NCA imposes limitations on Huawei and Ericsson with new licensing regime

The National Communications Authority (NCA) has quietly amended the Electronic Communications Managed Services License (ECMSL) to limit the scope of support Huawei and Ericsson can provide to the mobile network operators (MNOs).

The regulator has subsequently licensed or is licensing new vendors to take up the rest of the job from these two long time partners of the telcos. All this is being done without consultation with the affected vendors nor even the telcos who are now supposed to allow the newly licensed vendor(s) to manage a large part of their networks on day to day basis.

Per the amendment, the Huawei and Ericsson, which installed and have been managing almost all of the network equipment of all the telcos and other operators in the country for years, have been classified as Original Equipment Manufacturers (OEMs), which is now a Category Two License, costing GHS500,000, plus a GHS45,000 application fee and 1% regulatory fees each to NCA and GIFEC (Ghana Investment Fund for Electronic Communications).

The license limits Huawei and Ericsson to importation of equipment on behalf of the telcos and other industry players, installation of same, and the provision of what it described as Level 3 support services – maintenance and upgrade of Hardware and Software release.

Meanwhile, the new vendors christened Non-Original Equipment Manufacturers (Non-OEMs) are now going to be Category One license holders, and offer Levels 1 and 2 support, run Network Operation Center (NOC), Call Center Fibre managed services, Field Level maintenance (radio and transmission), Tower sites and other released services.
The Category One license is going for GHS1 million, plus GHS55,000 application fee and 1% regulatory fees each to NCA and GIFEC.

To put it in layman’s language – it is like you go to Toyota Ghana and get a brand new Toyota Landcruiser. You then make Toyota you first point of call for routine maintenance, which is the smart thing to do. Then out of the blue, an industry regulator jumps in and says, from henceforth, you can no longer go to Toyota for routine maintenance unless the car completely breaks down or you need some spare parts imported. Then the regulator decides for you which mechanic should be doing your routine maintenance.

Techfocus24 has written to NCA to understand the rationale for licensing new vendors to manage equipment and systems installed by the original manufacturers of the equipment. The NCA is yet to respond to the request.
But very reliable sources have revealed that the affected vendors (Huawei and Ericsson) as well as the telcos have raised some critical concerns about the NCA’s move.

No consultation
For starters, concerns have been raised about the manner in which the NCA sprung a surprise on the industry players without consultation. Since the decision is going to affect their investment and possibly the network performance, there should have been some consultation, even if just for the records.

But it appears the NCA’s Board chose to be legalistic rather than collaborative on this matter. Section 25(3) of the National Communications Authority Act, Act 769, only enjoins the NCA Board to notify affected persons/entities of its decision and provide reasons. It does mandate them to consult before the decision.
Impact on Quality of Service
But there are concerns about the implication of this move for consumers regarding its impact on quality of services. The NCA is rushing the industry players to apply for the new licenses within fourteen days of informing them. Meanwhile, the point has been made that such a transition, per international best practices, will require over a year in some cases to be done in a way not to shortchange consumers in the short-term and even degrade the telcos’ networks in the long term.

The point has also been made that the industry players have evolved into multi-technology operators. As a result, the two main vendors, Ericsson and Huawei have also invested heavily to position themselves to meet the aspirations of these operators. So, such a huge limitation of their scope makes nonsense of their investment. Moreover, such a transition will most likely have an adverse impact on the revenues of the telcos themselves.

Judgement debt
Indeed, there have been hints of possible judgment debt lawsuits if the license is imposed in the form it is now.

An industry expert told Techfocus24 that any of the two vendors will be justified in seeking compensation because they invested based on the original licenses they were given, so, if the new license will render their investment a waste, they should be entitled to some compensation.

False expectations
That expert also stated that the NCA and people in government seem to think that there is money to be made in the provision of day to day maintenance of telecoms equipment, but the truth is that it involves a lot of work and resources to execute, particularly the field work.
He is therefore concerned for whoever the new vendors will be and what expectations they have.

Given how the NCA’s assurances of protection made some local companies buy Broadband Wireless Access (BWA) licenses for US$6 million each, only for the NCA to allow the industry monster to wipe them out, any investor, based on this new license, should be measured in their expectations,” he said.
No Local Content Clause
According to him, it is also worrying that the NCA has not said that the new licensing regime is to inject some local content into the industry – i.e. making it exclusive to local investors.

“The way it is now, any multinationals can come from anywhere and enter the space, which is not the best,” he said.
For instance, Techfocus24 gathered that the company being licensed under Category One, belongs to a Nigerian businessman suspected to be a crony of some people in authority.

Weird Novelty
Meanwhile, another expert says this categorisation in managed services license, which excludes OEMs from day to day maintenance of equipment and other critical services is a “weird novelty” that does not happen anyway in the world.

He thinks this kind of categorisation will most likely create room for players in the managed service space to sabotage each other, and in the end the telcos and their customers will suffer for it.

Website Information
It is interesting to note that on the website of the NCA, when you click on Licensing and Authorization and select Other Services (at the bottom of the page), you will find Communications Managed and Support Services License, which is not the amended ECMSL.

NCA is yet to update the information on its own website to reflect the new licensing categories for managed and support services.

Industry players are still standing by to understand the NCA’s wisdom in amending the said license and doing those categorisations.

Source: Samuel Dowuona

A multiple award-winning telecoms and technology industry journalist, and also the CEO of www.techfocus24.com. He can be reached at dowuonasamuel24@gmail.com