MACRA in cost model and pricing framework for service providers

Blantyre, The Malawi Communication Regulatory Authority (MACRA) has started holding consultative meetings in its plans to develop cost models and pricing framework for telecoms services for wholesale and retail telecommunication services.

The move is supposed to enhance competition among operators in Malawi.

The cost model once in practice in October 2017 will ensure that MACRA is effectively and efficiently regulating the tariffs offered by the operators at the same time providing a viable business environment to the operators to maximize their profits.

MACRA procured Incyte Consultant, a Scotland based firm to develop the cost models with effect from February 27, 2017 and the whole project will be supervised by MACRA on behalf of the Malawi Government.

The maximum project duration from the date of contract signing to the delivery of the final report shall be 6 to 9 months.

In his remarks during the meeting with telecommunication service providers on Tuesday MACRA’s Head of Economic Regulation Andrew Nyirenda said the move will also facilitate fair competition, promote consumer protection and facilitate access and usage of ICT services.

He said, “Since the establishment of MACRA, the Authority has regulated the telecommunication sector without any well researched and market oriented pricing and cost models to assist both the regulator and operators to have a basis of providing the services. While most of other countries communications jurisdictions have developed costing models for their telecommunication services, MACRA has been regulating the industry without any scientifically and well researched models.”

According to Nyirenda, the Communications Act provides competition rules under Section 25 which aim at promoting competition among persons holding individual licenses in the country.

Commenting on the development, Managing Director for Incyte Consulting, David Rogerson said affordability is the main challenge in Malawi market when it comes to telecommunications services.

He said currently competition between the two main operators Telekom Networks Malawi (TNM) and Airtel is based on price and promotional discounts, a thing he said are enough reasons for the sector to have cost models pricing that can benefit both consumers and service providers when it comes to value for money.

“Cost model pricing is good because it will make other investors to come and compete handsomely on the market. Above all it protects consumers in a long term from being reaped off,” Rogerson said.

Telekom Networks Malawi’s Chief Strategy Officer, Wilson Kyumba said his company has welcomed the development saying cost modeling is beneficial for telecommunication industry.

He said he expects the modeling to improve TNM’s efficiency saying once put into practice it will open up the market.

“I don’t think we can argue with MACRA on this matter because it is supported by a new Communication Act that is currently in place. What our regulator is looking at mainly is for the sector to be efficient,” Kyumba said.

Section 4 (1) and (2) of the Communications Act provides MACRA with the general duties of providing reliable and affordable communication services throughout Malawi.

Section 4 (1) stipulates that: “The Authority shall have the general duty to ensure that, as far as it is practicable, there are provided throughout Malawi reliable and affordable communication services sufficient to meet the demand for them.”

While Section 4 (2) states that subject to subsection (1), the Authority shall (specifically on consumer welfare): (a) protect the interests of consumers, purchasers and other users of communication services in respect of the prices charged for the quality and variety services provided and terminal equipment supplied’ ‘(b) promote open access to information by means of communication services”(c) promote efficiency and competition among persons engaged in provision of communication services or supply of communication equipment.

Source: Malawi News Agency – MANA