Although roaming subscribers will continue to receive incoming calls free, a tariff will now apply to calls made while hosted on a foreign network. Photo/GRAPHICS
Mobile phone companies Safaricom, MTN and Vodacom have suddenly ended their toll-free regional roaming services and announced new tariffs for their subscribers.
This development effectively leaves the roaming field clear for Zain’s One Network, which extends from Burkina Faso to Kenya to Zambia, linking 15 countries in sub-Saharan Africa and seven in the Middle East.
The reversal comes only two years after the three partners introduced seamless roaming that allowed their customers to migrate with their tariff plans across boarders.
Industry sources said while the development was evidence of the success of the product, market realities are finally catching up with service providers as competition creates an uneven landscape in the market.
Although roaming subscribers will continue to receive incoming calls free, a tariff will now apply to calls made while hosted on a foreign network.
For instance, where an MTN Uganda customer on a flat rate tariff of 16 US cents a minute once paid the same amount for on-net calls while hosted by Kenya’s Safaricom, a new rate of 22 US cents will now apply.
Equally, calls to the host country’s networks that previously cost 23 US cents per minute will now cost 31 US cents.
When Safaricom introduced the Kama Kawaida arrangement, each of the participating operators had a retail tariff structure that could support the model and allow their respective customers to roam with their tariffs from their home network.
At the time, this model was sustainable by all the operators, according to Safaricom CEO Michael Joseph.
However, as Safaricom continued to pass on the benefits of lower tariffs to its customers, its roaming customers have enjoyed more favourable calling rates compared with the retail rates offered by its partner networks.
“As a result, and to maintain the spirit of the co-operation, the parties have agreed to introduce a specific roaming rate that is independent of each operator’s local tariff plans,” he told The EastAfrican.
Described then by Mr Joseph as a move that was intended to take the “roaming fees out of roaming,” the single-network concept caught on fast, prompting the three regional giants to take it a step farther by programming their networks to accept each others calling credit top-up vouchers.
But while this worked well for subscribers, underlying contradictions were straining the partnership.
For instance, Safaricom — the biggest of the three partners — found itself bleeding money to MTN and Vodacom in interconnection dues every time it reduced tariffs in response to competition in its home market.
The lower tariffs attracted more non-Kenyan subscribers to Safaricom, meaning it owed its partners more for traffic that they carried on its behalf.
With the reduction in Safaricom’s calling rates, a situation has developed where Safaricom now has ‘permanent roamers’ resident in partners’ networks.
“This scenario went against the initial intention of the co-operation arrangement as it led to direct competition between the local network and Safaricom’s network with its lower calling rates,” said Mr Joseph. “This is not what was envisaged when the co-operation was initiated.”
Officials at MTN Uganda said the re-introduction of roaming tariffs was primarily driven by the need for Safaricom to protect its revenues from flowing to its partners under the single-network arrangement.
“The bottleneck in this arrangement was that it never took away interconnection fees, so we were seeing a situation where more Ugandans and other nationals from around the region were subscribing to Safaricom to take advantage of its comparatively lower tariffs,” said Isaac Nsereko, MTN Uganda marketing manager.
Safaricom’s tariffs have come under increased pressure during the past year as the operator responded to the increased competition occasioned by the launch of two competitors — Orange and Econet.
Mr Nsereko said while the roaming tariff while in Kenya and Rwanda was almost at par for MTN Uganda subscribers, it would be higher in Tanzania — 34 US cents — because of the relatively higher cost of telephony in that country.
At Ush670 (34 US cents) per minute for roaming Ugandan subscribers, this tariff is just over 3 US cents higher than MTN Uganda’s international tariff of Ush600 (30 US cents).
As the intricacies of pricing a regional call sank in on the partners to the linked network, Zain — which pioneered the concept with its One Network in September 2006 — was perhaps having the last laugh as its officials said the partners were finally accepting reality.
“Those guys were promoting a model that could never work as long as you still had interconnection charges in the equation,” said Fred Masadde, Zain Uganda’s corporate affairs manager.
In contrast, Zain’s One Network, which runs across the entire breadth of its African operations and the Middle East, circumvents this problem by subjecting the subscriber to the prevailing tariffs of the host operation.
