Sunday, 22 July 2007

Zamtel's monopoly....why I oppose it

I thought the above chart (click to enlarge) might be useful to show how Zamtel's international gateway dominance and its freedom to discriminate influences the level of competition in the fixed line, cellular and internet segments. This is a rich topic, but I have attempted a short summary below to add some colour to the chart above:

Fixed-line segment : All international traffic has to be routed through Zamtel's gateway. Interconnection fees paid by mobile providers are set at 80% of Zamtel's retail price, which has left no room for competition on prices. With supply constraints, the result is high prices and low quality of service because of congestion. Hence, with a de-facto monopoly on international traffic, Zamtel as a fixed line incumbent operator effectively operates a high-margin, low volume, low-quality business. This status quo is okay for urban households that already in possession of a phone line and for Government departments that do not pay their bills. However, it has resulted in Zamtel's profits not being invested in the expansion the network.

Cellular segment: Under the current situation, Celtel and MTN have to route their international traffic through Zamtel's gateway. On outgoing international calls, Celtel and MTN are charged 80% of Zamtel's retail price as interconnection fee for the delivery of the call. The remaining margin is sufficient to cover the mobile operators' costs associated with administration and delivery of call to the international Gateway. MTN, for example, which is passing on 10% discount of Zamtel's international rates to its customers, has previously claimed that it makes an annual loss of $50,000 by providing international calls. These losses are depriving MTN and Celtel from investing in the expansion of their networks at a faster rate. Apart from that Zamtel distorts competition through providing both a fixed network and mobile operator in form of Cell-Z. The Zambia Competition Commission in noted this in 2003 in its submission to the Select Committee on Transport and Communication : "the position of Zamtel means that it has the power to prevent, restrict or distort competitor access to this essential infrastructure which was built with public funds".

Internet segment: Although internet access is open to competition in general, Zamtel's dominance as a fixed line operator eliminates the level playing field. In Zambia most of the internet is through dial-up connections, using the fixed-line telephone network controlled by Zamtel. By controlling the landline infrastructure, Zamtel is able to offer better access conditions to its own internet subsidiary than to competitors. For example, Zamtel ha set up so called virtual local access points, which allow customers outside Lusaka to access the internet at local rates, but these rates are available only to customers of Zamtel Online. Customers of other Internet service provides (ISPs) have to pay long distance telephone charges to access the internet if they are located outside Lusaka.

THEMES :

53 Comments:

  1. David KabamfwileJul 24, 2007 04:12 PM
    Chronic indifference to fact and truth should not so blind our minds as to loose sight of what is at stake here.
    A credit bureau helps businesses manage risk, Zamtel would not loose as much revenue as it does if customers' credit worthiness was assesed before services as given. As an economist Cho is aware of the huge role risk,plays in cost of borrowing and running a business.
    Again the cost of international calls is determined by the cost of use of intel sat, transit switch charges and the volume of traffic. For example a call to Kuwait from Zambia would exist the Mwembeshi earth station satelite our gateway to an intel sat satelite in space then get routed to BT in the UK, who in turn route the call to Kuwait thru transit switches.Furthermore volume of calls affects operating costs, since there are millions of calls per second between the UK and the US the cost of calls is very low. As the volume of calls to outside Zambia increases the cost per call will go down.
    That Zamtel maintains the only gateway does NOT constitute a monopoly, other carriers can invest in other services e.g internet and TV delivery. Why won't Celtel or other carriers take internet or TV service to rural Zambia. It's about profit for them.
    I would say that, whole sum application of western world experiences to the Zambian condition only shows indifference our current standing.
    ReplyDelete
  2. David,

    Your post raises some fundamental points. Some which you have raised on "Mulongotism" and I have addressed...and some new. Let me try and answer them.

    A credit bureau helps businesses manage risk, Zamtel would not loose as much revenue as it does if customers' credit worthiness was assesed before services as given. As an economist Cho is aware of the huge role risk,plays in cost of borrowing and running a business.

    I whole heartedly support the establishment of the Credit Bureau. I know Fundanga and others are working to get this forward. Incidentally you should note that for it to be it we probably need to introduce a number of things e.g. public access to voting register, introduction of a post code system. However, my main point is that Zamtel’s problems are structural and very much about how it is restricting welfare gains in the cellular, fixed line and internet segments.

    What I would say for your “credit” point is that you are right Zamtel faces problems from collecting revenue but most of it is from Government institutions. Zamtel knows who these organisations are. Indeed in March 2006, Zamtel put its outstanding debt at $62m (4 months worth of the company’s revenue). The problems is not the lack of a credit bureau but the lack of incentives for Zamtel to provide services responsibly as any normal company operating on profit would.

    "Again the cost of international calls is determined by the cost of use of intel sat, transit switch charges and the volume of traffic."

