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New law threatens Econet
Clemence Manyukwe, The Zimbabwe Independent
October 27, 2006

http://www.theindependent.co.zw/viewinfo.cfm?linkid=11&id=8138&siteID=1

THE government intends to introduce legislation with effect from next week which is likely to cripple the operations of cellular phone company Econet through termination rates for international traffic that favour the state-owned Tel*One.

The government has notified mobile phone operators that Statutory Instrument 70/06 will be operational beginning November 1 in a development that will also have a negative impact on Telecel as it will hand Tel*One a monopoly over foreign currency earnings.

The Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz) director general Cuthbert Chidoori yesterday could not comment on the statutory instrument, only saying: "I will come back to you."

The introduction of the law shows government's determination to squeeze private players out of business as a similar move, through statutory instrument 18/04, instructing that Tel*One was to provide all international telecommunications services with effect from January 31 2004, was set aside by the High Court.

At that time Econet Wireless sought recourse in the courts against the law that also required mobile operators and Internet providers to use the government-owned earth station in Mazowe amid fears that government intended to increase its eavesdropping on international communications.

The statutory instruments are in violation of a 1998 Supreme Court ruling that ushered in a new era in communications by ending the state's monopoly through granting licences to private operators.

The government recently gazetted the Interception of Communications Bill that seeks to intercept private communications in a reversal of a 2004 Supreme Court ruling which declared unconstitutional Sections 98 and 103 of the Posts and Telecommunications (PTC) Act as they violated Section 20 of the constitution of Zimbabwe.

The latest statutory instrument will see traffic being routed through Tel*One that is charging the lowest tariffs of 15 US cents against the private mobile operators who are required to charge 20 US cents.

The effect of the statutory instrument is that private players would be prejudiced of foreign currency as Tel*One would declare all calls passing through it as its own and the private companies would get local termination rates in local currency. Econet and Telecel would however be required to pay for outgoing
traffic in foreign currency although they would not be earning hard currency from incoming calls.

The move will also result in Zimbabwe losing foreign currency due to Tel*One's low rates that have since been condemned by Reserve Bank governor Gideon Gono.

In his December 2003 monetary policy statement Gono said: "the monetary policy recommendation is that the minimum termination rate be set at between 20 US cents and 25 US cents."

He said between 2000 and 2002, Zimbabwe lost over US$75 million due to the low termination rates for incoming traffic.

"Zimbabwe is losing millions of foreign currency earnings through sub-economic termination rates for incoming international traffic . . . this results in Zimbabwe always being a net payer of scarce foreign currency," Gono said.

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