No real basis for regulating on-net tariff – Vodafone

The Finance Director of Vodafone Ghana, Kenneth Gomado says the National Communications Authority (NCA) has no real basis for attempting to regulate on-net tariffs.

The NCA is proposing that all telcos should charge not less than 4Gp per minute of calls made within a particular network, example from Vodafone to Vodafone call.

But speaking at a forum to discuss the proposal and it’s implication for consumers, he noted that the Section 25 sub sections of the Electronic Communications Act, Act 775 clearly states that prices in the telecoms industry should be determined by market forces and not by regulation.

He said the law only gave the NCA the opportunity to intervene where there is proven evidence of a dominant player using anti-trust means and predatory pricing to muscle out smaller players.

Subsection 2c of the Act hi however allows the regulator to regulate tariffs when it detects acts of unfair competition and anti-competitive pricing.

But Gomado said the onus lies on the regulator to show, through a thorough market research, if indeed the conditions exist for the regulatory intervention in pricing.

“As we speak now no market research has been conducted and there is no such scientific evidence to warrant a regulation so the NCA needs to show us the basis for seeking to regulate on-net prices,” he said.

Adom News is reliably informed there was a market research that showed the need for interconnect rates to be regulated, but no such research has been conducted prior to the attempted regulation of on-net tariff.

Director of Strategy and Innovation at Vodafone, Julius. Owusu Kyeremanteng said the regulation of on-net tariff will kill creativity of the telcos in structuring their bundles to meet the needs of various categories of consumers.

He noted that consumers stand to lose because packages they used to pay 1Gp per minute for would now become 4Gp per minute and so they would get less minutes for same bundle price.

“NCA cannot assume that the minimum cap will earn us more money. It rather threatens to make our customers spend less and ultimately impact the returns we expect from our huge investments negatively,” he said.

Taxes and consumers
Julius Owusu Kyeremanteng said NCA’s proposal threatens to cost the industry an estimated GHC175million every year and also cause reduction in government taxes as less and less minutes are consumed on the various networks.

He contended that regulation would also kill competition by forcing telcos to gravitate towards similar pricing, saying that it is the mandate of the NCA to protect consumers but on-net tariff regulation is not good for consumers.

Indeed Section 5, subsections C and G of the National Communications Authority Act, Act 769 enjoins the NCA to protect the consumers interest and even vulnerable people who cannot afford high prices of communications service.

The Vodafone Director of Strategy and Innovation said regulating on-net tariff would also make telcos lose revenue to OTT applications like Whatsapp, Viber, Facebook, Imo and others because people will use those affordable channels more than make mobile to mobile calls.

He also foresees protracted consumer agitation across the country because the 4Gp floor price will raise on-net tariff on the various bundles by 75 per cent.

Chief Technical Officer of Tigo, Obafemi Banigbe believes market forces should be allowed to determine on-net tariffs because they encourage innovation and the consumers is better for it in the long run.

“If a particular telco is unable to compete through the use of innovation to win and keep customers, that cannot be the fault of other telcos – it only means that telco is not offering what Ghanaians want and at the price they can afford,” he said.

Meanwhile, the NCA and the telcos who believe they on-net tariff regulation is necessary, argue that generally revenues in the industry is fast dwindling and there is need to control what they call “predatory pricing” by some telcos and ensure fair competition and the general sustainability of the industry.

But both Tigo’s Banigbe and Vodafone’s Gomado said their respective revenues are not dwindling as has been widely speculated. They insisted that even if that was the case, they were in a better position to manage it than the NCA.

Meanwhile, Vodafone’s External Affairs Director, Geheardt Mensah thinks the industry is over regulated and NCA is becoming more of a revenue collector than a regulator because regulation is not chatting a clear path for the future growth of the industry.

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