Low tariffs drive record high data usage, analysts say
14 January 2024
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By A Correspondent| Despite the ongoing debate about data costs and data pricing in the country, the statistics show that Zimbabwe’s mobile data usage soared to unprecedented levels in the third quarter of 2023, surging to 44.67 petabytes – a 6.2% jump from the prior quarter, according to a report by the telecommunications industry regulator.

The remarkable growth in customer usage of data is attributed to low tariffs, driven by rising inflation, giving access to mobile data and internet use to a broader market.

The Postal and Telecommunications Regulatory Authority (Potraz) revealed that mobile voice traffic also experienced a significant uptick, growing by a massive 30%, to record 3.29 billion minutes in the third quarter, up from 2.53 billion minutes in the second quarter of 2023. Potraz attributed the increase to eroded voice tariffs that hovered around USD 0.01 (One USD cent) for on-net calls throughout the quarter.

However, the surge in both mobile data and mobile voice usage has ignited concerns about the sustainability of the current pricing models, and their potential impact on sustained long-term investment in the ICT sector.

Francis Mukora, an industry analyst, acknowledged that very low mobile data had fuelled increased usage, especially for basic browsing and social media.

“While low tariffs contribute to a digital-savvy population and increased data consumption, they may hinder the industry’s ability to invest in the necessary infrastructure to meet growing demands,” said Mukora.

Investment expert and Global Renaissance Investment CEO Ngoni Dzirutwe concurred, stating that the current data pricing structure does not accurately reflect the true cost of maintaining network infrastructure.

“The current data pricing structure, which is pegged in local currency, doesn’t always reflect the true cost of providing and maintaining the network infrastructure. At these rates, it becomes challenging to keep pace with the ever-growing demand for data, which can ultimately lead to network congestion and poor user experience.”

Dzirutwe stressed that the impact of low tariffs extended beyond network quality, hindering investments in network upgrades and new, cutting-edge technologies such as 5G, which are crucial for future economic development and digital transformation.

Potraz, acknowledging the low tariffs, implemented a tariff increase in October last year, aimed at improving revenue-to-cost ratios (RCRs) for operators. The regulator hopes the move will stimulate improved investment in the sector, leading to enhanced service delivery through improved coverage and quality of service.

However, Potraz warned that the sector still faced inadequate foreign currency resources required to upgrade, expand and maintain reasonable service quality by the telecommunications operators.

“Low disposable incomes in the country remain a major constraint on service affordability and uptake by postal and telecommunication users. The sector is heavily affected by power outages, which increase the cost-of-service provision. These are operational realities that inhibit sector growth,” read part of the Potraz report.

Economic analyst Victor Bhoroma urged the regulator, mobile network operators, and consumers to work together to find a pricing model that promotes both data usage and sustainable investment in the sector.

“Despite the increase in data prices, the number of Zimbabweans that use the internet, and the time spent on the internet, have increased tremendously since COVID days. The internet is now a basic need that many cannot do without,” he said.

Equities analyst Rufaro Hozheri said the country should adopt cost-reflective USD-based tariffs to encourage investment in the sector.

“Because technology is fast evolving, investing in research and development and having capital expenditure are of the essence.

Typically, telecom companies would want to dedicate a portion of every US$1 generated, for instance, 30%, towards capex to remain efficient and in touch with (current) trends. Failure to do so, telcos run the risk of becoming irrelevant.”