The Independent Consumer and Competition Commission (ICCC) wishes to respond to the article titled “Why Telikom raised charges: Duma” which appeared in The National newspaper (30 August, p.5).
While responding to questions by East Sepik Governor Hon. Alan Bird on the recent hike in mobile phone services fees and charges by Telikom, Public Enterprise and State Investment Minister Hon. William Duma unfortunately made several incorrect and misleading statements about the function of the ICCC.
Hon. Minister Duma stated that;
- “Internet and telephone charges and prices are fixed by the Independent Competition Consumer Commission.”
- a “170 per cent increase” in mobile phone service fees charged by Telikom “remains to be clarified by ICCC”;
- “There are certain increases that have been approved by ICCC”; and
- that necessary increases “have been approved by ICCC to enable our companies to provide decent dividends for our people.”
ICCC Commissioner and Chief Executive Officer, Paulus Ain said that the statements made by Minister Duma, and reported by the media, is indeed inaccurate and misleading. It only further increases the divide and public misconception on the role of the ICCC in the Information, Communications and Technology (ICT) Industry.
Mr. Ain said under the National Information Communications Technology Act 2010, NICTA is the ICT regulator and it is entirely responsible for setting the tariff/rates, attending to consumer complaints, issuing licences, setting interconnection rates and monitoring their service standards of all its licences and all other players in the ICT industry.
It is imperative to note that prior to 2010, the ICCC was the economic regulator of the telecommunication industry and that it was responsible for setting the tariff/prices of telecommunication services and the inter-connection rates between the competing telecommunication service providers. During that time, the Papua New Guinea Telecommunication and Radio-communication Technical Authority (PANGTEL) was the technical regulator of the industry responsible for, amongst other things, issuance of spectrum licenses and bandwidths to industry participants.
However, n 2010, the Government repelled the Telecommunications Act and replaced it with the NICTA Act 2010 and it established a new Authority called the National Information and Communications Technology Authority (NICTA). The new Authority or NICTA took over the role of the former PANGTEL as the technical regulator and the economic regulatory function of the ICCC that were previously performed by the ICCC and PNAGTEL.
Mr. Ain said, since 2010, NICTA is the legislated or mandated Authority responsible for both the economic and technical regulation for the entire ICT industry. Amongst other economic regulatory functions of the ICCC that has been transferred to NICTA includes; setting of the prices or rates of mobile and fixed line telephony services, wholesale internet bandwidth rates, interconnection rates for mobile and fixed line telephony, monitoring of the service standards and issuance of operator licences.
Mr. Ain said prior to 2010, the ICCC has many success stories as the economic regulatory of the telecommunications industry, one that stands out today is the successful issuance of mobile operator’s licence to Digicel PNG Limited in 2007.
Adding to this Commissioner Ain said, “It is therefore important for all concerned stakeholders to understand that NICTA is the telecommunication industry regulator by law and is directly responsible for regulating the prices of telecommunication services and service standards of the operators in that industry. It [NICTA] is the sector specific regulator of the telecommunication industry and is duty bound to perform its mandated role under its legislation.”
“Users of telecommunication services also need to know that NICTA has a consumer affairs branch that deals with Information Communication Technology (ICT) service queries. This facility can be utilized by aggrieved consumers.” Commissioner Ain said.
Consistent with Government policy, the ICCC, as an implementation agency, only regulates the prices of Electricity, Water, Fuel, Essential Port Services, Motor Vehicles 3rd Party Insurance premiums, Postal Services, PMV and Taxi Fares. It also monitors the factory gate prices of Rice, Flour and Sugar but does not set the prices of these goods. Commissioner Ain added that prices of all other goods and services in the PNG economy are determined by the market forces of demand and supply or by industry/sector specific regulators where these are subject to regulations; and not the ICCC. All stakeholders need to be informed and educated about these facts. Unfortunately, Minister Duma has miss interpreted the facts. Similarly, many consumers and the general public also continue to misinterpret the facts.
Commissioner Ain added that given the ICCC continues to maintain its competition and consumer watchdog role, it continues to receive consumer complaints regarding telecommunication issues.
“In most cases, these are referred to NICTA to investigate as the sector regulator because NICTA is best placed to deal with these complaints and queries. NICTA has successfully assisted customers on the same with and without the assistance of the ICCC.”
