DATA MUST FALL!
The Minister of Transport and Communications Kitso Mokaila has waged war against the oligopolistic mobile telecommunications industry and its regulators following allegations of predatory pricing on mobile data.
Investigations by this publication indicate that on 16 February 2017 Mokaila misled parliament on the prices of mobile data and insiders claim that he became livid in discovering that he was given incorrect prices and he is currently on a mission to ensure that mobile operators slash their internet prices to protect consumers.
The Botswana Gazette investigations show that Mokaila told parliament that, “the price of mobile broadband data ranges from P0.13 per Megabyte (MB) to P0.67 per MB depending on the type of package subscribed for.” Adding that, “The principle is that prices must, to the extent possible, reflect the cost of providing a service, irrespective of number of minutes called or size of bandwidth transacted.”
He was responding to Francistown East MP, Buti Billy who had asked the minister to explain why mobile phone companies; Mascom, Orange and beMOBILE (BTC), continue to charge ‘exorbitant’ phone and data charges. Billy had also wanted the minister to state what is being done to address the concerns. To which Mokaila explained that provision of ICT infrastructure was very expensive for individual operators to roll out themselves, hence the creation of Bofinet.
When the Botswana Gazette contacted the mobile companies service centres to confirm Mokaila’s figures the results contradicted the minister’s assertions. BTC-BeMobile said that their internet charge is 0.99 thebe/MB, Orange also priced it at 0.99/MB while Mascom sold it at high end P1.95/MB. Where Mokaila obtained his figures and why they are at such variance with what the three mobile operators offered The Botswana Gazette is itself a cause for concern given the information obtaining resources at his disposal.
When the issue was debated in parliament, the Minister for Presidential Affairs and Public Administration, Eric Molale also complained that mobile phone and Internet connectivity were not up to the required standard, further asking Mokaila to intervene .
However, in 2015 the wholesale provider of national telecommunication infrastructure Botswana Fibre Networks Ltd (BoFiNet) slashed its wholesale prices by 90% from averages of USD800/MB to USD120/MB and this meant that Mascom, Orange and Be Mobile now could purchase internet at a giveaway price of 06 thebe per MB.
The vacillating difference between the wholesale internet price and what the consumer pays is a jaw dropping 1200% to 2400% in profits for mobile phone companies, this publication have found.
Interestingly, Mokaila also seems to have had a sudden change of heart. He recently told the media without mincing his words that, “the internet charges in this country are ridiculously high and I will take it upon myself to make sure that they are lowered and regulated.”
Insiders revealed to The Botswana Gazette that this past week Moikala has been paying visits to mobile operators, the regulator and the internet providers to find out why the internet prices are exorbitant while complaints on the quality of service are still rife. “He is scheduled to come to our office this week, then Mascom and Orange in the coming week. I am not sure about the ISPs but I have been informed to prepare presentations to explain these charges,” a source who wanted to remain anonymous confided.
Consumer Watchdog, Richard Harriman said that his organisation has also heard from many consumers who have complained that their airtime or data has disappeared without any obvious explanation.
The problem is that it’s very difficult for consumers to know exactly what happened in these cases because they’re often told by their network provider that they had actually downloaded data but this isn’t always fully substantiated, he pointed out.
“I suspect that, with the exception of a few occasions when there have been technical problems, background downloads are the best explanation for the disappearing data. But that doesn’t excuse the network providers completely. I think they need to do a lot more consumer education and teach us how to manage and control these updates to show they are interested in their consumers.”Harriman said.
Bofinet Strategy and Business Development Executive, Thato Jensen also told The Botswana Gazette that they were aware of some customer complaints that the internet charges were high. He said that BoFinet does not have the powers to regulate the market prices. The pricing, he said is determined by the costs of production and that most internet service providers do not only buy from BoFinet but have other options Africa wide.
“I would be difficult for me to tell you how the industry players price their services but all I can tell you is that we recently reduced our wholesale prices from an average of $800 to $120 per MB in efforts to expand internet access and affordability in Botswana,” he said briefly.
THE CASE OF MASCOM
Mascom’s market share in the three billion pula industry is 55%, Bemobile 28% and Orange at 17% and when it comes to internet, Bemobile (BTC) is BOFinet’s largest client followed by Orange and Mascom as a dominant player buys the least. Fifty Three percent of Mascom is owned by the MTN Group through two companies DECI and Econet Wireless Citizens, making the one billion pula company part of Africa’s largest telecommunications firms.