    The cost of access is a huge fact in the cost of calls. This is why Zambia's rate of out-going is lower than incoming. All market analysts agree on this. Even the CSZ agree. See the blog
    http://zambian-economist.blogspot.com/2007/07/mulongotism-3rd-edition.html

    "As the volume of calls to outside Zambia increases the cost per call will go down."

    Yes if capacity is elastic, but that is not case.Higher volumes means greater congestion.

    "That Zamtel maintains the only gateway does NOT constitute a monopoly, other carriers can invest in other services e.g internet and TV delivery."

    You have a point in so far as market definition is concerned.
    Of course if we defined the market broad enough we can see where Zamtel has limited dominance. But in terms of fixed land lines and sole access to the gateway, Zamtel leverages increadible market power. I am not the only who realises this point, the Government own Competition Commission said so!! I would ask that you carefully examine their report.
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  3. Yes if capacity is elastic, but that is not case.Higher volumes means greater congestion.

    Mwembeshi is less than 50% utilized so congestion is not so much an issue.
    http://www.zamtel.zm/zamtel/mwembeshi/traffic.htm

    Still my guess is that the price will not go down if the demand goes up. ;)

    What people are missing is that Zambia could carry traffic for other countries. It could easily happen that the fiber on the one coast is cheaper than fiber on the other coast so part of the traffic could go either way.

    Zambia _needs_ to have fiber connections directly to every bordering country. Either we can buy from them or we can sell to them.
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  4. Anonymous,

    "Mwembeshi is less than 50% utilized so congestion is not so much an issue.
    http://www.zamtel.zm/zamtel/mwembeshi/traffic.htm"

    Quite right.
    I was addressing his narrower technical point that additional demand must always lead to lower costs. Thats not always the case.

    The fact that gateway is underutilised actually illustrates my point. It is typical behaviour of a monopoly which seeks to maximise profits rather than moving towards a more socially optimum position where average revenues equals average costs.

    So what we have is confusion in the debate. Let me illustrate the conversation:

    MTN/CELTEL: We are overcharged and we can't grow, we need to break up Zamtel's gateway monopoly.

    GOVERNMENT: We have liberalisation. The gateway is open, you can set up your own.

    MTN/CELTEL: But it is too expensive $12m per licence? We can't afford that. Can you decrease it please so that we can have own gateway?

    GOVERNMENT: To be honest we don't really support your idea because the currrent gateway is underutilised.

    CELTEL/MTN: Yes that is because it is expensive for us to use it. We are currently losing $50,000 annually just for offering international calls. We can't break even with this thing. We need to break up Zamtel's monopoly.

    GOVERNMENT: We have liberalisation.

    And on and on it goes...
    ReplyDelete
  5. let me try and add my rumblings

    we talk about credit bureau the peoples lives are not being organised to make this venture profitable.how many zambians have organised lives to need a credit bureau for easier access to loans

    do we have a system in place to collect taxes to fund this venture.

    zamtels monopoly is evidency of how shallow we are as zambians to be creative in raising funds.an example is how zampost imposed mailboxes at high fees in preference to collaberating with the local authorities in clearly marking street names. how much does zesco spend employing those delivery girls/boys? one clear way of creating employment.

    routing of calls has to happen that way through the uk/us/china why because we can't afford to put up a satelite and it's not priority. maybe its gov. idea to make money for it's running costs?

    when you talk about tv delivery which audience do you have in mind? tv is about advertising. its a way for the marketer to get in your home without getting permission.

    if volume should increase then gov. should get the cream and spread it out.

    calls from zambia are cheap and those talking don't know the real cost of communication. i used to call my friends to the UK using a 2.5 from celtel and my adopted boy calls me when i send him some thru western union.

    we dream of europe being this big mistry,where we imagime calls of 2ngwee. stop dreaming.

    if you think it's expensive then its not worth it. its like expecting cheap stuff in a society where there are high salaries.
    ReplyDelete
  6. David KabamfwileJul 25, 2007 05:33 PM
    Whatever Cho deems as structural problems may arise from the evolution of telecommunications in Zambia. Starting off a GPO ( General Post Office) to PTC, then Zamtel. BT has a near similar history having started as GPO also,of course BT is now private. However BT still has a significant market power in fixed lines, box call phones and has Universal Service Obligation for telecommunications in the UK.I know the regulatory framework ensures the competition fair access to it's infrastructure. Zamtel because of it's history also maintains a significant infrastructure in fixed lines and RF transmission,however the regulatory framework and technological advances offers the competition viable options to it's exclusive gateway advantage.
    For example Zamnet operates an independent internet gateway(VSAT) which can support VOIP telephony. Since Celtel has come into easy capital finance they can use an internet gateway and have a VOIP telephony route independent of Zamtel.
    Operating licenses are issued by Communications Authority ( Zamtel has no control), if as Cho states they cost $12M hey thats the price for everyone.
    Am interested to know what Cho thinks accounts for Telecel( Now MTN) slow growth. MTN entered the market earlier than Celtel, is Zamtel structural problems the reason Celtel has surpassed MTN?
    ReplyDelete
  7. David,

    You say:

    "Zamtel because of it's history also maintains a significant infrastructure in fixed lines and RF transmission,however the regulatory framework and technological advances offers the competition viable options to it's exclusive gateway advantage."

