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Statutory Regulations — Potraz

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The recent abortive increase of mobile data prices generated heated debate across all information platforms.
Earlier, in the second week of January, the regulator of postal and telecommunication services, the Postal and Telecommunications Authority of Zimbabwe (Potraz) announced a mandatory minimum price for mobile data charges. This incurred the wrath of consumers, who viewed it as punitive and irregular. Many people suspected a devious underhand motive by the government to stifle the use of social media in the country.

Rights: MIRIAM TOSE MAJOME

Initially, the industry players issued benign statements justifying the price increase of mobile data. However, the ensuing public ire quickly resulted in an open brawl, which disintegrated into accusations and denials, which culminated in downright nasty insults. Severe warnings and threats were traded between one of the service providers, Potraz and the Minister of Telecommunications and Postal and Courier Services.

The role of the regulator came under spotlight as a result because it was unclear whose side it was fighting on.
Questions were asked if it is the place of a statutory regulator to prescribe charges and set minimum prices in any industry We will examine the role and functions of statutory regulators in general and focus on Potraz in particular.

Regulatory Agencies

A regulatory agency is a public authority or government agency responsible for exercising autonomous authority over some economic or human activity within a country. Regulatory agencies play an oversight role in the industry to keep things fair and up to standard. Examples are the Civil Aviation Authority, Broadcasting Authority, Energy Regulatory Authority among others.

They are created to implement and enforce specific laws and establish professional standards in the particular industry they apply to.

In the case of Potraz, it was established in terms of section 2 the Postal and Telecommunications Act Chapter 12:05. Potraz, like other regulators, is a body corporate that is capable of suing or being sued.

Fixing Prices

The question is whether or not Potraz had the power to set prices and impose them on the mobile phone service providers.

Was it proper for it as a regulator to confer with service providers and agree to proposals to fix minimum prices for mobile data? Notably the three service providers involved are independent companies and are competitors. Price fixing should be read with section 5 of the Competition Act Chapter 14:28. The major aim of the Competition Act is to encourage and promote competition in all sectors of the economy. It endeavours to curb cartel behaviour, creation of monopolies and price fixing.

Functions of Potraz: Section 4(1)

Chief among its functions is provision of sufficient domestic and international telecommunication and postal services throughout the country. It licences or revokes licences for industry players.

It is not only concerned with mobile phone companies but all other providers of telecommunications and postal services.

Service providers have to provide services at rates that are consistent with the provision of an efficient and continuous service, while maintaining financial viability for the service providers.

Potraz is supposed to promote the development of postal and telecommunication systems and services in accordance with international standards and ethics. It also approves of telecommunications equipment imported into and used in the country.

Consumer Interests

Potraz’s stated role is promoting the interests of consumers, purchasers and other users in respect of the quality and variety of postal and telecommunication services.

While partiality is a required element for an industry regulator, it is not stated that the role of Potraz is to promote the interests of service providers. The director-general was widely quoted to admitting that customers had not been consulted prior to the price increase. He said that consultations had only been extended to service providers. He stated that this was because the scope of the consultations did not warrant the involvement of subscribers. The scope he referred to was cost of the services and Potraz was convinced that it was not necessary to consult the consumers who pay for the services.

Growing the Industry

The other role of Potraz is to promote and encourage the expansion of postal and telecommunications services. This entails keeping prices affordable. Expansion cannot occur if the majority of the consumer base is priced out of the market. Potraz, therefore, would breach its obligation through imposing onerous conditions to either service providers or customers.

It can be said that setting a minimum price on charges inevitably results in price increases. This automatically impedes expansion and shrinks the industry if ordinary people cannot afford the services being offered.

It is worthwhile, to note that consumers are not unreasonable. They understand that services need to be paid for and will occasionally go up with good reason.

What they do not understand is how a statutory regulator can impose a minimum charge that will inevitably result in price hikes. It will become illegal for a service provider to charge less than the minimum charge or conduct promotions that entail that. It matters little if service providers petitioned the regulator for the increase or minimum charge. The regulator should know better and always act within its scope.

Monitoring Prices

Potraz’s role is to monitor tariffs charged by telecommunications companies and not be the champion of price increases. The Act does not state that the regulator can set charges or dictate how companies should set out their operations.

Potraz gives licences and should aim to eliminate unfair business practices while ensuring industry viability and fairness for both customers and service providers.

While it is appointed by the minister and plays an advisory role it should remain independent and conduct its business free from government interference. It should also be free of other partisan interests otherwise it ceases to be a regulator.

Miriam Tose Majome a lawyer and a teacher. She can be contacted on enquiries@legalpractitioners.org

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