail services.
While denying this allegation, BTCL has in a case filed at BOCRA, accepted that one of its retail customers enjoys a rather high discount for a high-speed internet service it calls corporate internet. The discount, which by BTCL’s own admission, is below the cost price, was offered to retain the customer from moving its business to the competition, according to BTCL.
By dragging BTCL to the Authority, Inq. Digital wanted BOCRA to establish whether BTCL, in refusing to offer VDSL at wholesale has violated any of its licence conditions, regulatory directives or any provisions of the Communications Regulatotory Authority (CRA) Act, especially Clause 17 of the licence as read with the Botswana Telecommunications Authority Guidelines on Tariffs for Telecommunications Services of February 2011.
Clause 17 of the parties’ Services and Applications licences states: “The Licensee shall offer to provide to Other Operators on a fair wholesale basis the services and applications that they may require from the Licensee in order to provide any retail service and application in competition with a retail service and applications offered by the Licensee.”
It further states: “If agreement on wholesale terms cannot be reached between the Licensee and any Other Operator who wishes to offer a retail service in competition to one that is offered by the Licensee within 30 days of the initial request, either party to the proposed agreement may refer the dispute to the Authority, or the Authority may require the dispute to be referred to it by issuing a notice to that effect to the parties.
“If a dispute is referred to, or called in by the Authority, the Authority will issue a determination in respect of the terms of the arrangement in dispute taking into account all relevant facts and circumstances, and also relevant international benchmarks, and may provide for all necessary matters, including but not limited to the timings, costs, pricing and billing, ordering, testing and management and dispute resolution, as it deems fit. The Licensee shall be bound by the determination.”
The clause further states that the Licensee shall not show undue preference to, or exercise unfair discrimination against any User, or Other Operator regarding the provision of any of the service and applications or regarding interconnection or access. “The Licensee will be deemed to be in breach of this condition if it favours any business carried on by the Licensee, or by an associated company or any Other Operator, so as to place any Other Operator competing with such a business at an unfair disadvantage in relation to the provisions of a competitive activity.”
BOCRA operates with a licensing framework and other regulatory guidance documents, including the Guidelines on Tariffs for Telecommunication Services of February 2011 (“Guidelines on Tariffs”) and the Regulatory Directive No. 1 of 2017. According to the Authority, BTCL by its own admission, has extended a different and superior service to its retail customers only to the exclusion of other retail customers serviced by the complainant and other internet service providers. According to BOCRA, BTCL has taken a decision, which it explained merely as a strategic business decision, to limit the kind of services it offers at wholesale, a decision that is clear discrimination and favours BTCL business against that of Inq. Digital.
The ruling says in response to questions from the Authority at a fact-finding meeting, BTCL admitted that there are no technical challenges or impossibilities in offering the same service to the Inq. Digital’s retail customers that it offers to its own customers. BOCRA holds the view that any serious and intended decision, especially affecting approved services that ultimately affect the market, are followed with a written communication with adherence to proper regulatory processes and requirements. The Authority believes that BTCL should have sought such approvals before deciding to stop provision of VDSL at wholesale level.
BOCRA believes BTCL’s response that a presentation of its strategic decision was made is unconvincing, particularly as the telco giant has been in the business long enough to fully appreciate that termination of any service that has been approved by the regulator and in fact taken to consumers requires regulatory engagement prior to cessation. This is done because the Authority needs to appreciate the reasons for and impact of discontinuing any service on the market and consumers. The VDSL offered by BTCL is an improved version of the ADSL, which BOCRA issued Directive No 1 of 2017 on stating that it should be provided to other service providers as a wholesale service on the same terms, processes and prices.
The rationale behind this directive is that BTCL is the only one currently owning the copper cable to the customer as an Incumbent Fixed Line Operator. Therefore, if BTCL is desirous of stopping the provision of wholesale services, it should seek the necessary regulatory intervention, according to BOCRA’s ruling.
With regard to pricing, BOCRA acknowledges that businesses sometimes offer volume-based discounts and other incentives to their customers. However, it says, retail prices and any discounts should never be lower than the actual costs to the business, otherwise such a practice would undercut the market.
BOCRA says the prices offered by BTCL to one or a few of its customers to the exclusion of others and without a transparent discount scheme are not compliant with Directive No. 1 of 2017 or the Tariff Guidelines.
“The decision to offer prices below the cost of service, thereby undercutting the market, is also contrary to the Directive and the Tariff Guidelines designed for regulation of the sector to ensure a level playing field,” reads the BOCRA ruling.
Consequently, BTCL was found to have acted in contravention of its own licence condition, specifically Clause 17.1 as read with Clause 17.3 and the Tariff Guidelines by refusing to offer wholesale services to other licensed operators, choosing to offer the service at retail only to its business, especially as wholesale high speed fixed broadband service and tarriffs had been approved by the regulator.
Further, BTCL was found to have acted in breach of the Regulatory Directive 1 of 2017 by failing to avail wholesale services to other licensed operators using the same prices, processes and terms. It also acted contrary to the Authority’s Tariff Guidelines and the Regulatory Directive No. 1 of 2017 by discriminately offering services only to its business and refusing to avail same on a wholesale basis to other licensed operators, discriminately offering discount services to one (or a select few) of its customers and not availing such discount (whether a scheme or not) to other customers and thus failing to be transparent; and offering services to one of its customers at a cost below the cost price.
BOCRA has since directed BTCL to ensure compliance with its own licence condition and offer Inq. Digital at wholesale services using copper (including the improved version of the ADSL) in accordance with the Wholesale Reference Offer and the Regulatory Directive within a period of 30 days from the ruling.
With regards to contravention of the Regulatory Directive and Tariff Guidelines, the Authority issued a stern warning for BTCL to desist, with immediate effect, from this breach and to ensure that remedial steps are taken within 30 working days from receipt of this ruling.
Should BTCL fail to remedy this contravention within the stipulated time, the BOCRA will, within a period of 14 working days from date of such failure, impose a civil penalty as empowered by the CRA Act and calculated in accordance with the BOCRA Penalty Framework of 2020.