16 December 2012

Uganda: Uniform Telecom Tariffs

Photo: New Vision
Companies that charge for dropped calls will be fined.

Ugandans are paying even much more because of the poor quality of services

Uganda's telecom companies have almost identical charges, a mini survey by The Independent has established. It found out that a new subscriber who buys a new SIM card from any of the five major companies and makes ten regular calls of one minute each or sends ten SMS messages (both on-net and off-net) would be charged almost the same amount.

The total call charges would amount to exactly Shs 6,800 for MTN, Warid and Airtel, while a subscriber on Orange would pay Shs 6,900. The one on UTL would be charged Shs 5,800. While each of the companies is running promotions to lure customers by promising the "cheapest" call rates, the fact that the charges are almost identical for subscribers who are not registered to the promotions appears to suggest that the companies have reached a 'gentleman's agreement' not to engage in price competition.

All the companies, apart from Orange (Shs 3 per second), charge their peak time calls at Shs 4 per second for both on-net and off-net voice calls. However, Orange's off-net calls are charged at Shs 6.

MTN, Warid and Airtel sell their new SIM cards at Shs 2,000 each, while the one for UTL costs Shs 1,000 and the one for Orange is priced at Shs 1,500, at their authorized service centres.

The Uganda Communications Commission (UCC), the regulator of the industry, which earlier in the year expressed concern about the low call rates, is now satisfied that the tariffs have now stabilized. It is not clear if the almost uniform call rates were agreed upon between the regulator and the telecom companies.

Isaac Kalembe, the UCC Media and Public Relations specialist, said telecom companies have the right to set their own call tariffs but must keep the regulator informed. "We think the current call and voice tariffs in the market are fair and we keep monitoring the situation," Kalembe said.

Cost of 10 voice calls for five companies on per second package

Like all the other companies, MTN, the market leader, has found 2012 particularly hard. According to Group's quarterly report for the period ended September 30, 2012, performance in Ugandan market was impacted by increased competition, which led to only a marginal increase in the number of subscribers.

However, the company's average revenue per user in Uganda is reported to have increased by 4.6%. With Uganda's five major telecom companies, industry analysts say the potential in the industry is yet to be fully exploited.

PriceWaterhouseCoopers (PwC), an international consultancy firm, says there is huge potential for growth in Uganda's telecom sector because penetration rates are still below 40%. It says mobile subscriber growth is expected to reach 25 million by 2015, which points to more players joining the fray. Kalembe could not confirm if the commission had received applications from new telecom companies desiring to launch operations in Uganda. "I think they are there but we need to wait and see whether [they will be] licensed or not," he said.

However, while the charges are high compared to regional standards, Ugandans are also paying a higher price because of the poor quality of services. The UCC has previously warned telecom operators to brace for tough penalties starting March should they continue defaulting on quality of service. The penalties are still under discussion but should be complete by early next year, but among the proposed penalties is cancellation of licenses.

A recent survey indicated that quality of services had deteriorated with more dropped and blocked calls. Operators told The Independent that quality standards have been plummeting because of the competition on the voice segment that led to a spike in new connections and usage, but that have heavily overloaded the network thus compromising quality of services.

Cost of 10 SMS on various networks (Shs)

Copyright © 2012 The Independent. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.