Macra unpacks data price buildup

Malawi Communications Regulatory Authority (Macra) has cited low demand for Internet data, saying it forces operators to spread costs to the few users, making data cost expensive in the country.

In a written response last week, Macra spokesperson Clara Ngwira admitted that the country’s data rates are above the recommended threshold, but argued that asking telecommunication firms to reduce prices would kill them and make the services unavailable.

Her response comes against the backdrop of concerns from the public that Internet data in the country is expensive, frustrating efforts to ensure digital inclusion.

Said Ngwira: “Affordability of Internet is so many things and all these needs to be looked at. Some of which are the economic status of the people in the country.

“Data price is determined by the costs that the telecommunications operator incurs to provide one megabyte [Mb] to a consumer in the country. But you also consider issues of investments meant to improve efficiency and some mark up for the businesses to be viable.”

International Telecommunications Union (ITU) figures show that affordability of Internet is achieved when one gigabyte (Gb) of data is bought at two percent of the monthly gross national income (GNI) per capita.

At the moment, Malawi’s GNI per capita is $380 (about K281 200), translating to $31.67 (K23 435) per month.

Macra calculations show that two percent of this is $0.63 (about K466). This means that one megabyte (Mb) data on pay-as-you go offered by Airtel Malawi plc and TNM plc on average costs K5 after recent reductions.

This, according to Macra, is after factoring in K3.75 for costs of transporting tariffs, energy costs, levies, staff costs and mark-up as well as K0.42 for the 10 percent exercise tax and K0.83 for value added tax (VAT).

On average, this brings the cost of one Gb to $8.53 (about K6 312.20), which is K5 849 or $7.9 above the ITU recommended price.

Malawi had 2.7 million Internet users as at December 2019, according to ITU.

Said Ngwira: “This is why there is need to work together with the government to have the economic status of the people improved so that the GNI per capita is improved and people are able to afford Internet which is now a necessity.”

In a separate interview, Consumers Association of Malawi executive director John Kapito said the consumer rights body has engaged a consultant to independently evaluate data pricing as they also demand reduced data tariffs.

On his part, TNM plc chief executive officer, Michiel Buitelaar, in an interview last week said Malawi comes with at least two irregular costs—taxes and international transmission.

He said: “With additional ‘excise’ taxation for telecoms, more than 25 percent of what people pay per Gb is actually tax.

“As almost all Internet traffic goes through Europe [London Internet Exchange], we use sea cables. Malawi being landlocked, we buy or lease cables through Mozambique and Tanzania to get to places where sea cables land. That triggers additional significant costs.”

On her part, Norah Chavula-Chirwa, Airtel Malawi plc public relations, communications and CSR manager, observed that cost of operations are high as they carry traffic over long distances.

“We, at Airtel Malawi plc, continue to work towards bridging the digital divide and working to always avail the best networks at the most affordable rates,” she said in a written response.

Weighing in, Information and Communication Technology Association of Malawi president Bram Fudzulani said much as they want data prices to fall, they also want operators remove expiry dates on data bundles as is the case in Kenya, Uganda and South Africa.

Last week, information technology expert Matthews Mtumbuka, who is also UbunthuNet Alliance chief executive officer, explained that countries that are landlocked tend to suffer from higher Internet prices than countries on the coast such as Kenya and Mozambique, among others.

“Malawi is a poor country, which means that few citizens really use mobile data and they do not use much of it. This means that only a few people have to pay up for the cost it took Internet companies to set up the infrastructure,” he said.

Minister of Information Gospel Kazako earlier said government cannot completely remove taxes on some of the services, but agreed that data tariffs are too high in Malawi.

He said it is sad that telecommunication firms are enjoying huge profit margins while Malawians are finding it hard to cope with such challenges.

Last month, some civil society organisations (CSOs) asked government to reduce the cost of ICT services, especially Internet, following suspension of physical meetings amid the Covid-19 pandemic.

The CSOs also called for the removal of VAT on Internet services.