1 March 2019

Morocco: The Long Plod of Local Loop Unbundling or a Short, Sharp Dose of Private Sector Innovation? the Lessons From Morocco's Glacial Progress

analysis

London — With a few exceptions, Sub-Saharan Africa's broadband markets are stuck. No-one currently has the capital or the focus to create a low-cost, high capacity mass market broadband offer. Might local loop unbundling might be one answer? Russell Southwood looks at Morocco's experience and argues for a short, sharp dose of more private sector innovation.

Morocco's Law 12.121 amending and supplementing Law No. 24.96 on Post and Telecommunications has just been published in the country's Official Bulletin several months after it had been passed in Parliament. This might seem a rather dry subject for your weekly News Update but because it's about infrastructure sharing, it's very much a live topic and illustrates some of the difficulties in imposing infrastructure sharing (in this instance, the local loop) on a powerful incumbent.

Law 24.96 first obliged operators to share infrastructure since 2007 but has been the subject of a long rearguard action by Maroc Telecom that has resisted it at every turn. Their resistance has been helped by what regulator ANRT admits was the imprecise text of the earlier law. The text for the revised law was first tabled in Parliament in March 2014 and was not adopted until 24 July 2018, over four years later.

Morocco has a situation that many other African countries would recognize. Maroc Telecom (now owned by Etisalat, formerly Vivendi) has dominance in fibre infrastructure that makes it almost financially impossible for any other competitor to catch up. Maroc Telecom made it difficult for other operators to use its infrastructure to roll out their own retail broadband: it used the classic tactics of delay and high fees for other operators.

Its resistance earned it a warning from the regulator ANRT in 2016 and one of the other players too it to court. Third largest operator Inwi (owned by the Moroccan Royal Family, Zain and Kuwaiti Investment Authority's Al Ajial Investments) became so frustrated that it took legal action against Maroc Telecom. Its lawyer, Abdelatif Wahebi, said the suit had been filed because "Maroc Telecom holds 60 percent of the market and the law says companies should hold no more than 40 percent".

According to Abdelaziz Tib, Director of Regulation at ANRT: "(the law) strengthens the existing mechanism in the old text and makes it more precise, and it requires operators to publish an offer for the technical and pricing (aspects of) sharing of their infrastructures and the establishment of a database of infrastructure for which they are responsible."

Each operator will now have to publish a reference offer at specified intervals covering these topics. However, ANRT now has to publish detailed texts that will inevitably be subject to further delay.

Sub-Saharan Africa has been slow to establish reasonably priced, high-capacity mass-market fixed wireless, fibre or copper broadband. It's a matter of fact that the market is dominated by mobile access but there are many thousands of households who have the capacity to pay for high-capacity broadband access.

Indeed outside of Mauritius, Kenya and South Africa, FTTH roll-out has been incredibly slow despite the fact that these are the potential "power users" in the market. This is an opportunity to leapfrog poorly maintained copper networks and start to supply a 21st century service.

As the Morocco story above demonstrates, it is hard to impose "local loop" sharing on a powerful incumbent. It might be better for regulators to encourage wider competition to incumbents through new business models.

What TooMuchWifi is doing in South Africa and POA! Internet is doing in Kenya points in the direction of how this might be achieved. The latter is serving household customers an average of 35GB monthly for US$15 in low income areas. Probably neither of these business models is yet fully optimized but they demonstrate a way to get to the mass market.

CSquared's proposal to offer wholesale FTTH is again another can-opener. It can use its metro fibre to speed up the development of retail FTTH. Without these kinds of innovative ideas coming out of the private sector, regulators might in the long run be forced to go through the long, plodding process of local loop unbundling.

Morocco

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