EDITORIAL: Affordable mobile service good for economic growth

Tuesday October 17 2017

Harmonising tariffs between African countries,

Harmonising tariffs between African countries, putting connection charges between networks at the bear minimum and restraining tax agents from taking too much from the sector in the form of excise duties hold the promise for more affordable communication. TEA GRAPHIC | FELIX MIRING'U 

By The EastAfrican
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The mobile phone has become a communication tool of choice across all segments of the population.

Its promise to be the game changer in improving the business environment, however, has been hampered by high costs starting with acquisition of handsets and tariffs that, despite dropping steadily over the past decade, are still beyond the reach of the majority.

For instance, while feature phones cost as low as $5 in some markets, asking a subscriber to spend 20 US cents daily on phone services — voice, SMS and data — is a tall order for most families that live on less than $2 a day.

It is in this context that the main trading blocs in Africa — Comesa, SADC and Ecowas — have separately resolved in principle to drop roaming charges that operators heap on users who go beyond their network reach, and which are borne mostly by travellers and business people.

The limitation hurts social interactions as well as business, starting with the operators who have to contend with lower revenue per user and governments lower tax collections. Yet the charges were not without justification.

As mobile phone networks gained currency on the continent towards the turn of the century, the set up costs and licence fees were so enormous that each network could accommodate only a designated number of subscribers.

Having many intruders, especially along national boundaries, would have compromised the service quality hence the premium operators attached to serving extra handsets.

After years of investments, advances in technology and intense competition, however, networks now have the capacity to handle more subscribers many times over and it would be a disservice to charge a premium for what is essentially idle capacity.

Another factor making roaming charges less significant is convergence of regulations making it easier for network operators to partner and exchange favours in hosting each other’s subscribers.

East Africa has already seen improvements in the communications sector since the launch of the One Network Area two years ago which has enabled users in Kenya, Rwanda and Uganda pay local rates while outside their countries. Tariffs have reduced by 12 US cents, call traffic is up four-fold and operators like Safaricom and Airtel have reduced roaming charges by more than half.

Such benefits are expected to spread across Africa and should be the reason why Tanzania and Burundi must reconsider their absence from the One Network Area.

As the East African experience has shown, the other regional blocs need to go beyond abolishing roaming charges and make calls within national borders as affordable as possible.

Harmonising tariffs between countries, putting connection charges between networks at the bear minimum and restraining tax agents from taking too much from the sector in the form of excise duties hold the promise for more affordable communication.

Affordable communication will be key to unlocking not just the potential in commercial activities. It is also critical in agriculture, education and health where the phone is delivering innovations for better access to markets and services.