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GSM companies given ultimatum to rescind illegal price hike

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The Liberian Telecommunication Authority (LTA) says it has given the Mobile Networks Operators in the country 12 hours ultimatum to rescind what it says is an illegal hike in the prices of voice and data bundles.

“The MNOs are hereby given 12 hours to rescind this illegal price increase or face appropriate punitive measures,” the LTA statement issued said.

Both LoneStar Cell MTN and Orange have within days announced an increase in the prices of voice and data saying they were complying with the surcharge order issued over a year ago by the LTA

The LTA notes that it regards this act as illegal price fixing, collusion, and antitrust conspiracy. It opines that under relevant provisions of the Liberia Telecommunications Act of 2007, no ‘Term Services” can be increased without approval of the LTA.

The LTA issued an order 0016-02-25-19 introducing a Floor Price on Voice and Data, under which the MNOs eliminated the “3 days free call” package, thereby earning a windfall of over a 104 Million USD in extra revenue.

The Authority explains that the New Term of Services which is being implemented by the MNOs now is far in excess of what is required for the implementation of any order and designed for profiteering and political purposes.

It can be recalled that in 2018, the LTA issued Order 0016-02-25-19 imposing floor prices and surcharges on on-net voice calls and data. Before issuing the Order, the LTA got all stakeholders involved and their inputs were considered. The LTA also conducted public consultations to be able to make informed decisions.

Thereafter, the Order was finalized and took effect. This led to the elimination of the famous “Three Days Free Calls,” by the two GSM Companies last year September.

Subsequently, when the order went in to force, the two GSM companies requested 6 months after which they will pay into government revenue the surcharges collected from the implementation of the floor price.

So the one major effect of the LTA Order was to abort the famous three days free-call as specifically requested by Orange Liberia and other stakeholders. Orange Liberia and the stakeholders allegedly argued at the time that it was necessary to stop the three days free call because they believed it had no economic benefits to their owners.

The New Dawn investigation at the time revealed that the famous three days free call was introduced by Celcom prior to Orange acquisition of Celcom through purchase as reported. It was likely a business strategy employed by Celcom to increase its customers in order to attract potential buyers like Orange.

The three days free calls having lasted for years, thus Celcom’s customers definitely increased, and Celcom sold to Orange Liberia. Among other things, the three days free call prompted unfair competition and instability between Celcom (and later Orange Liberia) and Lonestar Cell MTN. As the result, LTA as the regulator issued the Order with the aim to achieve stability, coordination, and efficiency in the sector.

When Orange Liberia took over Celcom, and with its sole interest to maximize profit, it did not like the three days free call because Orange Liberia felt it could make more eliminating the three days free calls.

The Government too welcomed the idea likely because of its interest to collect revenue on paid calls, unlike free calls. Since there were no conflict of interests between the GSM companies on the one hand and the Government on the other, the LTA issued the Order which charges a floor price and surcharge in consultation with all stakeholders.

Surprisingly, having eliminated the free call and collected revenue from the floor price as the LTA Order, Orange continued to refuse to pay the surcharge fee to the Government of Liberia as provided for in the same Order.

The order also provides that after it comes into force on April 15, 2019, and on the sixth month anniversary of the order, there shall be automatically impose, a surcharge on the on-net voice of US$0.008 per minute, and on the data services a surcharge of US$0.0065 for each megabyte. But following the publication of this order in 2019, Orange Liberia continued to engage the LTA by numerous letters, outlining its objection to the order.

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