TCRA rules against retail pricing regulation; end user costs rising as inflation bites

8 Dec 2011

The Tanzania Communication Regulatory Authority (TCRA) will not intervene in regulating retail prices, arguing that the cost of mobile calls in the country is better determined by market forces. The Citizen daily quotes TCRA’s communications manager Innocent Mungy as saying that whilst the watchdog does control interconnection charges, stepping in to regulate retail call prices could ultimately prove costly to subscribers. Mungy argues that it is free competition that has driven down call tariffs in the country – in some instances to as little as TZS1 (USD0.00062) per second. ‘If we limit the operators at TZS5 per second, for example, would they reduce their tariffs to TSZ1 per second, as they have sometimes been doing?’ the official said.

Critics of the decision not to intervene are calling for some kind of retail regulation though, and suggest that as things stand, the possibility of cartels developing exists. Tanzanians are currently facing a rise in mobile phone tariffs due to rising inflation and a weak shilling. A number of incumbent cellcos have pulled discount promotions and increased calling tariffs in recent months, blaming inflation for the decision, and in the process ended the price war between rival operators that had delivered ultra low-cost calls to end users in the period May 2010 to August 2011. Inflation rose from about 4.2% in October 2010 to 17% now.