HomeLocal NewsUpdated: ‘New mobile data tariffs counter-productive’

Updated: ‘New mobile data tariffs counter-productive’

In a move widely seen as an attempt to clampdown on social media use, government has resorted to controversial tactics, including steep increases on data charges, and critics say this threatens the viability of the country’s largest mobile phone operator, Econet Wireless.

By Taurai Mangudhla

Founder and executive chair of the Econet Group Strive Masiyiwa yesterday described the setting of a floor price as “very unusual”.

Commenting on Twitter, Masiyiwa said he has “never supported this type of regulatory approach”.

“It is my understanding that it was a directive from the telecoms regulator. I have never supported this type of regulatory approach. It makes it difficult to introduce new services such as Mobile TV, when a floor price is set for data. Very unusual,” Masiyiwa said.

But angry Econet customers accused Masiyiwa of greed, saying his company has taken advantage of the new floor pricing regime to fleece the public.

Leaked minutes of a purported meeting of the Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz) held in October and attended by the mobile network operators show that Econet “presented its proposals arguing that the following floor prices be adopted: voice US$0,12 and data US$0,05”.

A 12 US cents per minute and two US cents per megabyte floor on voice and data tariffs respectively was introduced this week and comes after Finance minister Patrick Chinamasa announced a 5% health tax on airtime.

The government’s decision will affect the country’s three mobile network operators, which had combined revenue of about US$728 million in the first nine months of 2016.

The move effectively illegalises voice and data promotions on mobile networks. This will also affect over-the-top (OTT) services like WhatsApp and Facebook bundles at current rates. Consumers have complained that operators could enjoy an upper hand in pricing some products in the absence of such promotions.

Econet has the widest network coverage after investing hundreds of millions of dollars in infrastructure soon after dollarisation. This made the operator, now enjoying about 52% market share of Zimbabwe’s active subscribers, more flexible on promotions. Government, owns NetOne and holds a majority stake in Telecel Zimbabwe, effectively meaning that two of the country’s three mobile operators are controlled by the state.

The government, which regulates the telecoms industry, is believed to have taken advantage of its position to grow revenues amid demands to recover close to US$500 million spent on a three-phase expansion drive. Part of the money was obtained from Huawei.

Apart from the loan, insiders say, NetOne and Telecel also have to play catch-up and start growing its subscriber numbers and subsequently revenues in the lucrative sector particularly ahead of the make-or-break 2018 harmonised elections which need funding. The telecoms sector has been used as a source of funding for elections and political events by President Robert Mugabe’s government.

A social media message that reads “Econet Wireless, inspiring you to switch to NetOne” and ends with Telecel’s tagline “tell someone” has been doing the rounds since Wednesday, sparking widespread outrage from customers who accused the mobile operator of making a killing from customers. It seems the message was more than a joke as some senior officials in Supa Mandiwanzira’s Information Communication Technology ministry referred to it when asked to shed light on the recent developments.
The public outrage against Econet is despite the fact that Telecel and NetOne had already complied with the new regime.
Mandiwanzira could not be reached for comment as he was said to be on his annual leave holiday until the end of January.
However, Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz) director-general Gift Machengete justified the new tariff regime as a means to ensure operators remain sustainable.

“Potraz has a mandate in terms of Section 4 of the Postal and Telecommunications Act Chapter 12:05 to ensure sustainable and consistent provision of domestic and international telecommunication services. Therefore, the introduction of floor prices will ensure consistent and sustainable long-term provision of services to all Zimbabweans,” Machengete said on the company’s website.

He said floor pricing did not only focus on revenue, but on sustaining long-term provision of service to consumers throughout the country.

Asked about the impact of the new tariff regime to consumers at a time the economy is haemorrhaging due to de-industrialisation and subsequent reduction in disposable income, Machengete said the regulator’s aim is to keep the price of data as low as possible while ensuring sustainability of the sector and protecting consumers.

“The authority’s intention in setting floor prices is, therefore, to maintain a delicate balance between service affordability by consumers and operator viability,” Machengete said, adding Potraz was currently carrying out studies to review the cost models used in tariff setting which were designed in 2014 to ensure fair pricing.

“Potraz is currently consulting stakeholders in the sector and conducting research on the impact of OTTs and how to reduce the negative impact of the same on sector viability while harnessing their advantages in line with global trends.”

Statement by the Minister of ICT, Postal & Courier Services

In the last few minutes, I have conversed with the Potraz Chairman and with the kind permission of the Acting Minister of ICT, Postal & Courier Services, Cde Prisca Mupfumira, I have directed an immediate suspension of the tariff increases that were effected two days ago, to the dismay of many mobile phone users.

I have been told that the new prices were actually proposed by the mobile operators to the regulator. While it is conceivable that the price of data may go up, the margin by which the prices have gone up is shockingly high and can only reflect insensitivity to fellow Zimbabweans and gluttonous corporate greed.

Internet is now a key driver of economic growth – innovation, entrepreneurship and government service delivery. Internet access is at the centre of all development. It therefore follows that it must be accessible – physically and financially. I share and sympathise with concerns expressed by a multitude of Zimbabwean internet users that the recently effected data prices are unparalleled and extortionist.
Unreasonable data prices, especially in a high literacy country like ours, undermine our huge investments in human capital, broadband infrastructure and the ability to attract investment.

My Ministry’s Innovation Fund initiative, which has raised more than $6 million to date, is premised on affordable broadband and growth opportunities in on-line enterprises in Zimbabwe and beyond.

On the occasion of the official opening of the Chikato Community Information Centre in Masvingo last month, our President, His Excellency Cde Robert Mugabe, spoke passionately about his desire to bring marginalized communities, especially in rural areas, onto the information superhighway. This in itself, is instructive that broadband access must be affordable.

Given the astronomical rates that have been charged over the last two days, it may be necessary and morally correct to get the concerned mobile networks to refund their subscribers. This shall be on the agenda when I undertake a comprehensive review of the developments of the last two days on the first day of my return from leave on January the 30th.

Let me take this opportunity to wish all Zimbabweans, a happy and stress-free new year.

Issued by: Hon Supa Collins Mandiwanzira, MP
Minister of ICT, Postal & Courier Services

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