Monopoly stifles telecoms sector

LACK of competition in the fixed line telecommunications sector as well as restrictive policies has hampered growth in the sub-sector where State-owned TelOne still maintains a monopoly on fixed lines.

VENERANDA LANGA

According to a 2014 report on Zimbabwe Trade Competitiveness by the Poverty Reduction and Economic Management Unit Africa Region, the Indigenisation and Economic Empowerment Act has also inhibited growth in the sub-sector by imposing strict limits on ownership and entry into the sub-sector by interested investors in telecommunications.

The telecommunications sector is pivotal in the economic growth of the country, but fixed line penetration as at 2011 was centred more on urban areas with 83% access while rural areas only had 17% access.

“Lack of competition has hampered growth in the sub-sector of telecommunications, especially in the fixed line segment and there is a State monopoly on fixed wire services (TelOne) where as a result consumers are penalised with high fees and bad quality services,” reads the report.

“Fixed line penetration is low (3%) and given the bad financial situation of TelOne, it is unlikely that expansions of lines of creation of a national backbone will take place.”

Although mobile penetration is said to have increased, prices are said to be high by regional standards (Safdar 2013).

“The average price of a mobile call in Zimbabwe was
US24 cents per minute in 2011, which is roughly 500% higher than in comparator (comparable)countries across the region. Similarly, although there have been some reductions, prices for mobile broadband are still high in Zimbabwe in comparison to regional standards,” the report said.

It noted that it had been difficult for NetOne to raise capital to invest, while in the case of Telecel, the indigenisation requirements had affected investment in the company.

It said overlapping regulatory authorities also stifled performance in the sector where regulation was divided between the Postal and Telecommunications Authority, which is accountable to the Minister of Transport and Communications, and the Broadcasting Authority of Zimbabwe and the Media and Information Commission which report to the Minister of Media, Information and Broadcasting Services.

“Although these regulatory institutions are meant to be independent, the government has powers to intervene in a range of matters, including connection fees, tariffs and connectivity targets for licences.  There is an overlap and duplication of functions between the agencies regulating the sector, policies in the sub-sector are restrictive and the IEEA imposes strict limits on ownership and entry,” the report said.


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