the usual sense, the market is where the vendors' offers meet the demands of buyers who fit a certain price. The offer is the amount of goods and services that sellers are willing to sell for a price. The application refers to it as the amount of goods and services that buyers are willing to buy at one price, given their incomes and preferences.
A competitive market is materialized by the presence of many sellers and many buyers, while the monopoly market is reflected the presence of a single supplier who faces many applicants. The market of mobile telephony in Cameroon did not match any of these two types of markets because it meets two main providers (MTN and Orange), who face several applicants. It is therefore in this case of a market that can characterize a duopoly, which is a special case of a oligopoly market, which is observed when the presence of several suppliers and several applicants. The market of mobile telephony will be characterized oligopoly considering CAMTEL as the third operator. We will assume initially that it is a duopoly, since it strives to understand the view that it operates in fixed telephony.
A duopoly market is characterized by the presence of two companies that provide goods or services satisfying the same need. The competition model operated in this market can be done either by the quantities offered by each company, or the prices offered by the plaintiffs. The first model is known as a duopoly in the "Cournot " and the second, the duopoly " Bertrand " (Names of those who define these forms of equilibrium). Cournot proposes a war in the quantities and Bertrand price war. However, there is a third form, which does not compete in the true sense of the term: the duopoly " Stackelberg, who considers that there is a firm" leader "and another considered" follower. " The follower reacts (ie its product offering) as a function of the action of the leader, who controls a significant market share.
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MTN and Orange lead they a war with the volumes?
The market supply of mobile telephony in Cameroon is characterized by identical products, available to all consumers: it is the mobile phone and its accessories and a chip credit card communication.
The phenomenon observed in recent years is the arrival of the "pack" the purchase of which gave the right to offer an additional chip in addition to that contained in said telephone which led to the buyer hold two chips. This technique has been proposed by the two operators and only the price of the pack was considered the indicator of convergence to one rather than another. This shows that the amounts offered by the war thus turned to a battle on price. The balance achieved here is not that of Cournot.
What about the price war?
Communication costs have been enormous changes since the arrival of two operators in the market for mobile telephony. Of 340 FCFA per minute in the early 2000s, the maximum cost rises today at 180 FCFA per minute. This fall is it the result of an open war between MTN and Orange to the attention of consumers to increase their market share?
In 2005, posters, banners and placards advertising inundate the town, revealing that famously " split your minutes in seconds " it was later accompanied by another: "talk ten seconds and ten seconds pay. " These are a few words, summed up the novelty introduced by MTN in the pricing of telephone calls. And appeared for the first both Cameroon's per second billing, billed 5FCFA. Consumers actually realizing that they were paying for the airtime spent, not for a minute, once indivisible. However, the last minute of this option was more expensive than the same minute spent in the traditional options and the cost was estimated at 240 FCFA.
The same method of pricing, which could be described as''a true copy of the original''was resumed a few months later by Orange due to the rush of new users to the operator, MTN, and intentions relating to non consumers (those who do not yet have a telephone, but were likely to buy one in the future). This copy
Orange led by MTN to review the cost of a second call, which went from 5FCFA to 3FCFA for MTN to MTN calls. Once again a few months later, the same price was offered by Orange for calls to its network. We can see the real existence of price competition or Bertrand competition. However, we can afford to ask two questions:
- Is it a Stackelberg duopoly, where there is a leader and a follower that MTN is Orange?
- Is this a strategy put in place by the two operators to show that it exists on this market price competition?
To answer the first question, we say that we are not in the presence of such a duopoly, because some offers had been proposed by Orange, and then again by MTN, indicating that each firm behaves at times as leader and others as follower. In addition, the number of subscribers reported by each operator (three million each) indicates although they share the market equally and not a leader and follower.
MTN and Orange lead they a war with the volumes?
The market supply of mobile telephony in Cameroon is characterized by identical products, available to all consumers: it is the mobile phone and its accessories and a chip credit card communication.
The phenomenon observed in recent years is the arrival of the "pack" the purchase of which gave the right to offer an additional chip in addition to that contained in said telephone which led to the buyer hold two chips. This technique has been proposed by the two operators and only the price of the pack was considered the indicator of convergence to one rather than another. This shows that the amounts offered by the war thus turned to a battle on price. The balance achieved here is not that of Cournot.
What about the price war?
Communication costs have been enormous changes since the arrival of two operators in the market for mobile telephony. Of 340 FCFA per minute in the early 2000s, the maximum cost rises today at 180 FCFA per minute. This fall is it the result of an open war between MTN and Orange to the attention of consumers to increase their market share?
