Internet access is expensive in Zimbabwe, that fact cannot be stressed enough. The cost of establishing a consistent connection for individual, residential or commercial use is still beyond the economic reach of most citizens especially against the backdrop of our strained economy.
With over 98% of internet connections in Zimbabwe made via mobile devices, the cost of mobile broadband is the key determinant of how big an expense the internet really is.
Which is why these high broadband tariffs were a major pain point when the local telecoms regulator, POTRAZ, issued a directive for all operators to set floor prices of 2 cents per megabyte on data bundles.
The tariff increase was eventually reversed, but even after this Zimbabweans still pay an average of US$30 for 1 month’s access of 1 gigabyte (GB) of data. It’s the third highest in Africa. The local mobile broadband product lineup has also been stacked with packages like the daily bundles which offer subscribers 1 GB of data for $2, valid for 24 hours.
While there have been a lot of reasons thrown around for these high tariffs, we’ve listed our 5 which have also been cited by members of the telecoms industry, analysts as well as the government.
Far from the sea and submarines cables- the realities of being landlocked
Most of the bandwidth which translates to the internet connections which we enjoy is delivered via submarine cables which emerge at cable landing stations located at specific coastal points.
As a landlocked country, Zimbabwe is faced with the additional costs that come with obtaining access to the same submarine cables through the third party countries that have these cable landing stations.
This factor has been cited periodically as a major hurdle for landlocked emerging markets trying to increase internet access to their populations. In a 2016 World Bank Development Report on Digital Dividends, it was called “the last 1,000 miles”, referencing the additional distance data has to travel just to get to countries like Zimbabwe.
Our country’s internet providers factor in this cost into their pricing model, which inevitably makes the cost of access in Zimbabwe higher than coastal countries.
That’s not to say all landlocked countries are paying as much as Zimbabwe, though. Some pay less while others pay more, depending on other factors that determine the eventual cost of the internet.
Zimbabwe’s small population
As with all things related to mass adoption and use, the more people who are set to access the internet, the lower the potential cost. Zimbabwe’s population of 12 million people is small by any mass distribution standard.
Considering that this same population is further segmented by aspects like economic activity, age and literacy, the final number of potential users drops to less than 10 million. Just as an illustration, we currently have an internet penetration of 50.1% which is approximately 6 million active connections.
When purchasing bandwidth for distribution local internet access providers have to be cognisant of these limited numbers, which results in smaller quantities bought and lower discounts negotiated for. A larger population would mean greater volumes of bandwidth consumed, and greater discounts then passed on to consumers.
A larger pool of internet users also ensures that any cost incurred by the internet providers in delivering services is spread across a greater number of subscribers and not carried by only a limited set of users.
Private sector leads in the rollout of a public utility
Internet access is now accepted as a basic human right and while the internet is an everyday utility the State has to treat it differently. This is because it doesn’t have control of infrastructure. Any attempt to theoretically extend a massive subsidy to consumers or to “nationalise” the sector for public benefit will rightfully have serious pushback.
The largest investment in Zimbabwean telecoms has come from the private sector through the work done by companies like Econet Wireless and its affiliate, Liquid Telecom.
Their profits driven approach has ensured that the entire industry (mostly) adopts an aggressive stance towards aspects like service delivery as well as pricing. It would have likely been a less dynamic telecoms space had it been done in any other way.
The majority of telecoms investment have been made by these private entities with obligations that have to be taken into account before the cost of the internet is lowered overnight. Which explains the lengthy negotiations that take place between the regulator and these providers before such changes are put into place.
Late investment in infrastructure
Zimbabwe’s internet boom took place after 2009 when the country adopted a multi-currency regime which unlocked tangible financial returns for investments made on telecoms infrastructure.
A lot of the work that followed this was enabled through leverage finance – borrowed capital, which was secured from investors outside the country. Less than a decade later, there is still a significant amount of debt that service providers have to service, creating the perpetual cries for leniency from the regulator in determining prices for broadband.
To a greater extent POTRAZ has accommodated this, going so far as to give broadband providers the leeway to set prices according to market forces.
Until Zimbabwe gets to a stage in telecoms investment when infrastructure isn’t reliant on finance acquired under tough payment conditions and this same infrastructure has been extended to a greater part of the population then this factor will always be at play.
A “compromised” regulator
POTRAZ is mandated to protect consumers when it comes to products and services in telecoms. However, it has other obligations as the entity in charge of safeguarding the industry and protecting revenues for all operators and providers.
It falls under the government which, in as much as it might try to accommodate the concerns of falling revenues in telecoms, still anticipates taxes from the vibrant sector. This case is even more apparent in a tough economy with shrinking revenues.
POTRAZ might be the one entity that’s supposed to look out for the ordinary man, but its role in protecting its principal plus the service providers places the citizen at a disadvantage where other more pressing concerns such as money are put forward.
POTRAZ has to balance these two roles out, and as was the case in the recent tariff increases, sometimes the State’s revenue comes first. The result is that the cost of data isn’t reduced as much as we’d want with the other “technical reasons” cited as the primary motivation for holding out on any #DataMustFall outcome.