A Counter Opinion on the decision of the Liberia Telecommunications Authority to End “Price war” between Liberia’s GSM Companies
By Professor Michael M. Wiles, Cuttington Graduate School
In its Tuesday, December 11, 2018 edition, the FrontPage Africa (FPA) published a story under the heading “Stabilizing Telecommunications Cost?: Liberia Telecommunications Authority Seeking to End Price War in Telecommunications Industry.”
In the story, FPA quoted the LTA as indicating that to end the price war between our two Telecommunication companies, it was invoking the Telecommunications Law of 2012 which forbids telecom companies from selling below their cost of doing business.
Based on this 2012 Law, LTA has given justification for intervention in to what it considered as GSM “price war.”
However, we have done all research and found only the 2007 law and not 2012.
We are happy to note that The LTA should consider the above as PROMO, and that the actions of these companies are sales promotion to attract their customers, and not PRICE WAR.
The LTA needs to check its records when the costs of telecommunication worldwide and domestically were attached to satellite high cost and now it’s utilizing cables that cost a fraction in comparison to satellite utilizing cost.
This saving between satellite and cable cost was passed down to Liberian consumers; and as such cannot be considered as charging below cost or price war.
We also note that LTA stated the price war started in 2012. To this, we say it was not a price war; rather a promo to see how much each GSM company was willing to pass the acquired savings from the change from satellite to cable and to customers. This is not price war, it is a fair distribution to their customers for reduction from cost of doing business.
We also see that LTA is complaining that GSM companies are not getting enough from their return on investment. All companies go into business for three reasons: to grow, to survive and to make profit. If these three things were not happening, what makes you think that Orange and MTN would merge with our traditional GSM companies in Cellcom and Lonestar? If their stock holders were not satisfied with their return on investment, they would not operate on charity.
There would not have been any mergers and our GSM companies would have closed their operations, just as other GSM Liberian companies have done in the past.
Additionally, the LTA says people are staying too long on the line and for this reason, GSM companies and Government are losing money.
These GSM companies set the standard of operations to satisfy their customers which customers agreed to pay. It is the equivalent of value for value. So, why is LTA complaining about people staying so long on calls? It is an insult to consumers who are paying money to satisfy their utility of service they paid for? This is customers’ satisfaction and not abuse.
Recently, GSM companies have found a solution to that problem (by ending the call after 19 minutes). Not getting signal when traveling is a technical problem; it is not customers causing such problems because they stay too long on the line.
The LTA also said that GOL lost US$49 million dollars over a period of three years from GSM companies. Is LTA assuming that the GSM companies should have made an additional 265 million in profit so that GOL could make additional US$49 million in revenue? Who gets richer? Taxes are paid on profit, not on anticipated income.
The LTA also wants GSM companies to raise its rates from US$1 for 648 minutes to 64 minutes, $US1 for 1000megabytes to 100mb for $21 USD. If that that happens, who is GOL making poorer?
As indicated by LTA, this is a Pro Poor Government, but its planned action will show otherwise.
GOL is protecting the GSM companies to get richer at the expense of the poor? This plan is bad for our citizens and country.
The LTA needs to also know that these poor people who stay on the phones for long time are earners of hard currency in the form money transfers that GOL is receiving 25% which amount to millions of dollars that help our country.
Let our low-cost international calls continue to increase money transfer from our brothers and sisters in the diasporas.
We must congratulate LoneStar Cell MTN for recognizing the present hardship that we, the consumers are faced with by introducing the promo ‘You Eat I Eat’ which allows two persons to use US$1.00 card for up to five (5) days of airtime. This shows that they appreciate the Pro-Poor agenda of the George Weah led government.