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ISP's are already constantly changing their business models – GISPA
Posted on: 30-Jul-2012         Source: myjoyonline.com
The Ghana Internet Service Providers Association, GISPA has challenged assertions that they are losing out to competition from telecoms operators in the provision of internet service.

The Internet Service Providers, ISPs are said to be no more competitive because of their use of expensive and obsolete technology in providing internet service.

The Director of Regulatory Administration at the National Communications Authority, Joshua Peprah has in this light urged them to change their business model to stay in competition.

But the President of the Ghana Internet Service Providers Association, GISPA, Ernest Brown tells JOY BUSINESS, they are always responding to changing market trends.
“You cannot stay in Business without modifying or adjusting the business models they use. So that is always ongoing with the different ISP’s. The come out with different plan and packages to suit customer needs and we do it even much better than some of these big telecom operators. But the point is that we‘re working together because it’s interesting to know that all these big operators are even members of the ISP association” he said.

ISP’s have also been urged to integrate their services into that of Telco’s to improve internet penetration in the country. But Mr. Brown is again argues both parties are already working together to achieve the ultimate goal.

“We all have businesses we’re together with the telco’s in the provision of Internet service. And when you even talk to some of these ISP’s, they lament the kind of services they get from the operators as extremely poor. So we do not see any kind of excellent services the telcos are providing to warrant this integration” he explained further.

There are about 150 licenced ISPs in Ghana with only about 30 currently in operation.

Meanwhile, GISPA has issued a press release in response to reports that Telcos are chasing ISP's out of business. Below is the full statement.

The BF&T of July 23rd carries on it’s frontpage a lead story “Telcos chase ISPs out of business” which quotes extensively Mr. Joshua Peprah, Director of Regulatory Administration of the NCA. Mr. Kyle Whitehell, CEO of Vodafone is also quote in a similar story titled “Vodafone CEO says ISPs are no more competitive, and NCA agrees” on myjoyonline.com of the same day. The Ghana ISP Association (GISPA) presents below the quotes, responses and commentary for the public’s consideration. GISPA responses are in italics.

“ISPs need to look at their business model. It is not the same. Business models change and these people (ISPs) must change accordingly,” the Directly of Regulatory Administration, Joshua Peprah, told the B&FT in an interview in Accra.”

GISPA Response - Most of our members have changed their business models to keep with the changing industry trends but have received very little response from the NCA in the form of creating a level playing field.

For example, there are three Classes of Service (CoS) namely Voice, Data and Video. Out of the three CoS, voice is the easiest to implement and the most lucrative. Hence for the nation to empower indigenous business and promote local content, the ISPs must not be restricted by type of services.

The condition however should be to provide all three Classes of Services using IP platform. This is how Skype, Net – to – Phone etc, in the western world came into existence. Again as said above developing quality Data Network is much difficult than Voice and the ISPs have sustained their businesses albeit very slow growth because of lack of capital in the country. So the least people like Mr. Peprah could do to help the plight of the local investor in the industry is to advocate a policy of zero restriction on Class of Service. This would have made the ISPs more liquid to plow back into network coverage build-out.

In the past, Ghana Telecom , now Vodafone Ghana abused their incumbent estate by way of their monopoly status on the SAT3 submarine cable and now the National Communication Backbone Company (NCBC now Vodafone Wholesale) is behaving in a somewhat similar fashion. These practices have held back the ISP industry through price arbitrage and refusal to sell higher bandwidth on a competitive basis. Despite several efforts by GISPA to get the regulator to intervene and rectify the situation, the NCA has turned a blind eye, allowing the local ISP to suffer unnecessarily resulting in stunted growth. We however put on record that the Ministry of Communications intervened in the processes at some point resulting in reduction of SAT3 prices.

“The ISPs need to integrate themselves into the telecom network operators and offer services to them because now we are moving from voice to data. They should find a way to get an agreement with the network operators so that they can enhance the data business side of the telcos, since they have the spectrum. If an ISP wants to buy its own 2.6 frequency spectrum for about US$5million that is fine,” he said.

GISPA Response – Whiles market consolidation is inevitable in such a “congested” market, Mr. Peprah’s response begs the question of the real intent of the NCA and is creating bias in the market in favor of the Mobile Operators. Mr Peprah’s view kicks against the government’s agenda of empowering indigenous private businesses and their active participation in a competitive market place. There seems to be a dis-connect between the government’s policy of enhancing local content participation and the rhetoric of what we have just heard from a senior member of the NCA management team.