Research conducted by this publication based on MTN Group 2015 financial reports suggests that Mascom has up to 1.8 million active subscribers and an Average Revenue Per User (ARPU) of P64.00. In 2015 Mascom declared to the South African based MTN Group revenues of R945 million and profits after tax of P345 million.
While Mascom makes P64 from each service subscriber it has flatly denied to disclose to The Botswana Gazette the breakdown of this revenue across outgoing voice calls, incoming voice calls, data, SMS and devices for 2015.
The Mascom Chief Spokesperson Tebogo Lebotse Sebego opined in a statement that all the questions raised were, “shareholder issues and have strategic and market intelligence relevance”
“We are further limited to answer the questions you posed relating to data and internet as we cannot understand nor make sense of them. We pride ourselves as a community oriented corporate citizen and 99% of its employees are Batswana,” she said in a brief response to some of the following questions:
• Reports indicate that data usage has surpassed traditional voice calls usage is this true? What has yours been in 2015?
• How is it that when Mascom buys it at a low price they all sell it for 0.90 per MB? How do you justify this 1400% difference in profit charges from 0.06 thebe?
• Can you explain why all mobile operators including yourself charge almost similar- between 60 thebe and 1.50 per MB? How do you all set these charges?
• What do you think of consumer complaints about the high prices in the market?
• I understand that Mascom operates what is called a shared-bandwidth and load many customers in one bandwidth for internet services. What is your take on the complaints about this shared band width practice? Can you explain it?
• Is it fair to the customers?
• There are reports of price fixing in the industry. Are you aware of these?
• Are the current data prices fair considering the cost of purchase from Bofinet?
Is BOCRA toothless?
Consumers who spoke to the Gazette worried that despite their feeling that internet costs are not justified, BOCRA appears to be failing to protect and promote the interests of consumers particularly in respect of the prices charged for, and the availability, quality of services provided by telecommunications companies.
The Botswana Gazette’s investigation discovered that BOCRA holds a completely different view from Minister Mokaila on the data costs. BOCRA says that, “It is not true that the current market prices are high. Botswana market prices are favourable comparable to other countries in the developing world and in SADC.”
BOCRA spokesperson Aaron Nyelesi said that the current data prices are, “fair because they reflect the cost of providing the service borne by individual Value-Added Network Services (VANS).” He stressed that disbursement of discounts was not a legal requirement but a voluntary measure.
“It is important to note that the data service market is fairly competitive with more than ten VANS offering such services. It is equally important to note that not all operators buy their bandwidth from BoFinet. VANS are free to buy bandwidth where they see business justification.”
He explained that BOCRA also conducts costing studies every five years. The costing studies are used as input towards formulating a pricing framework that evolves with time, technology and market trends, for various services in the ICT market. The framework is used to remedy instances where the market fails to be competitive.
“The current market offers discounts to consumers in both data and voice markets, the most popular being the month end “buy for X Pula and double your airtime.”
When operators set charges/tariffs for their products and services, they consider their cost of providing such a service and not just the cost per MB. Similarity in the price per MB does not necessarily suggest that there is collusion, it may be reflective of the level of competition.
In addition, operators are not forced to buy WiFi or bandwidth from BoFiNet. Not all operators buy from BoFiNet. They are free to source WiFi or bandwidth from any supplier that appeals to their business model.
Despite, Fast Market Research ranking Botswana as one of countries with the highest mobile market penetration rates in Africa, approaching 160%, Botswana is always languishing at the bottom of the indexes for Internet Access International lists, as providers continue to charge exorbitant fees for below standard internet. internet World Statistics (IWS) indicate that 690 000 Batswana have internet access and by June 2016 only 29.4% of the population had internet access.
In 2017, the World Bank identified Internet access as a basic necessity for economic growth with every 10 percent increase in connectivity enabling a 1.38 percent growth in Gross Domestic Product (GDP Stock Broker Botswana 2015 report on Internet usage in Botswana also show that Botswana still has a long way to go; At the time, Mobile Internet penetration stood at 59% (up from 49% the previous year), while fixed Internet penetration was 5%.