International gateway liberalisation pays off
By GILBERT KAIMANA
THE idea to liberalise the international gateway was mooted early in the 1990s, when legislative changes started. But it was not until a single decision taken last month that benefits have oozed at such an incredible pace to consumers, and are already being appreciated.
While Zambia remained adamant on liberalising the gateway and pegged a prohibitive fee, countries like Niger, Ivory Coast, Cameroun, Gabon and Uganda have had liberalised gateways and had no additional charges other than telecommunication licence fees.
Those that had, such as Malawi, Sierra Leone and later Uganda, the fees were only in the range of US$50,000 to US$100,000.
But finally, the Zambian Government has practically liberalised the international gateway by enacting the Information and Communication Technologies (ICT) Act of 2009, slashing fees for international gateway from US$12 million to US$350,000, and allowing private mobile providers to operate their own gateways.
The Zambia Information and Communication Technology Authority (ZICTA) allowed private mobile phone operators to use their international gateways, and they have moved quickly to significantly cut their international call rates.
ZICTA authorised MTN and Zain to deploy their own international gateways on June 14, 2010, and within a week, MTN cut all its international call rates by an average 40 per cent, with the highest reduction of 80 per cent being on call tariffs to some countries with higher traffic to and from Zambia.
MTN Zambia chief executive officer Farhad Khan says the company effected the reduction since it was now economical in the context of the ‘remarkable’ new ICT Act.
Peak hour calling rates for calls to China, Canada and the United States of America (USA), which is the fifth most frequently called destination by Zambian callers, were cut by more than 80 per cent.
“Our customers will now be able to call these countries from K1, 500 per minute. Per second billing applies to all destinations, which is an added benefit of the new international calling proposition,” he said.
Other rates for calls to South Africa, Namibia, Botswana, Rwanda, Uganda and Tanzania were cut by 45 per cent.
Two weeks later, Zain Zambia commercial director Mark Ocitti also announced a reduction of all international tariffs by up to 70 per cent, with those for popular destinations like South Africa, China, United Kingdom (UK) and United Arab Emirates (UAE) cut to as low as K1,500 per minute.
“We are delighted to pass on the benefit of operating our own gateway directly to our customers. This means that the vast majority of international calls will be reduced and in some cases by 70 per cent,” he said.
Mr Ocitti said now making international calls will be affordable to its more than 3.3 million subscribers in Zambia.
“We commend Government for facilitating this further step in the liberalisation of the telecommunications sector,” he said.
Appreciating the development, Mildred Chola of Lusaka says she is now able to regularly communicate with her spouse who is studying in the USA.
“I used to wait for him to call, though I could send a text once in a while, but now I have been able to call him as well,” Mrs Chola said.
She added that: “I think we should be seeing more of such developments because communication is supposed to ease our lives, not burden us. When you have a phone you need to make a call, but it is always a burden.
For the business community, this is what has been long desired because the high rates have been increasing the costs of doing business and that is the reason they have been calling for the liberalisation of the gateway.
“We believe that it is a welcome development, because this is going to lower the costs of communication, which is a key input in business transaction. This will ultimately lower the cost of doing business,” says Isaac Ngoma, national secretary of the Economics Association of Zambia (EAZ).
Business people like cross border traders appreciate that the reduction has led to increased interaction with their suppliers and counterpart entrepreneurs in other countries.
Cross Border Traders Association (CBTA) chairperson general Eliot Kabinda says the traders now find it cheaper to engage with suppliers from whom they buy their goods as well as with other traders in the region.
“We want to commend the Government and the service providers for this, because it is like a rebate for us. This development will boost our businesses because it has become cheaper to make international calls to make orders,” Mr Kabinda said.
The decision by the Government was realistic, coming at a time that it is also undertaking other policy and structural reforms to develop the telecommunications industry in particular and the communications sector in general.
