Business News of 2013-12-16

Mobile phone boom, telcos and poor service

Until the 1990s, mobile phones were unknown in Ghana. Telephone calls were done with landlines and only a few privileged people had them in their homes.

Though telephone usage was very common in offices then, access was restricted because of the bill.

Introduction of telcos in Ghana

In 1992, the first cellular phone service was introduced in the country, with an initial 19,000 Ghanaians owning mobile phones. The figure shot up to 43,000 in 1998 after the process of deregulation of the telecom sector began in 1997.

By the end of 2000, the monopoly by Mobitel was broken by three other mobile phone operators: Areeba, Onetouch and Westel, which competed for cellular customers and subscribers numbering 132,000. Areeba is now MTN, while OneTouch and Westel are now Vodafone and Airtel respectively.

Expansion of telcos

Within the last decade, the mobile telecommunication industry in the country has exploded with a fast growing customer base. As of February 2013, there were six mobile phone service providers, with about 20,773,563 subscribers, according to the National Communication Authority (NCA).

The total number of active mobile phone lines in Ghana as of November 2012, according to an NCA report published in February 2013, stood at 25,344,745, which was marginally higher than the population of Ghana, which stands at 25,241,998.

Mobile penetration>/B>

Mobile penetration in Ghana, therefore, stands at 100.41 per cent, but this does not mean that all Ghanaians have active mobile phone lines. Multi-simming, the ownership of more than one active mobile phone line by one person, is commonplace in Ghana, and that accounts for the over 100 per cent penetration. It is estimated that the actual number of people who own mobile phone lines in the country are between 15 million and 16 million.

Expectations of subscribers

Mobile phone users, therefore, expect a lot from mobile service providers. Unfortunately, services provided by these telecos leave much to be desired.

“The service number you are calling is temporarily unavailable” or “The number you are calling cannot be reached” are common messages you may be familiar with if you are one of the over 20 million mobile phone users in the country.

Sometimes, it is annoying since the subscriber you would be calling could be just a few metres away, with a mobile phone switched on. As mobile phone service providers expand their subscription base, it is incumbent on them to improve the quality of their service.

Erring Telcos fined

The poor service cumulated in the NCA getting tough on the telcos. For instance, in 2012, a fine totalling GH¢1.2 million was imposed on five providers in the country due to the poor quality of the services they rendered to their clients.

It must be noted that the action by the NCA, which covered the third quarter of 2012, formed part of the teleco regulator’s quest to sanction poor quality service delivery and ensure that consumers had value for money. The five companies were MTN, Vodafone, Airtel, Expresso and Tigo.

Another method of punishing poor service by telecom providers was the introduction of the Mobile Number Portability (MNP) by the NCA in 2011 and as of August 2013, the number of subscribers who had successfully ported their lines had reached 817,202.

Talk Tax

In 2009, Parliament passed the Communication Service Tax, Act 2008, which imposed a tax known as the communication service tax, to be levied on charges payable by consumers for the use of communication service. The tax is levied on all communications service usage charged by communications service providers with Class One (1) licences as provided in the National Communications Regulations 2003 (L.I.1719).

The tax is collected by the Value Added Tax Service and paid into the Consolidated Fund for national development. Money accrued from the Communication Service Tax is used to fund developmental projects across the country. Currently, 60 per cent of the Communication Service Tax is used to fund the National Youth Employment Programme.

In June 2011, the government announced that GH¢247.6m had accrued from the talk tax.

To make the Act work effectively, Parliament, on July 9, 2013, passed into law, the Communication Service Tax (Amendment) Bill 2013 without the provisions, imposing an additional six per cent interconnection fee on incoming international calls and data transmissions.