Why A Price Floor Almost Made Sense For Zimbabwe Telecoms

price floor almost made sense

 

We have three MNO (Mobile Network Operators) in Zimbabwe, one private(Econet, the largest) and two Government owned. Operating licences are a must but Econet is the only operator with a fully paid licence. The other two operators could not be bothered about their licences. When POTRAZ, the Telecoms regulator introduced a price floor only Econet changed prices and the war started. It was a brutal scene on social media as Econet got the bulk of the flack. Econet was attacked for the price hike and they were labelled capitalist opportunists. An unprofessional war of words between the regulator and Econet ensued in the media. That scuffle is what brought the details to light and cleared the air. I want us to look at why the decision to have a price floor almost made sense.

WHY THE PRICE FLOOR ALMOST MADE SENSE

EQUITY IN THE MARKET

The licence payment scenario creates a certain unevenness in the market. For one, the two smaller operators could create super – promotions they couldn’t create if they had similar costs. Telecel offered the mega promotion for three years (while by POTRAZ definition mandate a promotion should not exceed three months). While it seems silly as Telecel was making half its revenue on all recharge cards for three years they definitely gained subscribers. it then comes as no surprise that the two couldn’t pay their licence fees.

The problem with that is that companies like Telecel and NetOne were creating promotions aiming to increase churn of Econet subscribers. Churn is the term for when subscribers jump ship. As subscribers, we may think we benefited from the promotions and it was good for us right? Wrong!

PRODUCTS

The operators wasted a lot of time on this promotional price war instead of working on their product offerings.. They should have been increasing 4G coverage, giving us more OneWallet agents and Telecel getting us better network overall. While the MNOs were being petty we suffered and the service we receive stagnated. Where other economies have seen increases in the scope of service they receive, nothing has changed for us. I actually believe that if the MNOs invested in hardware for service, the costs could come down for us in the long run. Or maybe POTRAZ can be like other Telecom Regulators and actually use licence fees to improve infrastructure.

CUSTOMER SERVICE 

A huge complaint for most of us subscribers has been that customer service quality levels dropped and it seemed like the MNOs stopped caring. I have tried out all three call centres; NetOne has rude agents, Telecel has clueless agents and you are the same after the call, Econet has helpful agents but by the time the answer my kid has kids. The MNOs have been so busy on the prices front trying to keep us that the other aspects of the business are suffering.

WHY THE PRICE FLOOR IDEA WAS STUPID

2C/MB

It was definitely not smart for POTRAZ and the MNOs to agree to set that $0.02/mb price when we were enjoying prices as low as $0.0015 (on the 2Gb bundle worth $3). By virtue of the one decision to charge us 13 times more than we were getting it stopped being about equity and became about increasing the price!

SELF – SABOTAGE

All the parties involved have vested interests in Zimbabwe. POTRAZ claims to want equality to promote innovation. Econet seems to have high interests in Kwese TV (online Tv) which would suffer when data costs are high. As the two are government owned Telecel and NetOne care about the ‘youthies’,  innovation and job creation. The increase in the data prices seemed to mostly hurt the operators and the regulator. It’s a good thing Zimbabweans became hashtag warriors for the cause of affordable internet.

 

POTRAZ really had one job, to give us a good price floor. By good what I really mean is fair The key should be for everyone to benefit, for service to get better and for the internet to be affordable.

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