“Thus, concerned users of telecommunication goods and services should not shy away from approaching NICTA directly and request that it investigates their complaints and queries. Where complaints are laid with the ICCC, these will be referred to NICTA to assess and resolve.”
In closing, Commissioner Ain said the ICCC will continue to work with NICTA, the sector regulator, on issues requiring our joint competency.
The Independent Consumer and Competition Commission (“ICCC”) will commence an independent investigation into the acquisition of Markham Farming Company Limited (MFCL) by New Britain Palm Oil Limited (NBPOL).
The ICCC advised that even though MFCL and NBPOL announced that the acquisition was completed on 23rd August, 2018, both parties never obtained a Clearance or an Authorisation from the ICCC.
ICCC Commissioner and CEO, Paulus Ain said it is important for businesses to apply for Clearance or Authorisation from the ICCC to safeguard the concerned parties from potential legal action from the ICCC or any aggrieved third parties under the ICCC Act.
“The ICCC administered a voluntary merger notification regime under the ICCC Act where businesses were not required to apply for Clearance or Authorisation for any proposed merger or acquisition. However, on 25th July, 2018, the ICCC Act was amended by Parliament making it mandatory for parties to a merger or an acquisition to give notice seeking a clearance from the ICCC if the merger or acquisition fell within certain thresholds.”
According to Mr Ain, the transaction value of the recent acquisition of K174million was well within the thresholds for giving a notice seeking clearance from the ICCC which was K50 million.
Mr Ain, however, explained that the acquisition is not subject to the new thresholds because the new amended ICCC Act is yet to be certified by the Speaker’s Office.
Despite this Mr Ain said that businesses should still apply for a Clearance or Authorisation under the ICCC Act.
“This is because in the event that the new amended ICCC Act is certified and gazetted, the amended ICCC Act may be made retrospective and come into effect on the date that it was passed by Parliament, which is 25th July 2018. Failure to give notice seeking clearance from the ICCC is an automatic fine of K750, 000.00. Therefore, to safeguard businesses from this potential effect, they should apply for a Clearance or Authorisation if the proposed acquisition would be completed after 25th July 2018.”
Mr Ain further stated that the ICCC reserves its rights under the ICCC Act to investigate any consummated acquisitions and take legal action if it is satisfied that the acquisition would have the effect of substantially lessening competition in a market in PNG.
The Independent Consumer and Competition Commission (ICCC) is aware of the recent increase in data rates for the 4G services offered by Kumul Telikom Limited (Telikom).
ICCC Commissioner and Chief Executive Officer, Mr Paulus Ain, said “We express grave concern over the very high increase on the data rates.”
Mr. Ain stated that the ICCC’s role is not only to protect consumers from harmful business conduct; but to also ensure that business are able to compete fairly and effectively in a market so that they can earn sufficient profits to continue to invest in the business.
“Businesses should not be restrained from being able to charge rates for the services and products they provide. However, such rates should be fair and reasonable and that should reflect actual investments costs for the business in providing the service or product.”
In the meantime, the ICCC advises the public to exercise their choice if they feel aggrieved by the new data rates offered by the two companies and seek other alternative services provided by other operators that offer the same 4G services.
Whilst the exponential increase in Telikom’s data rates may be detrimental to consumers, the ICCC is limited in terms of its regulatory powers to take remedial actions. Currently, the ICCC does not regulate the prices of data services; hence, it cannot take actions against such increases that may be over and above a fair or reasonable price.
Consumers have protected rights under the ICCC Act. One of the most important rights being the “right to choice”. Depending on the facts surrounding the allegations of inflated prices, the ICCC may insist on Telikom to justifying its costs. In this regard, the ICCC will establish a dialogue with both Telikom and the industry regulator, the National Information and Communications Technology Authority (NICTA), to ascertain the basis of the sudden increase in the data rates.
The ICCC understands that an employee of Telikom came out in one of the dailies claiming that the increases were due to costs of vandalism and maintenance. The ICCC believes these reasons are not sufficient to justify a very huge increase because price increase may be spread overtime to recover such costs.
The ICCC reiterates that Telikom should be reasonable and charge a price that is reflective of its costs so that they earn a fair return on their investment. Telikom should act as a good corporate citizen and be ethical in its conduct; and not using its near monopoly position in data services to their advantage by inflating prices unnecessarily to the detriment of the consumers. Telikom should be also cautious in its conduct as consumers may eventually switch to other operators who offer similar services.
