Liberia Telecommunications Authority Explains Abolition of Three-Day ‘Free’ Call Promo

0

MONROVIA – The termination of the Liberians darling three-day ‘free’ call, according to the Liberia Telecommunications Authority (LTA), was a request from the mobile networks operators to stop “price war” in the sector.

According to the LTA, the request necessitated the LTA Order 0016-02-25-19 to introduce new floor prices that would compensate for the lack of market mechanism and ensure market stability.

“The LTA measure is in response to call for intervention by MNOs to stop predatory pricing wars which has stifled the sector growth and plummeted revenue significantly. The LTA market research indicators showed the sector’s instability and anti-competitive behavior as a major factor. The LTA had to perform its role as the regulator to intervene and save the market from collapse,” the Chairman of the LTA, Mr. Ivan Brown said.

According to him, GMS Companies in Liberia were compelled to sell packages below market costs which was gradually leading to their collapse. This, he said, would have been detrimental to the country.

“What was actually happening is Mobile Network Operators were forced to sell packages below market costs and was clearly not profitable. The promotional packages were sold at the cost of diminishing revenue to providers. Diminishing revenue hinders innovation, stalls infrastructure nationwide and decreases revenue to government that could be used to provide social services, etc.,” he said.

He contended that the famous three-day ‘free call’ promotion which was introduced by the Cellcom GSM now Orange five years ago has not been entirely terminated, rather it has been modified to limit the call time to 45-50 minutes which would last for three days.

“The $1 for 3 days promotion is not being cancelled as widely circulated. What’s actually happening is that customers would talk for allotted minutes provided by the $1 within the same 3 days period. So, effectively, you can still buy a dollar $1 and call for three days as you used to but with a reduction in the allotted minutes,” Mr. Brown explained.

The Sector Regulator further contended that as one of the largest contributor to the national income, depressed telecommunications prices result in lower tax and other revenues to finance public welfare and development programs and have an overall negative impact on the economy. US$49 million in revenue was lost within just three years as the gross revenue of the sector fell from a high of US$150 million in 2014 to US$101 million in 2017.

According to him, based on the analysis conducted by the LTA, the average customer talked for less than 100 minutes over the three days period, therefore, “the current promotions will see customers calling for about 45 minutes over the same period, well within the same three-day period. Bottom line is, customers will still be able to communicate within the 3 days on a $1”.

The Liberia Telecommunications Authority said it held extensive consultations with Orange and LoneStar MTN to derive at the floor price to stabilize the market before reaching the conclusion.

In accordance with the new pricing, voice packages now have a minimum floor price of 0.0156 cents on each call provided in packages to customers by their MNO.  Data packages will now have a minimum Floor Price of 0.0218 per Megabyte (MB) of data provided to customers by their MNO.  Monthly minutes and megabytes totals will be used to assess compliance, in other words, their monthly volume. 

According to the LTA, the existence of fair competition in the telecommunications market is a necessary condition for sustainable economic development and enhanced social welfare of Liberians. 

“Anti-competitive practices by dominant players may marginalize the benefits of economic efficiency inherent in competitive markets, while the abuse of market power diminishes opportunities for dynamic efficiency leading to worsening consumer welfare,” the telecom regulator noted.

The LTA further contended that telecommunication users in Liberia enjoy the lowest prices in West Africa but the low prices come with a high cost for the sustained growth and development of the state.

“A long price war between Orange and Lonestar, multinational companies that control nearly 100 percent of the mobile telephone and data market of Liberia continues to have a negative impact on the access of the population to communication services and on the quality of services provided to consumers,” the LTA says.

The unending price promotion which started in 2012, according to the LTA, pushed other smaller GSM Companies including Novafone and Libercell out of the market, leaving the country with only two Companies, creating less room for competition.

“The price for call dropped from 14 cents per minute in 2014 to less than 1 cent per minute in 2017… 

Studies by the LTA showed that the distorted price structure mobile voice and data markets could have risen barriers for potential new market participants of the sector losses generated by the pricing strategy of service providers. 

The Sector Regulator further contended that as one of the largest contributor to the national income, depressed telecommunications prices result in lower tax and other revenues to finance public welfare and development programs and have an overall negative impact on the economy. US$49 million in revenue was lost within just three years as the gross revenue of the sector fell from a high of US$150 million in 2014 to US$101 million in 2017.

“The regulatory intervention is needed in keeping with the obligations of the LTA under the Act to rebalance the distorted price structure, reduce market inefficiencies, restore effective competition, improve quality of service, restore sector value and stabilize the market,” the LTA argues. 

Comments
Loading...