Mr. Peprah cited agitations in the early years of de-regulation in the telecom sector against the posture of the regulator concerning ISP business in the country. He recounted that: “When mobile phones first came, there was an association called the Pay-phone Association which advocated that the NCA stop licensing mobile phone network operators as patronage to pay-phones dwindled. “So pay-phones kept dying and the Association disappeared. And the result is that access to communication services, especially mobile phones, has increased exponentially.

GISPA Response - Our focus is a level playing in which if the Mobile Operators are allowed to do data/Internet then the ISPs must be allowed to do voice – that’s simple. GISPA’s mandate to protect the interest of the local ISP industry is in line with the government’s economic development agenda and policy consideration for indigenous participation.

ISPs pioneered the Internet in Ghana and while it is sad to see the demise of some of these local businesses, collectively the ISPs own a bigger share of the corporate Internet market and provide superior services, responding to the needs of the corporate users.

The Vodafone CEO in a frustrated effort to capture market share in the corporate internet/Data space has been very misguided, but we will forgive him.

“The regulator is not here to protect a particular type of business; be it indigenous or foreign. We just want quality and efficient service to the people.

GISPA Response - GISPA has helped shape government’s policy, established the Ghana Internet eXchange (GIX) which makes local Internet traffic stay in the country resulting in better browsing experience and lowering of Internet cost to customers. ISPs employ competent Ghanaians and other professionals, pay taxes and reinvest their profits back in the local economy.

We fail to see why the NCA would not be willing to create a level playing field for such an industry if she thinks there is no obligation to protect such a class. In the scheme of things, the ISPs provide better quality and efficient service to their customers on the whole than Mobile Operators -- evidence is in the recent sanctions imposed on the Mobile Operators by the NCA for various quality of service infractions.

Vodafone Ghana CEO Kyle Whitehill says Internet service providers (ISPs) in Ghana are no more competitive because they use expensive and obsolete technology to provide service. But the Vodafone Ghana boss said the accusation of the ISPs has no legs, because “we represent less than 10% of the cost of ISPs and 90% of their cost comes from the fact that they use expensive and old fashioned microwave technology, which is four times more expensive than anything else in the marketplace.”

GISPA Response – It is unfortunate that Vodafone is peddling falsehood in a desperate attempt to enter the corporate Internet/data market. GISPA members are championing state of the art technology. Some of our members are operating WiMAX networks, which delivers superior quality of data compared to 3G and 3.5G employed by the Mobile Operators globally.

On average, our members indicate their representation on cost is between 30 to 40% and not 10% as stated above. Secondly ISPs pay taxes on their Customer Premise Equipment (CPE) whiles Mobile Operators pay no taxes on the import of mobile handsets. Thirdly the Mobile Operators have other revenue streams that counter balances their cost of operations whiles the ISPs are limited.

“For instance we have 27 commercial banks and four state-owned banks in Ghana and all of them need fibre and a robust infrastructure to be managing our moneys effectively,” he said.

He said Vodafone is strong in that area because it has invested hundreds of millions of dollars into the kind of infrastructure that the corporate bodies want, but the ISPs have not made that kind of investment and are struggling along with expensive and old fashioned infrastructure.

GISPA Response – 80% of these banks are currently serviced by members of GISPA so it comes across to us that Vodafone is trying the usual trick of turning the facts on its head to create unnecessary disruptions in the market for customer acquisition.

Some of our members have also invested in fiber infrastructure but the customer cares less about what technology you are using, they just want to get return for their money and superior customer service which ISPs are best placed to provide due to several years of experience and our pioneering role in the Internet and data market.

ISPs would not figure out the voice market overnight so in the same vein the Mobile Operators are going through the learning curve and we advise decorum and not this sort of not to be taken serious misrepresentation of facts and cutting your nose to spite your face posture.

The Ghana Internet Services Providers Association (GISPA, www.gispa.org.gh), is a professional, non-profit trade association representing the interests of local ISPs and other Internet providers. The strength of the Association rests on its ability to be truly representative of the Ghanaian Internet industry as a whole; currently has twenty (20) members.