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New costing structure to lower Zim tariffs

By , Journalist
Zimbabwe , 18 Jun 2012

New costing structure to lower Zim tariffs

The Posts and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) has hinted that mobile operators might be forced to lower their tariffs, as the regulator is working on a new costing structure for the sector.

Current mobile tariffs average $0.24 cents per minute in cross network calls. POTRAZ has been under pressure from consumer representative groupings to force mobile companies to lower down their tariffs but recently said there was no need to lower them.

“We are working on a costing model that is acceptable to everyone, that is fair to the consumers and to operators. This implies changing our costing model, we have been using the Cositu model since 2000,” said POTRAZ director general, Charles Sibanda.

He explained that the Cositu model was “designed for fixed telephone(s)” adding that this has become “irrelevant” at a time when technology has constantly been developing.

Morris Muradzikwa, an expert in the telecommunications industry said the Cositu model calculates unit costs based on international and regional prices for phone calls. He added that it also factors in taxes to calculate interconnection rates.

“This is basically a top-down approach to costing and we need to move away from this and embrace new approaches and models,” he said.

Sibanda said POTRAZ now has to come up with a new and relevant costing structure that is able to grasp current technology dynamics. He said the tariffs charged by mobile companies should be satisfactory to both the operators and consumers.

International Telecommunications Union area representative for Southern Africa, John Mpapalika said a cost based tariff model will result in cheaper tariffs for consumers. Other analysts said this will lead to increased usage of mobile networks by consumers, which will “lead to increased profitability”.

“The current costing model that is being used in the country was selected arbitrarily without any methodology,” said Mpapalika.

Zimbabwe’s tele-density has now risen to about 75% according to POTRAZ statistics while the country’s total number of mobile subscribers has now surged to nine million.

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