Liberia: Proposed Hike in Tariffs Could End 3 Days ‘Free’ Call Promo

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MONROVIA – Liberians must brace themselves to pay US$0.156 per minute for on-net calls should the new tariffs set by the Liberia Telecommunications Authority (LTA) sail through. 

Report by Lennart Dodoo, [email protected]

The new tariff would be a shock to consumers who for the past four years have been paying US$1.00 for unlimited on-net calls for three days on both LoneStar MTN and Orange GSM networks. This mean, consumers would have to pay almost US$9.36 for an hour of on-net call compared to US$1 for 72 hours of on-net call.

Even preferring internet communication over voice calls would not be a favorable option as there is also a proposed hike in the price of internet data. The LTA has proposed US$ 0.218 per megabyte. This also means, one would pay US$21.8 for 100 megabytes.

Currently, both GSM networks offer 1,000 megabyte of internet data for US$1.00 depending on the number of days the subscriber intends to use it.

The prices may be higher as the proposed tariffs are the floor-rate. 

According to the LTA, the proposed decision is accordance with its mandate under the Liberia the Telecommunications Act 2007, particularly Part VII Article 27, which requires the LTA to “undertake market reviews from time to time to evaluate market conditions and the state of competition in those markets”.

The Telecommunications Authority in the proposal revealed that it has monitored and assessed the impact of the continuous promotions on the long-term stability and viability of the sector, and the impact on the quality of service offered to consumers.

“Over time, the price war has resulted in the exit of a number of firms from the market and the concentration of retail and wholesale mobile markets to only two major providers. The LTA remains concerned that these providers, through their long-running promotions, may be providing services below cost, a situation indicative of predatory pricing that may eventually drive one competitor or the other out of the market,” the proposal indicated. 

According to the LTA, the long-term promotions like the three days ‘free’ calls has made the market unattractive and may discourage new companies from wanting to venture the telecommunication market in Liberia.

“Sector uncertainty, reduced sector investment and growth, falling quality of service standards for consumers, and severe declines in sector revenues raise the possibility of a market failure, a return to monopoly control of the market, and a general down turn in national economic growth,” the proposal stated.

“In keeping with its responsibilities under the Act, the LTA is considering an ex ante regulatory intervention intended to avert the negative consequences of the price war, restore effective competition, increase sector revenues and investment, improve consumer quality of service and stabilize the market,” the proposal added.

The LTA, however, is seeking informed views of stakeholders and interested parties on the proposal to establish price floors on on-net voice and data services. Views are only being received through email. 

Expert Opinion

In his analysis of the new proposal, Mr. Darren Wilkins, former Managing Director of Liberia Telecommunications Company (LIBTELCO), said move is intended to end the long-running promotions by the two GSM Companies in the country which the LTA believes has led to pricing below cost.

“This has given Mobile Networks Operators (MNOs) dominance because they have Significant Marketing Powers (SMP). Smaller ISPs/providers and new entrants will have to match things like on-net promotions and bundles that are most likely, the result of “pricing below cost” (by large MNOs) in order to compete in the market. If they can’t, then competition is strangulated and the larger MNOs become a monopoly. Such a monopoly could hurt the sector and ultimately, the consumer,” he opined on Facebook.

He added: “The consumer is affected by this move because it will remove some or all bundled and promotional packages which they have, for so long, been enjoying at cheaper and affordable prices (No 3-Days Free Calls, potential increase in cost of services etc). The “move “affects the Liberian consumer because the country, for several years, has struggled with unemployment and other economic strangulations, which have led to a decrease in income or no income for the consumer. This exacerbates the already strangulated purchasing power of the consumer and could affect our internet penetration.”

Darren could not confirm whether or not the three days ‘free’ call promotion by the two networks has led to pricing below cost. He said the move might be intended to prevent monopoly in the market. 

He, however, implied that the move is a catch-22 situation for the government. 

“Is this the right move at a time when we all have embraced and continue to espouse a pro-poor “dispensation”? Some would see it as a contradiction to the very tenets of what pro-poor is all about. But the sector has to improve and be healthy in order to accommodate the “poor”; we can’t let it retrograde or fall. So, how can we make everyone happy? The Sector needs to be vibrant and healthy. Operators need to ensure that they achieve their bottom line (Profit). Consumers want services at lower costs. Low tariffs? Innovative Technologies/Solutions? Hmm!”

Campaign against the Proposal

Mr. Abe Darius Dillon, vice president for operations of the opposition Liberty Party is campaigning against the proposal on social media. He described the LTA’s proposal as “squeezing water out of rock; more suffering for the poor under pro poor”.

Dillon: “LTA is recommending that a minute call between a Cellcom [Orange] subscriber and another Cellcom [Orange] subscriber will cost about 25 Liberian Dollars (using the current exchange rate) and a minute call between MTN subscribers will cost LD25. The new proposal means no more $1 dollar for 3 days of phone calls. Also, be reminded that when the recommendation is made and the proposed Law is passed and signed by Pres. George Weah, 1 Mega Byte of data will cost you $34LD. 

“Say no to this new proposal. It is anti “pro-poor”. The people proposing this and other govt officials will not feel the economic burden; they get monthly free scratch cards in abundance. It is the ordinary masses that will feel and suffer from it. Say no to this!!!”

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