Internet charges up 11 percent

Telecom companies have revised their mobile data charges upward by about 11 percent as they choke on taxes and inflationary pressures.

B&FT analysis of data provided by the National Communication Authority (NCA) shows that over the past two years telecom companies have consistently increased their data charges, but it has been marginal year-on-year.

In 2012, companies were charging consumers about 10.67 pesewas per megabyte, which increased to 10.92 pesewas in 2013. But as of the end of August this year, consumers were paying 12.17 pesewas per megabyte of data accessed -- an 11 percent jump from 2013.

The increment, some mobile data operators have explained, is due to surging cost of operations following increases in utility and fuel costs.

According to the NCA, there is a vast difference in the pricing of data among the operators as some have maintained their charges for close to 20 months.

Vodafone, Expresso, and tiGO have maintained their data charges since December 2012, while MTN, Airtel and Glo have upped their charges over the period.

Nonetheless, Vodafone and tiGO are currently the most expensive mobile data providers, charging 20 pesewas per megabyte of data, which is twice what MTN, Glo and Airtel are charging.

Expresso charges consumers 5 pesewas per megabyte of data, which is far below the industry average of 12 pesewas, making it the cheapest mobile data network provider in the country.

Not long ago, a reduction in the wholesale prices of international bandwidths due to the entry of Glo1, MainOne, West Africa Cable System (WACS) and ACE fibre cables in addition to SAT 3 was hailed by many as a significant development that would cut down the price consumers pay for accessing the Internet.

Some Internet service providers say that the fall in wholesale bandwidth rates initially benefitted Internet prices, but the high cost of doing business in Ghana is the reason data prices have gone up.

When B&FT contacted officials of the Ghana Internet Service Providers Association (GISPA), whose membership comprises all firms authorised to provide Internet services to homes and offices, they argued that the increasing high cost of accessing the Internet is fundamental to their call on the government to strongly consider waiving taxes on terminal equipment as well as reducing taxes on some of their operations.

“As part of efforts to improve Internet usage in this country, we are faced with the issue of taxes on terminal equipment…we pay huge taxes on our operations. One of the reasons why growth in the Internet services sector has not really reached the level we want is that the cost of entry is always high.

“We need to look at some of these taxes and make sure that we get more users to have Internet access to reduce the cost of entry,” they said.

Currently, telecom operators pay about 40 percent of their total revenue as corporate taxes and levies. They also absorb the 6 percent communication service tax billed to consumers as well as a 6 percent interconnection fee on incoming international calls, which adds to the 15 percent value added tax (VAT) and 2.5 percent National Health Insurance Levy (NHIL) on international calls.

Market watchers believe that the expensive tariff structure of some network operators will compound the challenges they face as they try to boost their mobile data subscriber numbers and make them competitive.

This is mainly because pricing strategy has become one of the major tools operators in the country use to woo subscribers to their networks in the face of heightened competition.