One equally hardnosed decision has been to unbundle the monopoly that it clung to in the market through its ownership and control of the Zambia Telecommunications Company Limited (Zamtel).
The Government has sold a majority stake in Zamtel to Lap Green of Libya. It has been an endearing cry from the private sector that the State should diminish its monopoly and liberalise the sector to increase competition.
Finance and National Planning Minister Situmbeko Musokotwane says the reduction in international calling rates is a fruit of the privatisation of Zamtel.
Dr Musokotwane says the international tariffs were excessive partly, but significantly, because of Zamtel’s monopoly, as Zain and MTN were unable to reduce rates because of huge obligations to the parastatal for usage of its gateway.
The minister admitted it was a survival strategy for Zamtel not to reduce the fees that Zain and MTN were paying, because the company was failing in other revenue measures.
“The business community has been complaining to us about the high international calling rates, because all the calls were routed through Zamtel. Zamtel had to fix prices that made the other operators unable to charge lower rates,” he said.
The other benefit is that this development should now be able to align to their respective networks in other countries. For instance, Zain has been restless in trying to connect Zambia to the ‘One-Network’, which had connected all Zain operations in the Middle East and Africa to a single network with flat rates across borders.
“Zain has been complaining that because the Government was resisting the liberalisation of the international gateway, it was unable to offer some of the services that it was offering in other countries, since it was not connected to the one network.
“We heard Zain, but we could not participate in this because of the excessive monopoly of the gateway and the fees that we were asking them to pay.
Dr Musokotwane says it should now be possible for Zain and MTN to connect their networks to their family networks and allow Zambian subscribers to enjoy cheaper local rates when they are abroad on business or personal visits.
The subscribers will be able to recharge their phones with local airtime when they are in the foreign countries and make calls from there as though they are calling from Zambia. In fact it will be even cheaper because tariffs are lower in other countries.
“For us, it is more than just calling from Zambia. We want when we are in the countries for business or to organise our members, we should be able to make affordable calls back home,” said Mr Kabinda.
MTN has already implemented this, as it has already connected Zambia to the One Network and some subscribers can recharge their Zambian sim cards and local using local airtime at local rates in some countries when are in South Africa, Rwanda, Uganda and Swaziland.
The positive effects notwithstanding, it is the feeling of some stakeholders that more should be done to rationally reduce the call rates further.
As Mr Ngoma argued, it makes no sense that the service providers have maintained higher rates to destinations like South Africa and Zimbabwe - countries that have more business dealings with Zambia.
Mr Ngoma said there is need to resolve underlying telecommunication dynamics that make it expensive to connect to these countries.
“The applicable tariffs announced are not well structured, because why should we pay more to call South Africa and Zimbabwe, which are our neighbours? We also need to ensure that these tariffs are lowered,” he said.
For Stanely Phiri, even if international calling would be cheaper than before it will make more sense if local costs were also lowered, because one needs to save on local calls to make international calls.
But what is important is that this seems definitely the beginning of low calling costs, as the service providers have committed to doing more as they maximise on the international gateways.
For Zamtel, which hitherto has been the preferred network by those making international calls, the new management investors can only promise more affordable services, going by an assurance by Lap Green managing director, Abdulbaset Elazzabi.
And as for Zain, which has been taken over by Bharti Airtel, the new shareholders have equally been enthusiastic in passing on the benefits of the milestone development to customers.
Bharti international chief executive officer Manoj Kohli, who was in Zambia three weeks ago, promised that the company, using the gateway as a backbone to its strategy, would reduce international and local call rates to more affordable levels.
Regarding the local calls, the service providers are working at lowering interconnection fees to enable them reduce their tariffs.
Already, MTN and Zamtel have agreed to reduce the fees by 50 per cent once a Statutory Instrument (SI) has been issued by the Government.
Therefore, though belated, as other countries that had long liberalised their gateways or charged far less fees have been benefiting from real competitive rates, all signs are that the mobile phone providers in Zambia are responding positively.
