Liberia: New Floor Prices to Affect Communication in Liberia, Ends Unlimited Calls Promo
MONROVIA – New floor pricing set by the Liberian government is going to change the way Liberians have been communicating via mobile phone for the last five years, bringing a halt to the most-appreciated ‘three days free calls’ promotion on the two GSM Companies operating in the country.
Report by Lennart Dodoo, [email protected]
The new regulation which came into force on September 1, according to the Liberia Telecommunications Authority (LTA), is an intervention to calls by mobile network operators. (MNO) “to stop their predatory pricing wars which have stifled sector growth and plummeted revenue significantly over the last few years. Our market research indicators showed the sector’s instability and anti-competitive behavior was a major factor”.
In accordance with the new pricing, voice packages will now have a minimum floor price of one point five-six cents per minute (0.0156) on each call provided in packages to customers by their MNO. Data packages will now have a minimum Floor Price of two-point eighteen cents (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.
Based on the new prices, Orange for example, claims to still be offering the US$1 for three days call but voice time has been limited to 50 minutes to be used within three days. Previously, US$1 could buy an unlimited voice bundle that would last for three days.
Orange’s counterpart, LoneStar Cell MTN, on the other hand up to press time on Sunday had not made its new prices for voice calls public. The GSM Company, however, said it readjusting prices to conform with the LTA’s regulation.
Communication by internet could be a better a better alternative means of communication, but the prices on data have also gone astronomical. LoneStar Cell MTN for example, now has the following prices for data: $2 for 750MB, $5 for 1.7GB, $10 for 3.8GB, $20 for 7.8GB and $30 for 11.7GB.
For Orange, a gigabyte of data is $2.00. Initially, $2.00 offered 2GB of data for internet browsing.
According to the LTA, “mobile network operators have been forced into selling packages to outdo each other with offers below market cost and clearly not profitable creating market instability. The promotional packages have been popular but at the cost of diminishing revenue to providers. Diminishing revenue hinders innovation, diminishing revenue stalls infrastructural development nationwide, and diminishing revenue reduces the quality of service giving rise to dropped calls as network loads increase. As the national regulator, the LTA was compelled to intervene, stop the price wars and restore viability.”
The sector regulator noted that it had to put the new measure into place to end the market instability in the sector. According to the LTA, the model used for the new floor pricing was developed in 2009 and known as the Long Run Incremental Cost Model (LRIC).
“In 2016 this model was updated to provide rates for 2016 -2020 and data was provided directly by MNO’s to be taken into consideration to set the floor pricing. Other factors including common costs, and industry standard markups were included,” the LTA stated.
According to the chairman of the LTA, Mr. Ivan Brown said the floor prices would help stabilize the telecom sector and restore viability. He said it is “an effective regulatory tool and an appropriate response to curb predatory pricing and anti-competitive behavior”.
Mr. Brown averred that quality of service plummeted as more customers dropped calls and infrastructural expansion came to a halt.
Despite his argument, others believe that the timing for the implementing the new floor prices at a time the country’s economy continues to slump and the local currency continues to depreciate would only increase the hardship Liberians are already experiencing or make communication difficult.
Boakai Jaleiba, a member of the former ruling Unity Party and a former Assistant Minister in the Ellen Johnson-Sirleaf-led government commented on the new prices:
Current inflation rate is 23.3% and it is expected to increase to 27% by the end of the current quarter. Food inflation is 26.5%. Some estimates even put it at 32%. All this is coinciding with the appreciation of the USD among several other factors.
A government that focuses on promoting pro-poor governance should be deriving solid policies directed at lessening the burden on the poor and the poorest of the poor. That’s how you graduate the people out of poverty and enhancing prosperity.
Unfortunately, this is not happening. The current government is reducing salaries and increasing taxes during a recession. Not only that it doesn’t make sense, it really does not make commonsense.
So here are some things that are going to happen in the short term; many kids will not be in school this year. Sales will go down and the MSMEs will take the biggest hit. Demotivated workforce in the public. Informal sector employment will be sliced among many others.
Trust me, this isn’t politics. We’re getting the policies wrong!
Prior to becoming a Senator for Montsrrado County, Darius Dillon in December 2018 described the new pricing as “squeezing water out of rock; more suffering for the poor under pro poor”.
“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,” he said at the time.
The LTA, however, insists that “the floor price is an appropriate response and an effective tool for price control when market forces fail as indeed they have. We are confident that consumers will experience increased services through fair pricing and providers an increase in overall revenue. We also expect that consumer behavior will not change more than 10%. The LTA will continue to monitor developments, we have an obligation to assess traffic management, commercial practices and enforce regulations ensuring quality of internet access reflects advances in technology for all in Liberia. The LTA will be working on a new LRIC model for 2020 thru 2025.”