Tariff on Internet Phone Calls

Lusaka, August 14, 2018

At the 12th Cabinet Meeting held on the 13th of August 2018 at State House, chaired by His Excellency the President Mr. Edgar Chagwa Lungu, a statutory instrument was approved to further the introduction of tariff charges to be charged through telecommunication service providers. Government noted an increase in the use of internet phone calls at the expense of traditional phone calls. They indicated that this development threatens the telecommunications industry and jobs in companies such as Zamtel, Airtel and MTN. In response, the Government has since introduced a 30 Ngwee a day tariff on internet phone calls.

Firstly, it is important to note that this shift in consumer preferencesdoes not in any way threaten the telecommunications sector as the providers of both the traditional phone call services and internet phone call services are largely the same companies that are supposedly under threat. This decision amounts to double-charging as consumers will still pay for data and now, additionally, will be charged 30 Ngwee a day tariff by the service provider. It is also in violation of the consumers’ right to choose based on affordability.

This announcement comes as a surprise as it states that it is for the benefit of mobile phone companies however it was the mobile phone operators themselves, namely, Zamtel, Airtel and MTN, who all reduced the cost of data bundles by over 70 percent in at the end of 2017. This increased the affordability of this service for consumers and as such played a major role in the increase of data users. This decision was welcomed by consumers.

CUTS is particularly concerned that in the past two quarters ZICTA has fined all three mobile network operators for failing to meet Quality Service Guidelines. On June 262018 the three telecomminications service providers, namely Airtel, MTN and Zamtel were fined a total of K12,6 million for the first quarter of 2018. This decision was on the back of a similar action taken by the regulator in the fourth quarter of 2017 to fine mobile network operators K3.1 million for failing to adhere to Quality of Service parameters. As such, Zambians havebeen receiving expensive but low-quality services from these mobile phone companies.

The decision by consumers to move to internet phone calls is a rational consumer behavior prompted by the actions of both the Government and the mobile phone companies themselves.

Governments decision to increase the cost of internet phone calls will severely affect low income consumers who had switched to this form of communication due to the high cost of regular phone calls.Communication is not a luxury service to the Zambian consumer but a necessary component of the day to day social and economic activities of citizens. As suchit is important that the interests of consumers be safeguarded to the highest extent.

The growing indispensability of mobile phone services today speaks to the importance that the government should place on ensuring not only the accessibility, but also the affordability of mobile phone services.

What is most surprising about the statement is that it has indicated that this decision will help to maintain jobs however it is the same companies that offer traditional phone calls that provide data services. The statement contradicts itself in that the very companies that are being protected by the government are the same companies providing the internet services.

This decision to charge more for internet services so that consumers move back to regular phone callswill take Zambia backwards as the rest of the world is moving forward in this area. It will also have implications on the cost of doing business because as other countries are able to benefit from more efficient and affordable costs of communication, Zambian business will be burdened by these additional costs making them less competitive. This will have the most sever impacts on small and medium enterprises.

The Government should be concerned with improving the services being provided by the mobile providers and not taxing the people of Zambia and infringing on their rights to communicate. The proposed tariff of 30 Ngwee on internet calls is a threat to entrepreneurship, economic expansion and innovation.

For more information kindly contact: Centre Coordinator, Chenai Mukumba