Policy and Regulatory Challenges Posed by Emerging Pricing Strategies

Abstract

At the beginning of 2014, in some African countries mobile operators were offering bundles of voice, SMS, and data services. This emerged by applying the OECD (Organisation for Economic Co-operation and Development) 2010 price baskets methodology, which was used to analyze and compare prices in different countries and among operators and to develop a case study on South African mobile prepaid prices. This article discusses how mobile operators introduced new pricing strategies both to reduce churn rate and to challenge loss in voice and SMS revenues eroded by the use of Internet Protocol (IP) services. Although voice and SMS revenues were still the primary revenue streams for mobile operators, they decreased in 2013, while data and equipment revenues comprised an increasing share of revenue. Considering the complex structure of emerging bundle tariffs, the article recommends that national regulatory agencies request operators’ disaggregated data on average revenue per user, minutes of use, and data traffic on their services to develop new price baskets based on the real use of mobile prepaid services.