The House of Representatives thinks so, but industry analysts forecast bleak picture locally and globally
The House of Representatives, on Tuesday has voted to amend the Telecommunications Act of 2007 Part IV Section 12 (2)(3)(4) and Section 13 (1) and (2) to expand the functions of the Liberia Telecommunications Corporation (LIBTELCO) become a GSM Operator.
The expansion of the amendment relates to licensed service providers including expansion of the functions of the National Operator on the structure (role) of the Liberia Telecommunications Corporation (LIBTELCO) as a ‘revenue operator,’ to contribute towards the national budget.
Members of the House of Representatives, on the 43rd day sitting approve the act and forwarded it to the Senate for concurrence.
The House’s approval followed by a recommendation from the Joint Committee on Post & Telecommunications; Ways, Means and Finance and Judiciary after a three-week’s intensive public hearing and consultations.
Maryland County District #3 Representative, Isaac Roland introduced the bill which was read in July 9, 2020 and was subsequently turned over to the Committee’s on Post & Telecommunications; Ways, Means and Finance and Judiciary.
The Joint Committee wrote: “The amendment of those provisions of the Telecommunications Act of 2007 as cited herein will enable the Government-owned Corporation ‘LIBTELCO’ to provide world-class telecommunications products and services at cheaper at affordable prices for all Liberians that will enable growth of various sectors, such as education, healthcare, banking, energy and serving the masses, at large, for a sustainable economic growth of our society.”
The Committee added: “In an effort to counter the devastating impact of COVID-19 pandemic on the economy and to support maximum returns on internal resources government for economic recovery, we strongly believe that amending the provisions of the Telecommunications Act of 2007 to expand LIBTELCO’s functions as a National Operator, will have a positive effect on the economy and will enable growth of various sectors, such as education, healthcare, banking, energy and serving the masses, at large.”
The Joint Committee further: “Hon. Speaker and distinguished colleagues, the Committees are convinced to recommend to this noble body to amend Section 12 sub-sections 2, 3, 4 & 5, Section 13 sub-sections 1 & 2 and Schedule A of the Telecommunications Act of 2007, and to subsequently forward to the Liberian Senate for concurrence.”
The Joint Committee was led by Judiciary Chairman Cllr. J. Fonati Koffa, because the chairman on the Post and Telecommunications, Rep. Roland recused himself as a sponsor of the bill.
In an exclusive interview, Rep. Roland, who is also the chairman on the House’s chairman on Post & Telecommunications and co-chairman on Peace, Religion and National Reconciliation said the approval of the law is a “new dawn of the telecommunications sector.”
He indicated that the amendment will enable the Government-owned to provide world-class telecommunications products and services to meet its customers’ needs and to make fitting contributions to the national budget for execution and implementation of government’s Pro-poor Agenda for Prosperity and Development (PAPD).
While it may appear as a no-brainer for the Government of Liberia to give Libtelco the go-ahead to operate in the retail telecommunications space, along with the two existing providers, Lonestar Cell MTN and Orange Liberia, existing market data shows a very narrow competition between the two players and, as industry experts have long suggested, the entrance of a third player in the market, offering similar services as the other two, would be a death wish.
According to the Liberia Telecoms, Mobile and Broadband Statistics and Analyses (2019) report, the privatization of the neglected incumbent telco, Liberia Telecommunications Corporation (Libtelco), failed in 2005 though efforts to resuscitate the company have continued.
“Competition between the two key mobile operators, Lonestar Cell MTN and Orange Liberia, has led to a reduction in pricing for voice and data services, and this prompted the regulator in late 2018 to suggest a tariff floor,” the report says.
“Meanwhile,” the report continues, “the harmonization of a disorderly mobile licensing and spectrum allocation regime has caused some difficulties, and market penetration remains low compared to other countries in the region. Penetration has also been affected by SIM card registration requirements imposed in recent years.
“The market is ineffectively monitored by the telecom regulator, which lacks the resources, technical expertise and documentation to enforce its orders. As a result, a number of operators are able to avoid paying fees to the government and have continued to operate despite the regulator’s rulings that they must close down their services.
Going forward, the publisher of the report notes that the outbreak of the Coronavirus in 2020 “is having a significant impact on production and supply chains globally. During the coming year the telecoms sector to various degrees is likely to experience a downturn in mobile device production, while it may also be difficult for network operators to manage workflows when maintaining and upgrading existing infrastructure. Overall progress towards 5G may be postponed or slowed down in some countries,” the report says.
“On the consumer side, the report summary observes, spending on telecoms services and devices is under pressure from the financial effect of large-scale job losses and the consequent restriction on disposable incomes. However, the crucial nature of telecom services, both for general communication as well as a tool for home-working, will offset such pressures.
“Although it is challenging to predict and interpret the long-term impacts of the crisis as it develops, the report summary says, these have been acknowledged in the industry forecasts contained in this report.”
According to Datareportal’s Digital Liberia 2020, which provides data on mobile, internet and social media usage across the country Liberia’s market for mobile and internet services remains incredibly small and hardly diversified, with 4.13 million mobile phone connections out of a population of 5 million people, as at January 2020. This takes into account that most subscribers have more than one mobile phone connection.
Yet, between January 2019 and 2020, the total number of mobile phone connections grew by 32 percent, equal to nearly a million new connections within that period. Yet, only 12 percent of the Liberian population (624,600) use the internet and, of that number, 70% access the internet via mobile phones.
A former Libtelco executive, who requested not to be named, said that, for the company to enter such a fiercely competitive mobile telecommunications market — as a government run entity — among the likes of well established giants MTN and Orange, it would be prudent for the Libtelco to carve out a highly strategic and high-demand niche, where it can cultivate growth and not get slaughtered.