Uncapped data products – be careful what you wish for
Uganda’s parliament has directed the Uganda Communications Commission (UCC) to open discussions with operators on making all data plans unlimited. On the surface, this idea is appealing: why should data packages have limits? But exclusively providing unlimited data packages means that the link between data usage and revenues is then broken. This means that data usage can increase enormously without any additional revenues for the telco. There are costs associated, especially in mobile, with providing data and by divorcing data usage from revenues, there is no way to fully recoup these costs. The consequences of breaking the link between usage and price are visible in Europe, where revenues are stagnant, but data usage is growing rapidly (see the chart from Germany below). European operators are complaining that this is not sustainable, though the situation is largely of their own doing.
Different data caps and validity periods give telco’s flexibility to set provide a wide range of products to consumers. Forcing them to only offer uncapped data products and/or to remove validity periods (another proposal from the Ugandan Parliament) is likely to have unintended consequences. We can see that future playing out in Europe and Uganda should take note.
Other news from around Africa
- Non-resident digital platforms must register for income tax in Tanzania: According to the regulations, non-resident companies providing any electronic service to Tanzanians must register with the tax authority and pay Corporate Income Tax. How this will be enforced is unclear.
- MTN is in negotiations to buy Telkom: The deal is valued at more than USD 1 billion and would mean that South Africa is a telecom duopoly.
- Kenya has released its National Tax Policy: There are some positive statements contained in the policy. For example, there is recognition that excise duties are too high (page 19); that the current tax regime is not “equipped to deal with emerging technological business models” and especially that a physical presence is not required for these business models. There are also really vague statements, like the state should “put in place mechanisms to optimize revenue collection from the digital economy” (page 24).
- Zambia has awarded spectrum in 800MHz and 2600MHz bands: Airtel has been awarded 20MHz in the 800MHz band and 50MHz in the 2600MHz band for a price of USD 29 million. MTN was awarded 50MHz in the 2600MHz band for USD12.5 million.