POTRAZ boss justifies price increase on data bundles – It’s about protecting operators’ viability

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Recently, it was announced that Zimbabwe’s telecoms regulator, POTRAZ would be putting into effect a floor price on voice tariffs and data bundles with effect from the 9th of January, 2017.

Under the new pricing guidelines, voice tariffs will be set at a minimum of 12 cents per minute while data for all bundles will be priced at 2 cents a megabyte.

So far, the move has raised questions and attracted a lot of criticism, mainly because the floor prices makes data bundles more expensive, affecting users that have adopted some of these bundles as a way of managing the already high cost of internet access in Zimbabwe.

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In a set of responses issued to media POTRAZ’s Director General Dr Gift Kallisto Machengete has addressed some of the queries raised, justifying the move as a way of maintaining a balance between service affordability and the viability of mobile operators.

The responses laid out in question and answer format are set below.

POTRAZ has set floor prices for voice and data for bundled services including promotional packages from January 9. The floor prices are 12c per minute for voice and 2c per megabyte for data. What motivated the introduction of these floor prices?

POTRAZ has a mandate in terms of section 4 of the Postal and Telecommunications Act Chapter 12:05 to ensure sustainable and consistent provision of domestic and international telecommunication services. Therefore, the introduction of floor prices will ensure consistent and sustainable long-term provision of services to all Zimbabweans.

How will floor prices solve the issue of a reduction of revenue realised by mobile network operators?

Floor pricing does not only focus on revenue but on sustaining long-term provision of service to consumers throughout the Country.

Does setting a floor price not stifle innovation in the telecommunications sector and put the burden of reduced revenue on the consumer by making them pay more for data services?

One of POTRAZ’s mandates is to promote innovation. Therefore, the Authority has a duty to capacitate innovation drives in line with global technological developments by creating an enabling environment for the sector to provide innovative services, failure of which there would be no innovation to talk about.

Some members of the public have complained that the new floor prices make data specifically more expensive for example a 250mb daily bundle from Econet would essentially be priced at $5 and NetOne’s One Fusion package is likely to become more expensive. Why then would POTRAZ opt for tariffs that will make data more expensive for the consumer particularly in the prevailing economic climate?

POTRAZ’s aim is to keep is the price of data as low as possible while ensuring sustainability of the sector and protection of consumers. The Authority’s intention in setting floor prices is, therefore, to maintain a delicate balance between service affordability by consumers and operator viability.

Last year in October, there were reports that POTRAZ intended to reduce the data tariff but now the opposite seems to be the case. How does POTRAZ reconcile the intention to reduce data tariffs, the third most expensive in Africa with these new floor prices?

The Authority is currently carrying out studies to review the cost models used in tariff setting which were designed in 2014 to ensure fair pricing. The results of the study will guide any tariff changes.

POTRAZ is also said to be in talks with Mobile Network Operators (MNOs) to put a premium on specific OTT services such as WhatsApp calls. What has motivated this and is this the most innovative way for MNOs earn revenue in light of the competition they have faced from OTT services?

POTRAZ is currently consulting stakeholders in the sector and conducting research on the impact of OTTs and how to reduce the negative impact of the same on sector viability while harnessing their advantages in line with global trends.

There is a view in other parts of the world that the right to internet access should be a basic right accorded to all people. In fact, last year the United Nations Human Rights Council released a non-binding resolution condemning intentional disruption of internet access by governments and affirmed that “the same rights people have offline must also be protected online.” What is POTRAZ doing to ensure that internet access is readily and cheaply accessible to all Zimbabweans?

One of POTRAZ’s mandates is to protect consumers. In this regard, the Authority has included network roll-out obligations in all operators’ licences to ensure access to all telecommunication services for all Zimbabweans. In this regard rolling out of shared passive infrastructure and community information centres to remote and unserved areas is currently underway. It is important to note that the right to access depends on the ability to provide a sustainable service.

There is a new Cyber Bill that has been proposed which plans in part to regulate online communication. How will this regulation of communication work in practice and will it not infringe on citizens’ rights to free speech and to privacy?

Most countries in the world have cyber laws to protect their citizens from hackers, fraudsters and other cyber criminals. Zimbabwe should not be an exception.

Having responded to your questions please note that in line with the Authority’s mandate of promoting e-education and innovation operators are encouraged to develop cost effective packages for educational institutions and students that encourage this initiative.



21 Comments

  1. One fusionist says:

    That guy never answered any question. Just hot air.

  2. Frank says:

    This guy was not responding to questions but reading out a pre written script given to him by some authority….. the damn thing about all this is that Zimbos will take all this lying down..complaining here and there but will do zero to reverse this.

  3. Machengete says:

    econet daily 2gig will cost lyk $40

  4. Macd Chip says:

    Please correct the “…2c per minute..” for data sentence, its confusing especially if start to think in terms of voip.

    Its clear from the way Machengete he is answering that he knows nothing about Telecoms industry. He needs to learn fast from the international standards he keeps on refering to.

    His appointment is more of domestic political tactic than technical. Everyone Zimbabwean fear anything CIO, in that regard, he is serving the purpose very well because no one will oppose Potraz for the fear of unkown from his CIO background.

    Technically, Zimbabwe will suffer as innovation will stiffle. Facebook doesnt fear CIO(reminds me of Baba Jukwa, Makedenge and FB saga). Hackers from around the world are not scared.

    World trends points to telco environment where market forces control price through competition hence data prices are going down and OTT services coming up.

    On the plus side for Machengete, if the money telcos gets are to be used for infrastructure development, then there is light at the end of tunnel because right now they do need that money.

