Measuring the Information Society 2011 Box 3.1: Competitive pressure and mobile-cellular prices in Africa A recent price comparison between mobile prepaid cellular services in 18 African countries showed that, even in a liberalized and competitive market environment, prices for mobile-cellular services can vary noticeably between operators. The study, carried out by Research ICT Africa, found that, in six countries, the dominant operator was also the cheapest operator. In eight countries, the dominant operator was actually the most expensive operator, although in most cases the difference in price was less than 30 per cent (Figure Box 3.1). Two exceptions are Tanzania and Nigeria, where the cheapest operators are over 50 per cent cheaper than the dominant operator. Both countries have very dynamic and competitive mobile markets and are home to more than five operators each, with several smaller operators trying to gain market shares. In Tanzania, one of these relatively new and small ope-rators, 0.01 per cent of the country’s market share. Nigeria’s cheapest mobile operator, Starcomms, provides CDMA services but is limited to around 30 major cities and 175 towns across the country. By end 2010, it had around 1.8 million mobile-cellular subscriptions, representing about 1.4 per cent in Nigeria’s 90 million subscription market. One of the reasons that smaller/ new operators may find it difficult to gain market share is because their off-net prices have to be competitive with the large operator’s on-net prices. Since most of the calls of smaller operators are likely to terminate on another operator’s network, off-net tariffs must be kept low; otherwise it is in the customers’ interest to stay with the (or a) dominant operator, particularly in a market where mobile-termination rates, which tend to favour dominant operators, are high. While the relatively lower prices of these two operators could further increase competition and force other operators to adjust (i.e. lower) their own prices, their very limited market shares suggest that currently only few people benefit from their low tariffs. Benson Informatics, is also the cheapest operator. The company, which started out as a technology consultancy and Internet service provider, launched its mobile services at the end of 2008, but despite low prices, by end 2010, held only Figure Box 3.1: Cheapest prepaid mobile-cellular prices, in USD, selected African countries Ghana 3.04 Ghana Ghana 2.29 3.15 Tanzania 7.26 Tanzania Tanzania 2.93 7.26 Kenya 5.93 Kenya Kenya 3.35 5.93 Nigeria 7.76 Nigeria Nigeria 7.76 3.63 Ethiopia 3.74 Ethiopia Ethiopia 3.74 3.74 Rwanda 6.87 Rwanda Rwanda 3.74 6.87 Benin Benin 7.50 Benin 4.92 8.81 Botswana Botswana Botswana 5.04 5.04 6.66 Tunisia Tunisia Tunisia 5.06 5.06 5.36 Namibia Namibia Namibia 5.06 8.86 8.96 Senegal Senegal Senegal 6.12 7.52 6.12 Uganda Uganda Uganda 6.33 7.04 6.95 Zambia Zambia Zambia 6.57 8.18 6.60 Côte d'Ivoire Côte d'Ivoire Côte d'Ivoire 7.00 9.54 8.15 Mozambique Mozambique 7.45 Mozambique 8.32 7.45 South Africa South Africa 7.64 10.36 South Africa 7.64 Cameroon Cameroon 8.59 9.30 Cameroon 9.30 Burkina Faso Burkina Faso 11.04 12.54 Burkina Faso 12.54 Note: Prices in this graph are based on the 2006 OECD methodology and on the cheapest mobile prepaid product available, presented in USD. They may differ from the tariffs presented in the IPB, which is based on the 2009 OECD methodology. Source: Stork and Lumingu, 2010. See also http://www.tcra.go.tz/publications/telecomStatsDec10.pdf, and http://allafrica.com/stories/201008061127.html. 55