Think Tank Research Calls for Telecom Reform

Tayitu 14th

Monopoly admits problems, but claims privatisation is not a solution

A study on the services and service delivery performances of the state monopoly ethio telecom in Addis Abeba claimed that the company has serious deficits in its pricing and the delivery of quality services to the public.

The research was conducted by Forum for Social Studies (FSS), a non-governmental, non-profit policy think-tank registered as an ‘Ethiopian Residents Charity’ and that conducts independent research and provides a forum for informed public debate of development issues and policy initiatives.

The Second Urban Public Service Delivery in Addis Abeba Public Dialogue, held at Ghion Hotel on the first week of December 2014, engaged participants from Addis Abeba University (AAU), Telecommunications service and the media. Abdurahim Ahmed, the Communication Affairs Directorate director of ethio telecom reflected on some of the points raised by the researcher Dereje Teferi (PhD), Senior lecturer, Department of Information Science, Addis Abeba University.

The telecommunications that came into being in the country when Emperor Menilik II first advocated Ethiopia’s membership of the International Telecom Union (ITU) in 1907, which became realized in 1932, has now reached at providing different services such as mobile telephone, landline telephone, and internet.

The study that dealt with the telephone services separately by dividing them as fixed telephone line, wireless Code division multiple access (CDMA), mobile telephone service (2G and3G), satellite telephone service and internet access, found holes in the systems in terms of pricing, penetration, and service quality.

The study that found that there are 813,410 fixed telephone lines in Ethiopia by June 2014 growing only in three percent from the preceding year’s 790,168; the penetration rate still stands less than one per cent among the lowest in Africa.

“Since the introduction of mobile and wireless telephone access in Ethiopia, the expansion of fixed lines has declined significantly,” comments Dereje.

The mobile service started in 1998, building a client base of 28,000 subscribers in a short time. Then the service was suspended until the introduction of pre-paid service in 2003.

The mobile sector has been growing by 100pc every year, according to the research.Currently, there are 6,000 cellular towers in Addis Abeba, only pushing the penetration to 33pc from 17pc in 2011 and eight percent in 2010.

By June there were 29,307,662 mobile subscribers in the country showing a 19pc growth from the 23,756,607 in 2013. Currently, there are 29.3 million subscribers of mobile service in the country which is planned to reach 40 million when the current expansion project, done with an investment of 1.6 billion dollars contracting with ZTE and Huawei, is finalized. Recently,Ericson has joined by taking four of the six lots that ZTE failed to deliver as per the contract.

The internet service, also one of the deals, was deemed to have low penetration compared to other countries in Africa.

“Ethiopia still has the third lowest internet penetration rate in sub Saharan Africa surpassing only Sierra Leon and Somalia,” states the study.

Abdurahim, who explained the importance of the study and the benefit it will have as an input for the betterment of the future services the state monopoly provides, admitted the problem with the penetration of fixed-line telephone service and the Internet service.

“The Internet penetration is low because of the lack of content localization and when we look at the traffic, 90pc is for downloading; this shows that we have very small amount of uploaded contents,” says Abdurahim,stating the reason for the underdevelopment.

The research also found out that ethio telecom has made price adjustment in April 2011, reducing subscription charge from 80 dollars to 13 dollars, and the monthly fee from over 200 dollars for unlimited usage to fees between 17 dollars and 41dollars between 1G and 4G of use.

“The price is still very high considering the very low per capita income of Ethiopian’s is (about 471 dollars World Bank 2014) and is assumed to be one of the major reasons for the low internet penetration,” comments Dereje, suggesting liberalization and revision of the pricing.

The privatization discussion took much time than any other points with Solomon Teferra (PhD), senior lecturer, and head at the Department of Information Science, Addis Abeba University, saying that the government is not willing to leave the sector as it is”a good milked cow.”

Privatization is not the best option as it has got its own problems as experienced in other countries, according to Abdurahim.

“Other countries have no rural connectivity and different free government provided services for the society through the telecom service such as agrinet, revenuenet, and schoolnet,” argues Abdurahim.

One of the attendants of the forum, BediluAssefa, the manager of the Anbessa City Bus Service, said that the government’s strategy for privatization is in four rounds and conditions. The enterprises in the country are divided into four sections for saying non important and non strategic, important and non strategic, non important but strategic and both important and strategic. The telecom falls under the fourth one and it is not to be privatized until those in the three are completed.

The research also unraveled that the low quality telecom service is hindering different corporate and private customers from getting the best from the service. The Banking sector was raised as an example that cannot operate by connecting branches to utilize the automated core banking system and ATM machines fail because of network.

But Abdurahimstates here that the banks have been provided with non-stop power and it has become customary to attribute internal failures with the telecom services.

The monopoly now has 29.2 million mobile subscribers out of which 22 million are active. It plans to raise this number to 40 million with the capacity of reaching 59 million.”

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