    Lte deployments needs a lot of money to upgrade base stations and core networks from legacy 2G/3G networks. Bt only Econet can do that because the other two usually play politics, diverting money into polical grounds and awarding questionable tenders to the politically connected

    Good luck Mr Machendete

    1. Anonymous says:

      You seem to not know well what you’re saying. It is actually cheaper to implement 4G than it is to install 2G/3G

  5. dd says:

    well seems more like in reading tax income as well as making certain things more expensivel
    . but it goes to the same thing a person will only spend what will by have and hence operators won’t have any real increase as we are at a point where we can’t spend more than we are at the moment

    1. Macd Chip says:

      well observed!

    2. Imi Vanhu Musadaro says:

      On the contrary, quasi-parastal operators like Net-One and Telecel cannot sustain the “losses” (profit cuts rather) associated with data-bundles, against Econet. Base pricing forces all operators to have expensive data reducing Econets competitive advantage, whilst bolstering the “other” operators revenue.

  6. Langton says:

    Kutungana kwembudzi chaiko!

  7. Prince says:

    Those among us us who applauded this Potraz thing – this is what we meant when we said its a bad idea – always choose Freedom over Control – always! Power corrupts and is easily and more often abused ….

  8. dzom says:

    Anyone who thinks people will stop going on whatsapp, facebook and twitter just because they have hiked the price of data is in for a big surprise. Its like trying to stop the flow of a river by spanning a fishing net across it.

  9. Worse than useless says:

    The answers given are useless. The time I spent reading this article was wasted

  10. Don says:

    Silly answers to very good questions. And this guy is supposed to be a “Director General”? How do people get some of these jobs?

  11. Josh says:

    Guys lets be realistic why are we putting all the blame on machengete, the floor prices were nit decided a month ago… I knew about them ages ago when operators where consulted and all this was done by whoever was acting DG becoz this machengete guy only started work on 1 Dec so if anything he is implementing a plocy of his predecessors. U cannot arrive at a company and while still finding your foot u change or reverse policies laid out before you. Machengete is a victim of circumstance, such decisions are approved or even recommended by boards of directors and how can a new guy come in and reverse things. Lets give the guy a chance…. about him being cio well I agree that the powers that be may have strategically placed him there but if u look at the guys resume u will be equaly impressed. Doctorate in business admin from australia and top of his class and if the guy ran cio surely he can run potraz. Lets leave politics out of this matter amd talk technology and facts… there are always two sides of a coin. Lets look at potraz side directly, ey I said potraz side not machengwtes side. This is not a machengetw matter.

  12. Linda says:

    I get u josh but the issue is people are mad coz in a bad economy we expect gov to protect us more than it protects companies… the floor prices will not provide the intended balance but will tilt the scale against ordinary people… the mistake machengete is doing is trying to defend a bad policy even if it was mooted and agreed to before his time… I would cut him some slack because as a leader he has an obligation to defend the authorities policies regardless of him not being involved in their making

  13. Anonymous says:

    hopefully the new bundles wont be daily or weekly or whatever

  14. Sayah says:

    I have learned with deep heart how our country is digging deep in our pockets… and also how econet is giving us it’s home country an unfair deal for our.. money… The same econet in Burundi is pegged 1Gig at 1000F which is equivalent to $0.60 usdollar… In Lesotho the same Econet is Charging M120 ( 120 rands) about $8…for 1 gig of data and M5…less than $0.40 us dollar for 1.5gig.for night bundles.. Here in Zimbabwe we charged un fair

  15. Hinternet says:

    [:-) Let us ban th internet guyz we ar torwads elections, social media z a threat these dyz

    [:-( no its amongst some of th human rights

    [:-) So wat cn we do nw

    [:-( no problem mek it unaffordable

  16. Anonymous says:

    The issue of floor pricing, in my view, addresses the issue of unfair competition. operators are using promotions as a competitive tool to acquire customers and where there is no minimum regulated tariff floor, the tariff can be significantly eroded. Therefore, floor pricing minimises the risk of anti competitive behaviour by operators who charge prices that are below cost with the intention to push competitors out of the market. Companies like Econet with other revenue streams from their vast business empire within Zim and abroad can afford to charge below cost tariffs to push little Telecel and little NetOne out of business because a loss for Econet on voice and data revenue can be easily compensated by entities like Steward Bank and Liquid Telecom among others while achieving the bigger objective of pushing other players out of the game. hence, in the vain of maintaing a level playing field in the sector, setting a floor price is surely the way to go. Instead of predatory tendencies, a floor price will encourage competition on more substantive factors such as quality of service, product differentiation and loyalty programs.

  17. Gurundoro weDzimbahwe says:

    Cyber Laws?? thats absurd..talking about hacking..there is no major hacking in Zimbabwe which you can reduce by hikening data prices. First world countries like America have frightening hackers yet Internet Service is as good as free with public wifi’s and everything yet isu zvedu tisati tambonzwa of a classic hacking that has happened. i believe this is just a move by the Government to inhibit us from downloading beneficial videos dzanaMawarire nana#tajamuka chete chete. im asking myself whatever happened to Ubuntu Hunhu, where helping one another was the epitomy of our livelihood.

    Given this already cruel and desolate economy, you would think the Government and all its branches would be out to help us but lo all they are doing is to suppress us further and taking our modern basic rights for granted. Slowly the African way of dealing with things is being eroded by their greed.

    in Earnest truth i think Econet was forced to hike their prices since they have more than 55% market share out of the almost 15million people in zimbabwe. And Potraz comes about to justify the rise when it was an order from up top already. How can you blame Econet, its a chance for them to make more money out of a money-less nation already.

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