Cost of data in Ghana – The complex dynamics
In the last couple of years or slightly more, the country’s economic landscape has not been very favourable to businesses and households.
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High taxes, increase in fuel costs, deteriorating forex rates, high utility tariffs, particularly electricity and rising labour cost, among many others factors, come together to create what is obviously a complex web of cost considerations for service providers.
One industry that has not been spared by these harsh economic developments is the telecom sector, hence their pricing of services including data cost.
In the last couple of months or so, there seem to have been an incessant pressure on the telecom companies followed by a flurry of outbursts and protests in the digital space drawing significant attention to the high cost of data bundles in Ghana.
The phenomenon has culminated in extensive debates on social media regarding the affordability and accessibility of internet services.
Obviously, it is the right of those complaining to do so. However, much as these concerns may be cogent, there is the need for a comprehensive understanding and the need to situate the issues in context, which is the broader economic framework.
Key indicators
Key economic indicators which cannot be glossed over are high inflation (22.8 per cent as of June), currency devaluation (cedi depreciating against the United States greenback, for instance, by 18 per cent year to June alone), coupled with global economic strains are critical factors worth noting.
It is imperative to note that despite these substantial fluctuations within the economy, telecom operators in Ghana last adjusted their tariffs in November 2023.
This relatively infrequent adjustment contrasts with the frequent price hikes in other regulated services in other sectors.
Meanwhile, the same indicators that force the other sectors to review prices of their products and services upwards are same for the telecom sector.
To mention a few, the National Petroleum Authority (NPA) reviews fuel indicative prices approximately every two weeks (pricing window), taking into consideration the prevailing forex rates and the international price of crude oil.
Similarly, the Public Utilities Regulatory Commission (PURC) revises electricity and water tariffs on a quarterly basis.
Call it unfortunate and insensitive and you may not be far from the truth. However, these reviews often result in upward adjustments only to reflect the dynamic nature of global oil markets.
For instance, the first quarter of 2024 alone saw a significant 29.96 per cent increase in electricity tariffs, driven by factors such as currency depreciation, inflation and the rising cost of natural gas. Water and fuel prices have also seen increases of 8.3 per cent and 13 per cent, respectively, over the past year.
To put these in real perspectives, these increases in utility costs have profound implications for the cost of living and operational expenses for businesses, of which telecom operators cannot be left out.
In spite of these pressures, it is on record that the telecom operators have not responded to the adjustments and instead, have maintained stable tariffs since November 2023.
This clearly suggests that the telecom companies are, without doubt, absorbing a portion of the increased costs to mitigate the impact various economic indicators as mentioned earlier, on consumers.
It is obvious that the reluctance of the telecom operators to stay their tariffs is a deliberate yet strategic approach to ensure that the consumer is not overburdened. Simply put, it is to ensure affordability and market stability over short-term revenue gains.
Economic reality
It should not be lost on the public that the economic reality for telecom operators remains challenging.
Maintenance costs, infrastructure upgrades, operational expenses management, and navigating regulatory requirements is substantial. In this context, the decision to keep tariffs stable can be seen as a balancing act between sustaining business operations and protecting consumer interests.
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It is a truism that telecom operators must navigate a delicate equilibrium, balancing their need to generate sufficient revenue to cover rising costs while ensuring that data services remain affordable for the average consumer.
Comparisons
Again, to place the arguments in real context, it is without doubt that tariff pricing in Ghana, when compared to other countries within the sub-region, is relatively favourable, a development which clearly underscores the efforts made by industry stakeholders to ensure that internet services remain accessible and affordable despite the economic challenges.
In neighbouring countries such as Nigeria and Côte d'Ivoire, data tariffs have seen more frequent adjustments in response to economic conditions, leading to higher costs for consumers.
This regional comparison highlights Ghana's relatively advantageous position, yet it also underscores the potential volatility that could arise if economic pressures continue to mount.
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The implications of telecom operators adjusting their prices to fully reflect current economic conditions are significant. Such a decision would likely lead to substantial price hikes, potentially reducing internet accessibility for many Ghanaians.
Should that happen, these could have far-reaching implications, affecting not only individual consumers but also businesses that rely on affordable data services for their operations.
Higher data costs could stifle innovation, limit educational opportunities, and impede economic growth by making it harder for small and medium-sized enterprises (SMEs) to operate efficiently.
From an economic analyst's perspective, the stability of telecom tariffs in Ghana can be viewed as a strategic effort to balance economic realities with consumer demands.
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This approach helps to maintain social stability and economic inclusivity, which are critical for sustainable development.
However, it also highlights the need for ongoing dialogue between telecom operators, regulators and consumers to find innovative solutions that address the underlying economic challenges.
Interventions
Telecom operators might explore strategic partnerships or diversification into new revenue streams to buffer against economic fluctuations.
One potential solution could be the introduction of targeted subsidies or tax incentives for telecom operators to offset some of their operational costs.
This could help to maintain affordability while ensuring the financial viability of the telecom sector.
Additionally, investments in alternative energy sources and technological innovations could reduce dependency on volatile energy prices and improve operational efficiency. For example, adopting renewable energy sources such as solar power for network operations could mitigate the impact of fluctuating fuel costs.
Another avenue worth exploring is the enhancement of regulatory frameworks to provide more predictable and stable economic conditions for telecom operators.
Policies that promote transparency and consistency in regulatory decisions can help operators plan and manage their costs more effectively.
Again, encouraging infrastructure sharing among telecom companies can reduce duplication of efforts and lower overall operational costs, which can be passed on to consumers in the form of stable or reduced tariffs.
A country with a very youthful population, clearly, has more people relying on data services and what they use that service for cannot be overemphasised.
It serves as a reminder that economic policies must be responsive to the needs of consumers while ensuring the sustainability of essential services.
Way forward
Obviously, by fostering a collaborative approach, stakeholders can navigate the complexities of data pricing and work towards a more inclusive digital future for all Ghanaians.
This collaborative approach will require continuous engagement, transparency, and innovation from all parties involved to create a balanced ecosystem that benefits both consumers and service providers.