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Zimbabwean mobile internet’s floor prices – Apportioning blame correctly

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#ThisFlag, Protests

It’s been a hailstorm on social media following the recent upward adjustments of data and social media bundles by the mobile networks firstly by Telecel on the 19th of December and Econet on the 11th of January. NetOne is sure to make its own adjustments.

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The question is who is to blame for this mess?

The tariff changes have been the result of floor pricing. Floor pricing or price floor is when a body, usually a regulatory or government-affiliated arm, imposes a price control that is based on how low an industry can charge for a service or product.

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The reasons for implementing such a policy vary due to market circumstances. In certain instances, price floors can be implemented to reduce uncompetitive behaviours or protect the long-term health of an industry during a price war.

In our current situation, the data and voice price floor could have been implemented for a number of reasons but it is not likely that they have been imposed because of uncompetitive behaviour or because there is a price war.

It seems the decision to implement this price floor is to protect the revenues of the industry from plummeting and to also insure the downstream tax revenues remain healthy in an environment characterised by cash challenges dwindling incomes in a less than stellar economy.

The general public has been justifiably up in arms and many theories have been proposed to explain the decision. POTRAZ and the government have been accused along with the mobile networks of being in cahoots in bringing the price of data up.

The reality is that mobile networks operators (MNOs), as commercial oriented enterprises will, because of their profit chasing genetic make-up, take advantage of any opportunity to make money.

The price floor is one such opportunity as revenues will jump due to the unavoidable higher tariffs. The bulk of the public’s wrath must be directed at the regulator whose mandate at law is to regulate tariffs of the industry and protect consumers.

Having said that, it is still possible while implementing the pricing floor for the mobile operators to exercise some humanity and ethics towards subscribers and not take advantage of the pricing floor to charge exorbitantly.

Ultimately it is in the consumer’s interests to punish or reward players who overcharge or give a good price. The consumer notwithstanding the challenging circumstances still has a voice and should reward networks that will stand by them in this trying period by voting with their feet while they file complaints with the industry’s regulatory body.

While operators are more visible and naturally on the receiving end of the public anger, the reality is that the blame must be placed squarely in the regulator’s lap.

The industry players would have been consulted through their telecommunications body and would have naturally made submissions but ultimately the buck stops with the regulatory authority who has the legal muscle to right this self-inflicted crisis.


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10 thoughts on “Zimbabwean mobile internet’s floor prices – Apportioning blame correctly

  1. This whole episode clearly shows the Zimbabwean psych:

    1. Corrupt

    2. Short sighted

    3. Profiteering

    1. Corruption
    How can a regulator sit down and entertain floor price in the current economy we are in. An audit plus Lie Detector needs to be run on all those body members who attended such meetings including the Minister.
    This is sometimes the results of One Centre of Power where anyone within government can issue directives, or claim that cabinet approves their view, which indirectly means the President approves it.

    When you marry business and politics, you definately gets enhanced corruption.

    2. Short sighted
    Nothing gets thorough look, everything is done to suit where the wind is blowing at that moment. Right now winds are blowing towards elections and everything is put into election mode perspective.
    Even if there is a business case, everything from now will be explained in election mode until the elections are over, then some minds will start to resemble normality.

    3. Profiteering
    Biggest problem, just check the prices of goods being bought in SA and sold here. Even better, compare the price for DSTV Zim prices to those of SA.
    We cannt really complain if profiteering have roots everywhere in Zim. Check the so called traders who go to China and buy the cheapest things they find and come back here to sell them.
    There is something l want to buy, Chinese made. In Zim its $1800, but same product, make in China is almost $500, and here in Zim it is being sold by so called big traders who are benefiting from government low taxes

  2. Techzim have been justifying why Econet hiked prices, it’s clear from the leaked TOAZ minutes Econet wanted to eat more that the other operators and we’re clearly leading this sheraid. YOU are a biased column and should also fall like your paymasters Econet. #TECHZIMMUSTFALL

    1. Econet is the only operator privately owned! They borrow their loans from international markets without any government support.

      So yes, they can try to milk it as much as possible to cover all their cost and make profit at the same time. Vote with your wallet if you are not happy.

  3. but to be honest all operators have expenses like loan repayments etc to met very month. for example network a needs a minimum revenue of 20 million to breakeen. so if the floor price means a person for example now juices abt 60% meaning that its a tighter fit cz profits may just drop. smh zim logic raise price for more tax.

    1. but NetOne loans are backed by government as a guarantee, and they are from our all weather friends which means very low interest. Im yet to hear how much they have repaid so far.

      But if you are like Econet and borrow on money markets, Zim is regarded as a high risk investment destination so it attracts high interests on loans and if you you miss repayment date by even hours, you attract further interest on it.

      1. MacD Chip
        Vendor financing is being extended not only to gvt-owned entities but to all players in the telecoms sector. This isnt only from Eastern suppliers but Europeans as well. The issue is risk applies across the spectrum whether one loans to gvt-owned entities or to private and public companies.
        Actually private companies have access to cheaper equipment because they have room to negotiate than gvt entities that are hamstrung by SPB controls.

        1. Compare loans interests rates TelOne and NetOne got from China to those Econet get from international lenders

  4. I like your way of looking at this one Techzim.
    Surely the blame should lie with the regulator here. Why does NetOne play victim when they were part of the meetings?
    As much as I agree on the need to have viable prices, there is need to implement in a way that shows we have heart for customers. How about staggering it over time?
    Macd is also spot on; the terms these guys get for loans are very different and obviously less favourable for non-government operators.
    Thumbs up to the reduction in voice Tariff!!!

    1. NetOne is playing politics, its a extension cash cow for a certain Party especially now that elections are on their way

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