Liberia Telecommunications Authority posted on its website a proposal for new floor pricing for both voice calls and data. The proposal which is open for comments from stakeholders sets the floor price for voice call at US$0.156 per minute and data at US$0.218 per megabyte. This means, a dollar call card that once served consumers for three days unlimited voice calls would now serve for only 64 minutes. While 100 megabytes of data would be US$21.00. Currently, consumers pay US$1 for 1,000 megabytes of data.
The latest decision to drop the popular and affordable three days ‘free’ call promo follows the LTA decision to cancel the international call bundles offered by Lonestar Cell MTN and Orange which allowed customers to make international call at low cost.
According to the LTA, the intent of the new floor tariff is to end the price war between Orange and MTN which came about following the introduction of an extremely low-price call promotion; something it said it said led to counter offers from other telecoms operators which resulted in a various cycle that brought the price far below cost and it is destroying the telecommunications industry in Liberia.
The LTA noted that price war between GSM Companies in the country started in 2012 when some telecommunications providers began price promotions that pushed all the telephone companies into a “price war”.
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“As one company reduced its price, the others undercut that price in a vicious cycle that eventually brought the price for calls and internet data to a level far below cost,” the LTA argues.
It stated that the price for calls dropped from 14 cents per minute in 2014 to less than one cent per minute today; stating that the prices have become so low, that services are virtually free; something the LTA noted is prompting some subscribers to “just sit on the phone for hours, taking up bandwidth which is costing a loss for telecoms operators and for the government.”
Impact of Price War on Telecommunications and the Economy
According to the LTA, unlimited calls encourage a behavior of subscribers staying on the phone far longer than necessary and clogging the network; making it difficult for others to place important phone calls; while many people experience dropped calls in the middle of a call.
In addition, it added that Telecom operators are not getting enough returns to re-invest in improving their networks; noting that when the telecom companies lose money, they cannot build new towers and bring telephone and internet to rural Liberians.
The LTA clarified that this is not the first market where a price floor has been implemented to improve the quality of service for consumers; contending “that this is an action that should have been taken a long time ago. However, better late than never. This is a step in the right direction for all stakeholders. After all, we now know that ‘free’ and ‘unlimited’ is very costly and unsustainable in the long run.”