Regarding whether this conduct of Telikom should be considered as abuse of its (near) monopoly position, the ICCC advises that the ICCC Act does not consider such price increases as abuse of monopoly position.
The Independent Consumer and Competition Commission (“ICCC”) wishes to inform industry stakeholders and the general public that it has declined to give Clearance to China Navigation Company Pte Ltd (“CNCO’’) to proceed with the proposed Acquisition of assets of New Pacific Line Pte Ltd (“New Pac’’).
The CNCo has applied for Clearance and Authorization to acquire the business and assets of NewPac (“Proposed Acquisition”). The applications were since registered for assessment.
ICCC Commissioner and CEO, Mr. Paulus Ain, stated that the ICCC has completed its competition effects assessment of the Proposed Acquisition, which is the first step in such applications.
“The ICCC has declined to give Clearance because the ICCC is not satisfied that the proposed acquisition will not, and will not be likely to, have the effect of substantially lessen competition in the markets for a range of shipping and related services including international liner cargo shipping services to and from Papua New Guinea; coastal shipping services and stevedoring and handling; shipping agency services; and downstream services and goods using any of those services in PNG.”
The ICCC will now proceed with the second step to assess the Authorization application to determine whether or not the Proposed Acquisition, although it has been denied on competition grounds, must be allowed based on public benefit grounds. In assessing the Authorization application, the ICCC must grant authorization if it is satisfied that the public benefits that may stem from the Proposed Acquisition will, or will likely to, outweigh the public detriments including lessening of competition. The ICCC must decline Authorization should it form a view that the public detriments outweigh public benefits put forward by the applicant.
The determination on the Authorization application is expected by 12th October, 2018.
ICCC’s Clearance Determination can be accessed on its website: www.iccc.gov.pg or interested stakeholders can contact the ICCC Head Office at Garden City, Boroko (NCD) to obtain a hard copy.
The Independent Consumer & Competition Commission (ICCC) as the sole consumer watchdog and the economic regulator in the country has expressed grave concern on the recent increase in hotel room rates in Port Moresby.
ICCC Commissioner and Chief Executive Officer, Paulus Ain said the hotel rates in the country, particular in Port Moresby started to increase during construction of the PNG LNG Project which saw thousands of expatriates, investors and business travellers’ flock to the city straining the limited supply of high-end rooms.
“That has created a supply constraint and available rooms have seen their rates increasing significantly. The demand has eventually eased off due to the completion of the PNG LNG Project, however, the hotel room rates have never subsided.”
“In the last two or three years, there were more developments in hotel industry adding to new additional room with the expectation of the 2018 APEC Summit, hence, Port Moresby city appears to be well-positioned to meet an anticipated surge in foreign delegates arrival, despite delays on several high profile planned projects in the country.”
Commissioner Ain added that although there has been increase in the supply of hotel rooms, this is not reflected in the rates. Comparably, they are more expensive than some of the best hotels you find in another jurisdiction, including our very close neighbour economies.
“The room rates seem to be continuously increasing over the years, when will it decrease or when will the room rates come down?”
The ICCC views that supply of hotel rooms can be in excess of demand. This, according to Commissioner Ain, can cause a situation where some hotels can experience high room vacancy with falling revenue and profit.
Commissioner Ain said that given the increase in hotel rooms in Port Moresby compared to previous years, the hotel rates should be responsive to supply change.
“The room rates should decrease as the supply increases. Hotel supply has increased dramatically over the years in Port Moresby, but this change has not been reflected in the hotel room rates. The hotel room rates seem to be increasing significantly over the years.”
As the consumer watchdog, the ICCC is strongly urging all hoteliers to charge their rates prudently based on the real costs and the prevailing market conditions rather than on perception or historical trend or basing their price on their competitor’s rate. If the hotels reduce their room rates, we can encourage more tourist coming to our country, it can also increase potential investors coming to our country to look for potential investment opportunities and finally we can have more people travelling to PNG during the APEC period. can benefit our APEC delegates and the country as a whole.
However, Commissioner Ain said all consumers have the right to choice, hence, they are encouraged to exercise their power of choice in seeking alternatives, if, a particular hotel room rates are excessive. That opportunity is limited given the current supply, therefore, price gouging by hoteliers should avoided.