Vodafone, Tigo Battle NCA’s On-Net Price

           

Some mobile telecommunications operators have expressed alarm at the proposition of an on-net/retail price regulation by the National Communications Authority (NCA) lately.

On-net or retail tariff is what a particular telecommunication company charges its customers for calling themselves on the same network.

At a roundtable conference organised in Accra yesterday with the media and other industry stakeholders, officials of Tigo Ghana and Vodafone Ghana expressed dissatisfaction with the proposed on-net price of GH¢0.04p.

The two operators have initiated steps to seek help from the Electronic Communication Tribunal to stop the imposition of the price.

Currently the NCA has set interconnect or off-net (calls from one network to the other) at GH¢0.04p per minute, which means if a Vodafone customer calls a Tigo number, Vodafone would have to pay Tigo GH¢0.04p for every minute of call.

The status quo
“We have been a bit concerned in the past few years about where this is heading to. We do not really see any discernible focus on the intention of policy.

Looking at the directives and measures that are coming through, we tend to get the impression that policy and direction seem to be tailored a lot more toward revenue generation.

Concern
“There appears to be a blur between the role of the GRA and that of the NCA because most of policy initiatives are geared towards revenue generation while it should be rather geared towards helping industry to grow,” Gayheart Mensah, Vodafone Ghana’s Head of External Affairs said.

Noting that they were concerned about the structure of the industry, he noted: “With about 25 million population, we have six operators, and three LTEs – Surfline, Golden Keys, Blutech – plus the recent ICH which is the regulator, making 10.

“We are already an overcrowded industry. If you compare the number of operators in Ghana to what’s existing in other markets, there is a concern for worry and it creates a situation whereby operating becomes extremely difficult because of fragmentation.”

Prevailing tax regime
With the present tax regime, the NCA and government take their money upfront when a customer buys credit anywhere. This is a revenue based taxation system whereas in other industries it should be profit- based tax system.

“So today, we are paying massive amounts in taxes even though we are not making any profits. Government takes VAT (17.5%), CST (6%), NHIL (1%). They don’t care. So the question is why do we have an industry? If a consumer buys a GH¢10 recharge card, they get their revenue right away.

“With this system, there will no more be free night calls, bonus credits and other incentives to customers.”

The double tax applies to the interconnect calls that telcos make among themselves.

Competition
The aggrieved telcos believe the NCA fears that owing to the liberalization of the on-net price, smaller telcos would be disadvantaged.

But Kenneth Kwame Gomado, Chief Financial Officer at Vodafone, referred to the Electronic Communications Law (Section 25) which states that pricing should be determined by market forces.

The NCA must establish whether there is a monopoly, or whether there is a significant market player who is abusing its dominance in the market, he stated.

According to him, “No market study has been conducted, no dominant player has been established, no monopoly has been established and no unfair trade practices have been established. Therefore, we do not understand how we then get to the point of having a regulation that is trying to correct an ill that is yet to be established.”