Sierra Leone’s mobile phone tariff shock

Mahmud Tim Kargbo: Sierra Leone Telegraph: 14 March 2020:

Can NATCOM – Sierra Leone’s mobile telephone regulator, seriously call on Africell mobile phone service provider to do more to tackle the current growing problem of “bill shock” that followed immediately NATCOM slammed a 90% tax on all mobile companies’ promotions?

Many consumers using Africell are currently experiencing unexpected high mobile phone bills, which in many cases are exploiting victims.

Mobile companies operating in Sierra Leone, with the exemption of the newly established Q-cell, are well known for their bill shocks mostly in all their services to the public.

By the look of things, current NATCOM administration is well comfortable with their exploitative actions against nationals because they are doing nothing positive to put an end to mobile companies fraud against their consumers.

Sierra Leone Government’s action to effect a NONE PROGRESSIVE TAX on all mobile companies’ promotions is hanging Africell’s  customers out to dry with shocking phone bills.

Government is saying that mobile phone companies are subverting taxes and there is need for floor price fixing to prevent market dumping activities.

However, many are saying Sierra Leone has the highest mobile tariffs in the sub-region and is among the highest in the world. And that, with the present tough economic situation, there’s no need to even effect a very unfriendly Financial Act originated tax against mobile companies to discourage competition in the market and tolerate Africel to respond by shifting the burden of the very oppressive tax to their consumers.

The hard but uncomfortable truth is that a 90% tax on all mobile companies’ promotions by the regulating body NATCOM, indirectly means government is asking mobile companies to drop down 90% of their promotions to consumers and maintain only 10%.

Most Sierra Leoneans believe NATCOM”s action to effect 90% tax on all mobile companies promotions is meant to protect Africell and Orange who are currently losing consumers to newly established Q-cell,  due to years of cheating activities against their consumers.

Before the highly controversial 90% tax on all promotions was effected, Africell and Orange complained to NATCOM that Q-cell is dumping low calls and data prices on the market. An accusation Q-cell effectively dismissed by saying they have an obligation to treat their consumers well with fair prices and quality service. And that’s exactly what they are doing.

A tax expert said to me – “If NATCOM is saying mobile companies are evading taxes with their promotional calls, then there is an opportunity for NATCOM to be innovative by creating tools for NATCOM to keep day-to-day track of mobile companies’ operations on promotional and none promotional calls and data. NATCOM can also take steps to effectively stop these mobile companies (Africell and Orange) from stealing money from consumers”.

NATCOM is well aware of the issue of Africell and Orange stealing from their consumers. Currently the mobile industry regulator has no incentive to introduce measures to tackle the problem. But it cares about floor price fixing to discourage competition in the market and encourage these mobile companies to keep on stealing from their consumers and freely get away with it.

With NATCOM now seen by the public to be protecting Africell and Orange to monopolise the market with their controversial floor price fixing tactics, many are asking whether we are really operating in a free market economy where prices are determined by the forces of demand and supply.

So far the Ministry of Information and Communication is leading the way, and there is now a floor price limit on how much you can be charged for on and offnet calls – but no solution to the problem of Africell and Orange stealing from their consumers.

Citizens would like mobile companies to reduce their charges in line with other companies operating within the sub-region. Minister of Information and Communication – Mohamed Rahman Swaray,  said in a press conference that within 90 days they will put their house in order. But will this lead to the reduction of high mobile tariffs by these companies against their consumers?

However, two years on, when the government asked mobile companies to reduce their tariffs, they refused and the problem persists. Victims of bill shock have described NATCOM as “toothless”.

Nobody actually wants to be stung by sky high and unfair charges on their mobile phone tariffs. This is why NATCOM needs to come forward with strong measures against Africell and Orange.

Africell and Orange as providers should have effective and transparent complaint systems; and if consumers are not satisfied, there should be redress mechanisms set up by NATCOM to ensure fair outcomes for consumers.

3 Comments

  1. I am an IT-Televommunication-Netwotk Engineering and Cyberesecurity Consultant (Wangoh Dynamics Technologies Inc, currently and permanently based in USA. My Professional Advice to the current Government of Sierra Leone is to consolidate SALCAB and Suerratel into a Giant Telecommunication Infrasreucture known as SierraFios – Sierra Leone Fiber Optic Services; paving the way for a new ministry also known as Ninistry of Network-Telecoomincation and Cybersecurity Infrastructure.

    International Telecoomunication and Inrernet Service Providers should be given mandatory options to provude two sets of Services, that is, Per Seconds Billing Circles (Pay as Your Minutes finishes) and Per Minutes Billing Circles (One Month Billing Circles).

  2. Thanks Tim Kargbo. This story is not only what meets the eye – it is a complex one. The global market is seemingly positioning itself towards free and ‘perfect’ competition. A situation whereby the price of a good (or service) in a particular industry is set by market forces, that is, SUPPLY and DEMAND. Hence, in order to derive any profit margin, the only variable that can be manipulated (lowered) is the cost of production. And this, in most cases, is achieved by the presence of scale economies.

    In this scenario, Africell and Orange – the old boys – have relatively larger economies of scale: cheaper means of transportation, larger customer base, established networking activities, etc, as compared to the new player Q-cell. In fact the old boys, Africell and Orange, were presumably operating in a duopoly; which means they can collude together and fix prices. No wonder their prices were somewhat high.

    Now, for the new player, Q-cell to break into this market, and have a fair share of the pie, they would have to offer relatively low prices for their services. They are not going to offer these low prices forever; this is just a mechanism to gain leverage into the market, and then later raise their prices; or until the equilibrium price is attained in the industry, for any specific service. This is alright for a fair and perfect competition, and the forces of demand and supply will force the price of a unit of service down.

    The old boys, Africell and Orange, wouldn’t like that a bit. In fact they would frown at Q-cell for coming into the market and rake their profit margin. Profit being the magical phenomenon that keeps them in business. They can even bribe the regulator, NATCOM, to discourage Q-cell, as in the present stipulation of the “90% tax on all mobile companies’ promotions”.

    As for government, their main objective is to gain as much tax revenue as possible – especially in the present circumstances in Sierra Leone. The government’s pretext is that “mobile phone companies are subverting taxes and there is a need for floor price fixing to prevent market dumping activities”. A floor price fixing is the lowest possible selling price below which the seller is not legally allowed to sell the product or service. In a way, a floor price fixing can be good for the customer; as in the case of minimum wage setting. However, in the current case of mobile phone operators in Sierra Leone, it will discourage competition; and in particular, it will prevent Q-cell from establishing a solid footing in the market.

    Here is the tricky, complex and dark side of the whole saga: It is highly likely that Q-cell, the new player has not been ‘entertaining’ NATCOM in the form of kickbacks to find itself in this position. So, it could be that some unscrupulous paopa SLPP officials are trying to coax Q-cell into succumbing to illegal business practices. Notwithstanding, it is ironic for a government that is seeking to extend the scope of private enterprise to engage in price fixing and aggressive regulation of industries. All in all, it is the consumer that will suffer at the end of the day.

    • Excellent and sound analysis in regards to this issue. Thanks Mr. Turay, I always admire your competent approach in all issues brought forth to this platform.

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