Back to Index

Fixed and mobile telecommunication service tariffs
Postal and Telecommunication Regulatory Authority of Zimbabwe (POTRAZ)
Extracted from The Sunday Mail (Zimbabwe)
January 21, 2007

The Postal and Telecommunication Regulatory Authority of Zimbabwe (POTRAZ) is compelled to set the record straight on the recent media hype surrounding the recently approved tariffs for both mobile and fixed telephone operators.

The tariffs approved are in terms of the Postal and Telecommunications Act [Chapter 12:05] Section 100. The method used is based on the International Telecommunication Union (ITU) recommended model for the calculation of costs and tariffs for telephone services known among telecommunication bodies as COSITU. The tariffs are founded on cost information supplied by operators that is input into the COSITU software which gives us an output in form of cost of each service category based on its destination. This scenario is not by any means a deviation from the norm as it clearly demonstrates that our tariff levels are based on the cost incurred by each operator.

What the authority does not understand is the notion that international calls should be more expensive than local calls. This in our considered opinion is a fallacy, emanating from the practices of yester-year when tariffs were not cost-based and international prices were always hiked to subsidize local calls. In Zimbabwe we can proudly assert that we have moved ahead and adopted cost-based pricing, which has resulted in rebalanced tariffs, hence the most similar tariff levels for local and outgoing regional / international calls.

Stakeholders must first appreciate the differences between local /national calls and regional / international calls in order to understand how the tariff levels are arrived at. The major difference lies in that the latter have a significant cost component which is pegged in foreign currency in the form of regional /international termination rates.

The reason why tariffs for local /national calls have tended to increase at a higher rate than tariffs for outgoing regional/international calls is that local /national calls are affected 100% by local inflationary pressures, whereas tariff categories with a foreign currency component are partially affected. This is simply because the foreign currency component only responds to fluctuations in the exchange rates and our exchange rate has been largely fixed.

In computing international tariffs, all operators use the official exchange rate for converting the foreign currency component in the form of international termination rates. All operators can sufficiently fund their foreign currency needs from revenue earned for terminating incoming international calls on their networks. The earnings are deposited in their Foreign Currency Accounts (FCAs) and adequately cover their foreign currency obligations for terminating outgoing international calls on regional and international destinations. This is so because Zimbabwe is an overall net receiver of international calls and hence a net receiver of income from international termination rates.

It is the authority's conviction that no operator is sourcing foreign currency for paying termination rates for regional and international destinations from the black market. Furthermore, no single operator in Zimbabwe should fail to meet its international termination rates obligations to external networks unless they are grossly undercharging on terminating income international calls. If this is the case, then such operators need to realign what they charge for terminating international calls on their networks. Essentially, there might also be a need to investigate the operations of such operators as they could be engaging in illegal activities. It is myopic therefore, to imagine that our tariff levels are inimical to the development of the telecommunications sector as no single operator is making an operating loss but all are making reasonable profits which are factored in the tariff structure.

POTRAZ is committed to attaining its vision of a prosperous, knowledge-based society that is largely driven by information communication technologies and is there to strike a balance between ensuring the sustainability of the sector and affordability of services.

Postal and Telecommunication Regulatory Authority of Zimbabwe (POTRAZ)
Emerald Park, Block A
30 The Chase
Mount Pleasant
Harare
Tel: +263-4-333032
Fax: +263-4-333041
Email: The.Regulator@potraz.gov.zw

Please credit www.kubatana.net if you make use of material from this website. This work is licensed under a Creative Commons License unless stated otherwise.

TOP