[governance] gt telecom tariff

[annan ebenezer]

Telecom tariffs gt

| Posted: Thursday, August 11, 2005

Within fixed telephone networks gt's tariffs are among some of the cheapest in the world and far below both other ECOWAS countries and Europe and US. 
GT is Ghana's biggest fixed network operator (see table below). WESTEL, another fixed network operator has so far been a very negligible player in the industry. 
The mobile networks are now all the rage but GT however came to the mobile network a little later than its two main rivals, Sacancom (Spacefon) and Milicom (Mobitel). 
Due to interconnectivity problems, GT continues to suffer a heavy drain on its cash flow even as it charges very low tariffs on its fixed networks. 
It's been estimated that gt pays C10 billion a week in outstanding debts to the owners of Spacefon with current payments of C3 billion a week. 
When comparing other tariffs such as interconnection tariffs (calling from one network to another) and the cost of international calls the tariffs in Ghana are lower. 
The public perception has always been that it is so expensive to call in Ghana and to other countries. Have Ghanaians not been properly informed by the telecom operators, or should this be the responsibility of the NCA, or even the Ministry of Communication? 
ADM has learnt from the Corporate Communication Department of gt that: 
· The fixed network tariffs have been adjusted only two times since 1996, namely in 2001 and 2003. 
· Given in US dollar terms the current cost of a local call is less than one fifth (20%) of the cost in 1996. It should be remembered that most of the equipment for the expansion of telecom networks must be paid in foreign currency. 
· When the adjustment was done in 2003 the trunk call tariff was reduced from 450 cedis/minute to 200 cedis/minute. This was done to assist rural communities. 
· The fixed network tariff per minute is (calling from land line to land line) is less than one tenth (10%) of the mobile tariffs. 
gt's status as a private company means that it cannot resort to state subsidies like the some utility companies can. The only way they can procure the funds to pay for the network expansion is through its revenues. If these revenues dwindle the ability to finance the equipment would also be non-existent. gt in providing land line calls at a loss due to the low land line tariffs, means that the fixed network expansion would also be slow. 
This also explains why the mobile operators have outrun the land lines in network expansion. They could simply raise the necessary funds by much higher tariffs to pay for the equipment. Crucially, due to government policy, gt's land line accounts are to be separated from the mobile operation accounts. 
GT presented recently its financial statements showing a handsome profit of C175 billion. The question is, how can GT post such a profit when they lose money on their land line business? 
GT explains that part of their non regulated services such as the mobile operations (with much higher tariffs than the land line tariff), leased lines for data transmission, other transmission services and international traffic are profitable and in fact subsidizes the land line operations. 
On how to alleviate this accounting problem, gt has suggested, "tariff rebalancing", which sounds like a nice word covering up for a tariff increase. 
This does not necessarily mean an increase of the cost of telecommunication in total, but rather that some services come less expensive than others and these have to be "rebalanced" in the entire sector so that there would be fairness in trading. 
Sources at gt have indicated to ADM that they are looking at tariff structures, which will not lead to an increase at the bottom line of the monthly bill. They rather seek to optimize network utilization, thus reducing the overall costs and so there is every reason to believe that such tariff rebalancing is imminent. 
The NPP administration has made ICT development part of its core programme of modernizing the economy. The first point of call therefore would be to sort out what is increasingly looking like confusion in the telecom sector. 


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