Public interest oversight needed in data pricing

Digital platforms are increasingly proving to be a viable option for economic survival in the wake of COVID-19-induced lockdown measures. Although access to the Internet remains largely a preserve of urban dwellers, more Zimbabweans, like the rest of the world, are embracing the technological path by working from home using online-based platforms and digital transacting models within the broader electronic commerce framework.

Considerations are underway, should the pandemic persist, towards rolling out online education programs as well as digitization of health services among others. More than ever before, Covid-19 is teaching us the importance of investing more in information communication technology (ICT) driven solutions, which places internet services in the spotlight. Government and private sector players will have to invest more in decentralizing data services to also cover the rural communities at affordable costs. This revolution demands increased public interest oversight, especially regarding the pricing of data services and the broader electronic commerce (e-commerce) so as to strike a balance between the business imperative and protection of consumers.

Already there is a growing concern around data pricing in Zimbabwe after network service providers increased their charges last week, attracting increased criticism from the public. The latest hikes in data costs have rekindled debate about the affordability of Internet access in Zimbabwe, especially in an environment where income and salaries have remained static. While tariff reviews are inevitable given the prevailing inflationary environment and subject to regulatory approval, the level of increase and disparity in costs by players, and consideration of income level in the economy, demand some level of reasonableness.

There has to be a fair balance, more so given the devastating impact of Covid-19 on the economy and the strain it has induced on disposable incomes.

Mobile network operators Econet and NetOne have reviewed the prices of their mobile data bundles with effect from 5 May and 7, respectively. Although the prices are only for data bundles and do not include social media bundles for applications such as WhatsApp, Twitter, Facebook, and Instagram among others, a comparison of these confirms the need to harmonize the cost structure.

Indeed the pricing for the two operators has variations as they compete for clients but for comparison purposes, it is critical to track value per megabyte based per dollar. For instance, NetOne’s cheapest bundle for $8 is offering 3.8MB/$1, whilst Econet cheapest bundle is offering 3.64MB/$1. The offering is similar to lower production levels. However, when one purchases bundles with higher prices the disparity widens. For instance, the $60 bundle for NetOne offers 8MB/$1, which is double the value being offered by Econet.

Closer scrutiny further indicates that NetOne is offering daily data bundles for as little 8cents per megabyte, with the cheapest Econet daily bundle at about 24cents per megabyte, which is three times the value being offered by NetOne.

For monthly data bundles, NetOne offers 13cents per megabyte whilst Econet’s cheapest monthly bundle is about 24cents per megabyte. While at face value NetOne seems to be charging more, a cost-benefit analysis indicates the State-owned telecommunications operator is offering a lower tariff for more. Before the recent tariff hike, NetOne and Econet were offering 25GB and 50GB bundles for ZWL $400 and ZWL $800. Under the new price regime, Econet increased its wifi-bundle rates by 225 percent and 150 percent while NetOne, on the other hand, increased its One-Fi bundle rates by 63 percent and 56 percent respectively.

Drawing from the above examples it is clear that there is uneven costing of data services in Zimbabwe with NetOne remaining on the lower side towards reasonable data fees when compared to Econet.

Ironically the two giant network providers operate under the same economic climate and are regulated by the same authority. In view of the adverse effects of Covid-19 and the need to steer e-commerce, the expectation is that such big companies like NetOne and Econet should assist the country to fight the pandemic through promoting digital solutions and spreading of information regarding the Coronavirus. Reasonable pricing would greatly help workers in the private and public sector that are practicing social distancing by working from home.

In order to cushion network providers Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz) director-general, Dr. Gift Machengete, revealed that Government has allocated free frequencies until the end of the year to the three mobile network providers, Econet, NetOne and Telecel.

This is a commendable move meant to ensure affordable data to consumers in the wake of Covid-19. Network service players must also reciprocate the gesture for the benefit of consumers. Concerning high tariffs, Dr. Machengete said the operators were still within the threshold of 30 cents per megabyte set by the regulator as the companies had been charging discounted bundles all along.

“Potraz also continues to regulate tariffs for data or internet using the cost-based pricing principle. This means only the costs incurred to provide the service are used to determine the tariff thresholds within which operators set tariffs,” he told our sister paper, The Sunday News.

“This is meant to balance the need to ensure service affordability while at the same time ensuring the survival of operators and at the same time giving operators the flexibility to compete on price offerings as manifested in their discounted bundle offerings,” he said.

Globally, millions of people are also going online to stay in touch during Covid-19 and yet half of the world population has no access to the Internet, according to the World Economic Forum. It further notes that among the many inequalities exposed by Covid-19 the digital divide is not only one of the starkest but surprising. In South Africa, the government has called for data network providers to freeze costs for the duration of the Covid-19 period. For a developing country like Zimbabwe, there is a need to ensure the affordability of data services to all people for the economy to derive the full benefits of inclusive digitisation.