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Proposed new GSM tariff

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The Liberia Telecommunication Authority (LTA) says it has calculated, in collaboration with Orange Liberia and Lonestar Cell MTN, that the cost for one minute of telephone call is 0.0156 cents (LD$2.336) and that the cost for one megabyte of internet data is 0.0218 cents (LD$3.4008).

The LTA says the Telecommunication Law of 2012 forbids telecom companies from selling below their cost and so it wants to enforce this law to end the [price] war [between Orange and MTN] by telling telecom companies that they cannot sell telephone calls and internet data below their cost price.

LTA observes that Orange and MTN are said to be violation of this law by too many offering free calls.It says it is consulting with Orange and MTN and with many other stakeholders, including consumer groups on how to stabilize the market using a minimum price for calls and internet data.

The LTA informs the public that this minimum price of 0.0156 cents for calls and 0.0218 cents for internet data will both companies provide telephone and internet bundles for $1.00.According to the LTA, it is taking this measure to end the price war between Orange and MTN that is destroying the telecommunications industry here.

It recalls how in 2012, some telecommunications providers began price promotions that pushed all the telephone companies into a “price war.”According to the LTA, 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 price for calls dropped from 14 cents per minute in 2014 to less than 1 cent per minute in 2017 and is still falling,” the LTA explains.It emphasizes that the prices have become so low that the services are almost free, adding that people in Monrovia area have been enjoying these cheap calls, but people in most other parts of the country cannot make calls or go online at any price.

The LTA laments that the price drove smaller companies including Novafone,West Africa Telecom and Libercell out of the market, leaving only MTN and Orange.LTA admits that in the beginning it was happy to allow consumers to benefit from the cheap calls and data, but it says the war between Orange and MTN has become mutually destructive, with each company trying to drive the other out of the market.

“Both companies are selling calls and data below their cost price and are losing money, but neither Orange nor MTN wants to surrender,” the LTA observes.LTA warns that if the price war continues, either Orange or MTN will be forced from the market and the country will go back to the days of monopoly when SIM cards were sold for US$65.00 and one company could charge any price it wanted.

Telecommunications is one of the largest contributors to government revenues, the LTA notes, adding that when the telecom companies lose money, they pay less taxes to government for schools, hospitals, roads, and development.According to the LTA, other countries such as Nigeria and Sierra Leone have used this same price stabilization to improve the quality of service for consumers.

But it notes that these promotional packages can no longer be free, saying: “We have enjoyed free calls for years while the telecom companies have been fighting, but we see now that anything free is expensive in the long run.”The LTA argues that Liberia has the lowest prices for telephone and
internet in West Africa.

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