In 2005, posters, banners and placards advertising inundate the town, revealing that famously " split your minutes in seconds " it was later accompanied by another: "talk ten seconds and ten seconds pay. " These are a few words, summed up the novelty introduced by MTN in the pricing of telephone calls. And appeared for the first both Cameroon's per second billing, billed 5FCFA. Consumers actually realizing that they were paying for the airtime spent, not for a minute, once indivisible. However, the last minute of this option was more expensive than the same minute spent in the traditional options and the cost was estimated at 240 FCFA.
The same method of pricing, which could be described as''a true copy of the original''was resumed a few months later by Orange due to the rush of new users to the operator, MTN, and intentions relating to non consumers (those who do not yet have a telephone, but were likely to buy one in the future). This copy
Orange led by MTN to review the cost of a second call, which went from 5FCFA to 3FCFA for MTN to MTN calls. Once again a few months later, the same price was offered by Orange for calls to its network. We can see the real existence of price competition or Bertrand competition. However, we can afford to ask two questions:
- Is it a Stackelberg duopoly, where there is a leader and a follower that MTN is Orange?
- Is this a strategy put in place by the two operators to show that it exists on this market price competition?
To answer the first question, we say that we are not in the presence of such a duopoly, because some offers had been proposed by Orange, and then again by MTN, indicating that each firm behaves at times as leader and others as follower. In addition, the number of subscribers reported by each operator (three million each) indicates although they share the market equally and not a leader and follower.
Since our two operators competing to offer services identical time intervals more or less regular, you might think that there is an agreement, and therefore competition in disguise. This offer does not lead the same consumer to make a rational arbitration at the choice of operator. It is most often guided in his choice made by him with his knowledge (friends, family ...) and instead of choosing between MTN and Orange, he chose at any time between MTN and MTN one hand, and Orange and orange on the other. In short it chosen in all cases the same service offered by two operators, which differ only by their social reasons. We're in a monopoly situation where there are two operators who believe in the existence of competition in this market.
What does the Telecommunications Regulatory Agency about this situation?
The Telecommunications Regulatory Agency (TRA) is the body responsible for regulation this sector. The person must protect consumers from abuses they may suffer from MTN and Orange, in particular as regards the communication cost is considered high by a significant proportion of consumers. Although prices have declined, one realizes that they could fall further without causing deficits for both operators. Indeed, the invasion of our streets by the "call box" shows that the communication cost is high for anyone wishing to make a call to his mobile phone. How is it that the minute call from his mobile phone two to three times more expensive than the same minute passed from a call box? What can explain this difference? We would all like to have an explanation for this huge gap. If the operators that provide phone lines for call-box are not able to give us a convincing case on this difference in rates, then ART can still do it. Since the Agency does not, then we can conclude that it encourages competition and helps to disguise the establishment of a monopoly in the market for mobile telephony. Indeed, it is possible to connect or to 75FCFA 65FCFA per minute from a call box, then it is also possible from his mobile phone. Why the rush to create the call box so that each user can make calls from your phone? We strongly expect explanations of ART, because it is the body defending the interests of consumers.
The arrival of the third operator CAMTEL
Although operating within fixed telephony, it was observed that the firm has also launched mobile telephony, which is said to be "Fixed-mobile", that is to say, a phone that is neither fixed nor mobile while simultaneously fixed and mobile, according to the apprehension of each. The most important is that we see that it competes on price with the two operators 'historical' that are MTN and Orange. Indeed, the low cost per minute of communication demonstrates that the rates could also experience a decline in the other two operators, although this reduced cost may be explained by the infrastructure that has CAMTEL, because of its status former public company, which enjoys the facilities of the State. However this argument is not sufficient to explain these low communication costs, when we see that MTN and Orange can connect to the same costs, from the call box.
In sum, we can say that the adoption and popularization of mobile phones has helped raise its ownership rate of 7.6% to 44.9% between 2001 and 2007, from 19.9% to 81 , 4% in urban areas, and 1% to 23.4% in rural areas over the same period (source: ECAM1 and ECAM2). However, we note the existence of two competing operators in this sector: MTN and Orange-CAMTEL. The first two differ only in their corporate and lead a covert competition fostered by the ART, which has fostered the creation of this monopoly. The arrival of CAMTEL in this sector has also strengthened the merger of these two companies, which have joined forces to better fight the "enemy."
