Saturday, May 8, 2010


By Jehovaness Zacharia- LLB (Hon) UDSM -TCAS Program Officer

Past years till 1980s, Tanzanians communicated through letters and messengers, almost every office had a messenger who was there to be sent from one office to another, staff collogues could communicate through short written messages known as memos. From memo we developed and start using desktop phones. Thanks to globalization which brought us development including cellular phones which has became the cheapest mean of communication that is easier and faster.

This has well developed business sectors whereby one can easily make communications wherever he is and move on the business. It has even go further to roaming service whereupon cross boarders businessmen who can move from Tanzania to other countries with the same chip card and recharge with the local vouchers.

Increase on the number of service providers in this sector has necessitated intensive competition amongst players resulting to decrease on tariff charges. But…there is a say that, there is no free lunch, that is to say when one gives you something freely, it is not free indeed, there must be the other way s/he is going to get back whatever he has spent on you. Practice shows that what s/he gets back is in most cases greater than what he had spent on you.

In capitalism and trade liberalization, “predatory pricing” is not a new phenomenon. And it has always been the duty of the government-Competition Commission, Service providers and Civil Societies to ensure that there are healthy checks and balances and fair competition not to amount to malpractices. The enactment of Fair Competition Act 2003 (FCA) which put in place Fair Competition Commission (FCC) put in place the checks and balances for Tanzania.

Currently, all telecommunication companies struggle to conquer the market share, we have witness amazing lower prices never experience before. It started from 30Tshs to 10Tshs, 6Tsh per sec to 3Tsh to 1Tsh per sec few days ago we heard 0.50Tsh per second, and now enjoying below 25cents per second.

We may all be happy with the astounding offers and forget to think of our future as consumers of these important services which might be at stake. One may view this in form of predatory pricing or cartel which is a form of anti-competitive arrangement that occurs when a group of firms or companies agree to fix prices, shape geographic markets between themselves or jointly determine other market experience.

But due to lack of experience in combating predatory and cartel activities in most of developing countries Tanzania being among them, most of predatory and cartel activities go un-noticed. Under these practices, one or few service providers may sacrifice to go below company’s overhead costs for a certain period whereby, during this time, the dominant firm will keep surviving while others will not and therefore withdraw themselves out of the market as they cannot sustain the predatory pricing war.

Similar situation was experienced by Namibians who in couple of years back were celebrating the lowest cement price in history. The cement market dominancy were between Holcim, a South African company and Cheetah a Brazilian which imported cement from Brazil with the intention of building cement industry in near future.

When Cheetah got into market the price of 50kg cement bag was US8$, soon it went down to US4.5$per 50kg bag, in 2006, it went down to US3.5$per 50kg bag. At the end of the same year Cheetah could not sustain its activities in Namibia and ended its operation whereas Holcim become the sole cement provider whereby they later made an extraordinary change of price from USD 3.5 to US9.5$ per 50kg bag. Therefore Tanzania Consumers and all other key stakeholders including TCRA and FCC need to be on alert as this shouldn’t be the case on telecommunication industry, since not all what glitters is gold.

With the ongoing so called “promotions” by some of the telecommunication companies in Tanzania, a thorough immediate check on is required to ensure that they do not amount to go below recovering their overhead cost or ending up with anti-competitive practices. TCAS therefore calls upon professionals, academicians and relevant government organs to check on this and ensure service provider survival and consumer protection guaranteed.

Tanzania Consumer Advocacy Society (TCAS) wouldn’t wish to see incumbent operators with dominant market position are pushing other mobile phone companies out of the market and later the hunter (consumer) turns to be the hunted. The more the players in the market the better as it gives consumers a wide range of choices.

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