I have been watching in awe and extreme disappointment as many Zimbabweans reacted angrily to Econet against the recent data and calls tariff increases.
The same #Datamustfall noise was raised against NetOne when they once “hiked their data fees” forcing them to ultimately reduce.
By Toneo T Toneo
Admittedly, our data costs are too high. The majority of Zimbabweans can’t afford it, a clear indication that there is a bigger problem to be addressed.
As an Editor for years, we have continuously educated Zimbabweans on these basics, but I am still shocked at how our readers continuously keep missing the point, blaming a service provider over things they don’t even have control over.
For starters Econet Wireless Zimbabwe, just like NetOne Pvt Ltd, Telecel Zimbabwe, Liquid Inteligent , Dandemutande and Telone do not hike data fees, they do not have such powers in Zimbabwe, only the Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz) does this on their behalf.
Potraz is the one that approves the costs for the whole sector and allows the players to charge those costs, hence when they do so, it’s always been above board and only after being given a go-ahead to do so by the government’s arm.
Potraz is mandated by the law to continuously evaluate issues of cost and pricing as the regulator and they have been on records many times in our interviews explained why and how they struggle to strike the balance.
Yes this ofcourse creates an outcome that is outside the reach of millions who are civil servants and can’t afford this as a basic service.
The issue of affordability over sustainability has been the most difficult to balance, mandated for Potraz, they must always make sure that whatever tariff they finally settle for Zimbabweans must be able to afford it and also protect the same providers that they continue being in business for their sustainability.
In a statement, Potraz admitted that they had to make sure that the service providers remain sustainable and profitable as they operate but the biggest problem was not the tariff but the deteriorating RTGS currency .
Zimbabwe has two big problems that need to be fixed if we are serious about affordable data services which are
i) an ailing, free-falling RTGS currency and
ii)a bad taxing system, choking the service provider.
The pressure is exacerbated by the poor economy which demands alternative power solutions due to erratic ZESA supply and serious foreign currency shortages to cover maintenance costs.
Potraz in their latest press release noted;
“Accordingly, any service providers that adjust their USD-denominated service packages will be charging unapproved tariffs and will be liable to a fine. All such violations or licence conditions should be reported to POTRAZ for immediate action.
The recent review of tariff thresholds for telecommunication services was triggered by the steep depreciation of the ZWL of 738.75% against the USD from USD1: ZWL684.33 in December 2022, to USD1: ZWL 5,739.80 in June 2023. This is reflected in the movement of the Telecommunication Price Index (TPI), which is used to track the cost of providing telecommunication services in ZWL terms. The TPI increased by 528.14% from January to June 2023. The TPI is an internationally recognised and widely used cost-based tariff model.
Significant cost movements were registered for foreign currency-denominated costs such as foreign exchange losses, depreciation which increased in tandem with exchange rate depreciation; bandwidth cost which increased by 200%, from ZWL 8 billion in December 2022 to ZWL 23.8 billion in June 2023; software licence fees, fuel, and spares for network maintenance. Local costs such as staff costs increased by 582%, whilst other costs such as marketing, stationery, advertising and rentals increased due to inflationary pressure spurred by the depreciation of the local currency.
As a result, the tariff thresholds that were set in April 2023 were rendered unviable and fell below regional averages. For example, the mobile voice tariff of ZWL94.41 (2 USD cents) per minute, was below the regional average tariff of 9 USD cents. The mobile Internet/ data tariff of ZWL 14.93 (0.32 USD cents) per Megabyte (MB) was also below the regional average tariff of 4.61 USD cents.”
Let’s all agree that data just does not come to us, it comes at a cost too for the internet service providers to land. This is a product they import besides that they also have maintenance, operational, and administrative costs.
After having fulfilled these basics let’s not forget that these are noncharitable organisations, they are in business to make profits and these are also realised under the same price controls by Potraz.
However, we do have a big problem that we all need to deal with in the interest of both consumers and operators, that elephant in the building is tax.
Taxation in Zimbabwe against telecommunication operators is so huge that after all is said and done, companies are largely taxed an arm and leg, a cost which operators then simply pass on to us subscribers.
Zimbabwe mobile network operators are charged 5% health levy, 15% VAT, 25% corporate tax, 3% universal service fee, 10% excise duties on revenue and 2% IMT tax.
Mobile operators face other regulatory levies and taxes of 3.5%, bringing the total taxes to approximately 28% for every dollar they make.
Every phone call received a tax of US 6 cents per minute on international incoming traffic is demanded in foreign currency.
Needless to say, Econet Wireless Zimbabwe also paid a whooping USD $137.5 million against their licence fees.
If we do not unite and stand as one against taxation then we will not get out of this situation. Zimbabwe is arguably one of the most expensive service providers because the tax component is too huge.
We can’t continue to blame the end of the chain while ignoring the strong drivers that have made it impossible for most Zimbabweans to enjoy data and telecommunication services as a right!
The problem is a policy problem which must be fixed by the government, and if, and when they fix it most Zimbabweans will enjoy telecommunication and data services at ease.