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BOCRA clout on MNOs eases communication inflation

Publishing Date : 07 August, 2018

Author : TSAONE SEGAETSHO

A stern decision by communications regulator, Botswana Communications Regulatory Authority (BOCRA) to clamp down on what it concluded as Mobile Network Operators’ (MNOs) uncontrollable penchant of overcharging consumers, especially with regards to inflating off-net premiums, has been the major factor of the current decrease in Communication Index inflation rate.


This decrease in inflation rate was after BOCRA ensured that MNOs charge consumers the same tariff for on-net and off-net. Latest Statistics Botswana Consumer Price Index for July 2018 figures show that in headline inflation the Communication index group moved from 101.4 to 92.0, registering a drop of 9.2 percent between May and June. This is credited to a decline in the constituent section index of Telephone &Telefax Services, which went down by 11.7 percent. This Telephone &Telefax Services rate decrease was attributed to the revised prepaid voice call tariffs by mobile service providers which effected on the 1st June 2018 by BOCRA according to Statistics Botswana.


According to Statistics Botswana, the annual national inflation rate in June 2018 was 3.1 percent, registering a drop of 0.2 of a percentage point on the May 2018 rate of 3.3 percent and the decrease in Communication index group inflation rate is one of the main contributing factors.


When tracing the Communication Index Group inflation rate movement for the past three months, it shows from May the rate was moving crawlingly at a difference of 0.1 percent. However towards and after the BOCRA’s decisive directive the inflation rate moved by 11. 7 percent. In April it increased from 1.2 to 1.3 percent then decreased from 1.3 to 1.2 percent in May.


In June, during the effecting of the BOCRA directive, Communication inflation decreased heavily from 1.2 to -8.2 percent and that time it was credited to a decline in the constituent section index of Telephone and Telefax Services which went down by 11.7 percent like the current rating. This was also attributed to the revised prepaid voice call tariffs by MNOs which effected on 1 June 2018, meaning BOCRA contributed to a decrease in inflation in this index since then.


This BOCRA-inspired move to cancel off-net premiums which influenced a change in inflation rate was followed by the implementation of Regulatory Directive No.1 of 2017 issued by BOCRA mandating operators to remove Off-Net premiums over a period of two years.  The first phase was done on 1 June 2017. 


The second and final phase was done on 1 June 2018.BOCRA is mandated by Section 6 (2) of the Communications Regulatory Authority Act, 2012 (CRA Act) to protect and promote the interests of consumers, purchasers and other users of the services in the regulated sectors, particularly in respect of the prices charged for, and the availability, quality and variety of services and products.


Last year Mascom challenged BOCRA’s decision to cancel off-net premiums, citing the regulator’s lack of consultation. Furthermore, Mascom said the new rates which were set by BOCRA were very ridiculously low. Mascom lost the case against BOCRA with costs. As a way of consumer protection BOCRA had made a Cost Model and Pricing Framework study and the regulator determined that MTRs that form part of prices for calls should come down to reach 13 thebe by 1 June 2018 and that there was no justification for mobile operators to charge less for calls within their own networks (On-Net calls) and more for calls across networks (Off Net Calls).

Transport inflation stubbornly going up while NPF loot remains towering


Since April the Transport Index Group inflation has been stubbornly increasing due to two factors; an increase in transport fares and the rise in retail pump prices. In Botswana the initiative that was designed to cushion fuel consumers against rising international prices, the National Petroleum Fund (NPF), is alleged to have been misused and some believe it has been looted to almost run dry as it is currently a subject under magistrate courts. Experts believe this has lessened Botswana’s ability to control fuel prices.


Founded by government in 1986, NPF was designed for the purpose of meeting the engineering construction and operating costs of the strategic facilities for government fuel and most importantly to determine stability prices charges by oil industry. Experts believe an increase in fuel prices resulting in increase in transport fares, has a major weight in the transport index inflation.


For July, the Transport index group registered an increase of 1.5 percent, from 107.4 in May to 109.0 in June and this was mainly attributable to an increase in the constituent section index of Operation of Personal Transport, which went up by 2.7 percent. This increase in Operational Personal Transport section index was due to the retail pump prices for petrol rose by P0.23 and diesel by P0.45 per litre which effected on the 16 May 2018. This was the same factor for the inflation rate of June which recorded the same percentages due to same reasons of increase in fuel prices.


About three months ago, especially the in April Transport group index inflation, the uncontrollable increase in fuel prices prompted an increase on the inflation rate of the constituent section index of Transport Services by 11.3 percent. That rise in Transport Services section index was mainly due to an increase in Minibus and Taxis Fares from P3.50 to P4.00 and P3.90 to P5.00, respectively, while long distance bus fare (bitumen road) increased from P0.21 to P0.26 per kilometer effect from 1st April 2018.

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