Malawi’s ‘talk is not cheap’ mobile phone habit

At around 11:35 am, Vitumbiko Muotcha’s phone rings but hangs up before he answers it. Vitumbiko from Mbendera Village, Traditional Authority (TA) Somba in Blantyre being a job seeker, quickly rushes to buy airtime with optimism of receiving good news but alas, his K100 is depleted just after getting the details of the caller from the other side who apologizes that it was a wrong number; a double blow for him.

“The mobile phone tariffs are way too exorbitant in this country. The airtime we buy has no meaning,” bemoaned Vitumbiko saying service providers need to modify their charges.

According to him, mobile phone service providers are not considerate of their customers as airtime just disappears into thin air without one engaging in any meaningful discussion.   

International Telecommunications Union (ITU) report indicates that on average Malawians use more than $12 (approximately K9, 000) a month on airtime for mobile phones.

This is way beyond Vitumbiko’s living standard considering that that amount of money can be channelled towards priority areas in his family such as food.

In a bid to bring down the charges in the telecommunications sector, the Malawi Communications Regulatory Authority (MACRA) commissioned an independent survey to analyze market trends.

Part of the recommendations presented by the experts was to increase competition in the sector, currently dominated by two operators, Telkom Networks Malawi (TNM) and Airtel Malawi.

To save ordinary Malawians like Vitumbiko, government needs to intervene to bring down the tariffs that have made consumers incur high phone costs.

Currently, Malawi Communication Regulatory Authority (MACRA) is in the process of developing a cost model and pricing framework for telecoms services for wholesale and retail telecommunication services in order to enhance competition among operators in Malawi.

Maybe this is the hope that Vitumbiko and many other Malawians were waiting for.

The cost model once in place in October this year will ensure that MACRA is effectively and efficiently regulating the tariffs offered by the operators at the same time providing a viable business environment to the operators to maximize their profits.

MACRA procured Incyte Consultant, a Scotland based firm to develop cost models with effect from February 27, 2017 and the whole project will be supervised by MACRA on behalf of the Malawi Government.

The maximum project duration from the date of contract signing to the delivery of the final report shall be 6 to 9 months.

MACRA’s Head of Economic Regulation, Andrew Nyirenda said the move will facilitate fair competition, promote consumer protection and facilitate access and usage of ICT services.

“Since the establishment of MACRA, the Authority has regulated the telecommunication sector without any well researched and market oriented pricing and cost models to assist both the regulator and operators to have a basis of providing the services,” he said.

According to Nyirenda, while most other countries have developed costing models for their telecommunication services, MACRA has been regulating the industry without any scientifically and well researched models.

“It is, therefore, imperative that MACRA develops cost models and pricing frameworks for the wholesale and retail telecommunications services. The Communications Act provides competition rules under Section 25 which is aimed at promoting competition among persons holding individual licenses in the country.

Managing Director for Incyte Consulting, David Rogerson said affordability is the main challenge in Malawi market when it comes to telecommunications services.

He said currently competition between the two main operators Telekom networks Malawi (TNM) and Airtel is based on price and promotional discounts, something he says is a good enough reason for the sector to have cost models pricing that can benefit both consumers and service providers when it comes to value for money.

“Cost model pricing is good because it will make other investors to come and compete handsomely at the market. Above all it protects consumers in the long term from being reaped off,” Rogerson said.

Telekom Networks Malawi’s Chief Strategy Officer Wilson Kyumba says his company has welcomed the development saying cost modeling is beneficial for the telecommunication industry.

He says he expects the modeling to improve TNM’s efficiency once put into practice since it will open up the market.

“I don’t think we can argue with MACRA on this matter because it is supported by a new Communication Act that is currently in place. What our regulator is looking at mainly is for the sector to be efficient,” kyumba said.

Faizal Okhai is the Chief Executive Officer for Access Limited who said the cost modeling is a good tool since it will protect consumers from being reaped off whilst on the other hand leveling the playing field for mobile phone companies.

He agreed that the telecommunication sector is not cost effective enough, “The cost modeling will empower small companies like Access to compete with big giants in the sector like TNM and Airtel. It has really been difficult to us to penetrate into the market but now we are seeing bright future.”

However, Okhai feels the modeling has some disadvantages since it is not easy to control pricing in a liberalized economy country like Malawi.

Commenting on the development, Airtel’s Marketing Director, Emmanuel Kasambala applauded the cost modeling initiative saying it will help other companies enter the sector.

He explained the tool has some disadvantages but Airtel has no choice as the regulator is doing that according to the new revised 2016 Communication Act.

Section 4 (1) and (2) provides MACRA with the general duties of providing reliable and affordable communication services throughout Malawi.

Section 4 (1) stipulates that: The Authority shall have the general duty to ensure that, as far as it is practicable, there are provided throughout Malawi reliable and affordable communication services sufficient to meet the demand for them.’

While Section 4 (2) states that subject to subsection (1), the Authority shall (specifically on consumer welfare): (a) protect the interests of consumers, purchasers and other users of communication services in respect of the prices charged for the quality and variety services provided and terminal equipment supplied’ ‘(b) promote open access to information by means of communication services’‘(c) promote efficiency and competition among persons engaged in provision of communication services or supply of communication equipment.

The newly passed law aims at maintaining the relevance of regulating the sector which is dynamic and technology-driven as well as enhance the respect of consumers of communications; bring sanity in the licensing regime; and control the use and pricing in the telecommunications sector.

The aim of the new Act has therefore modernized the legal framework and will address the challenges being faced in the; electronic communications sector, posts and information society.

It further recognize the convergence of technologies and services for telecommunications, broadcasting and information through the establishment of technology and service-neutral licensing regimes; remove unnecessary barriers to entry and to attract investments and; to facilitate the deployment and use of communications services in the communications sector.

Currently, Malawi is among the most expensive African countries in which to make a phone call.  This is further shown in a study carried out by the ITU who claimed that network rates for phone calls in Malawi are among the highest in the world.

Consumer Association of Malawi’s (CAMA) John Kapito added his voice on the high prices describing Malawi mobile phone tariffs as high saying it is high time something must be done to reverse the trend.

Moreover, in 2015, findings from a survey by Research ICT Solutions indicated that Malawi ranks amongst African countries with highest cost of making phone calls and Internet usage.

On average, costs of making calls in Malawi are pegged at K72 per minute within the same network and K90 per minute between different networks.

Now, with cost modeling, expectations are high from people like Vitumbiko Muotcha that the time has come to vindicate the idiom “Talk is cheap” and not exorbitant as is the current situation.

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