    You are missing the fundamental point here. Zamtel cannot be adequately regulated by CAZ as long as it is owned by Government. CAZ is a Government regulator. There's a conflict of interest.

    You are right that BT and other utilities link British Gas and so forth have remained with significant power and regulation helps ensure competion (not always of course because the models tend to allow for unnecessary gold plating at the expense of consumers) - The difference with these companies is that they're private.

    Economic regulation only works properly if everyone in the industry is a private player. This is the case the world over.

    The other issue I have raised elsewhere of course is that CAZ is not an effective regulatory. It has inadequate regulatory capacity. This would need to improve and must be considered as the first step BEFORE commercialisation of Zamtel. See this blog : http://zambian-economist.blogspot.com/2007/07/mulongotism-3rd-edition.html

    Its not just CAZ, but also its relationship with the Zambia Competition Commission (ZCC). CAZ's role and that of the ZCC needs to be clearly defined, as is the CAZ powers to compel Zamtel and other players to act. There's a lot that can be done to improve CAZ. Its not very independent at the moment.

    Another issue is the definition of "significant market power". This is the really a ZCC issue, but at the moment its not well defined.

    So the general picture is one that CAZ cannot do its job as long as Zamtel is also Government owned. In adddition, it suffers from inadequate independence, lack of technical capacity and lack of clarity between its role and that of ZCC.
    ReplyDelete
  8. David KabamfwileJul 26, 2007 02:07 AM
    Cho,
    Am not sure I understand the degree of regulation you expect from the CA, as far as I understand the communications act- the basis of it's exist it's main roles are;
    a) Regulation frequency spectrum.
    b) Ensure telecommunications operators adhere to ITU regulations.
    c) Arbitrate and resolve RF interference disputes between operators.

    Government only retains a strategic 47% share in Zamtel, it is unfair to suggest that CA can not regulate effectively because of this.
    I just gave an example of how Celtel and MTN can have an alternative gateway, I thought the gateway was the main bone of discontent.
    I have not heard of any interest in fixed landline from Celtel or MTN.
    Would access to their own gateway not correct the inbalance?
    Regulation as you state is complex, especially in the face of changing technology.
    In Illinois USA for example the major cable provide is Comcast- the have used current television laws to maintain exclusive presence in most counties because they signed exclusive provider agreement with the counties. AT& T has cited unfair competition is lobbying to change the laws.This may take years to achieve due to bureaucracy and interest group lobby.
    I submit that Celtel and MTN have a fair chance in the Zambian market. Zamtel has provided services for many years and should not be forced crawl just because there are babies in the market.
    ReplyDelete
  9. Cho,

    CELTEL/MTN: Yes that is because it is expensive for us to use it. We are currently losing $50,000 annually just for offering international calls. We can't break even with this thing. We need to break up Zamtel's monopoly.

    GOVERNMENT: We have liberalisation.


    What you are saying is that (again) we're seeing the neoliberal's refusal to acknowledge pre-existing constraints to free access to markets.

    Basically what they are doing is to step back and say 'you're free now'. Except of course that the company needs to pay a $12 million licence to the government? So how free is that?

    It is the same thing as with land. When is this government going to get off it's backside and start creating an even playing field for everyone who wants to participate in the economy? And that includes telecommunications companies, as well as potential commercial farmers.
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  10. Arthur,

    "how many zambians have organised lives to need a credit bureau for easier access to loans"

    I agree.
    It is difficult to see how a credit bureau for example would help a poor lady in Samfya, who is very mobile in search of jobs (studies show the poor tend to be quite mobile). If anything such things are only helpful to the companies.

    "an example is how zampost imposed mailboxes at high fees in preference to collaberating with the local authorities in clearly marking street names."

    A very good example!!
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  11. David,

    There are a number of issues.
    My call to reform the industry is based on four step solution - let me explain them in some detail:

    Step 1 First and foremost I want to the Communications Authority Strengthened. This must be done before anything else. Why? Because the CAZ at the moment is a weak regulator. The problem with the institutional set up of the CAZ is two fold. First it has a weak regulatory mandate. The enforcement and regulatory capacity of the CAZ needs to be improved. CAZ was created by the Telecommunications of 1994. The ACT mandated the regulator to promote competition among providers of telecommunication services and infrastructure to ensure the benefits of the telecommunication sector accrue to all of our people and the economy in general, and to take reasonable steps to extend the provision of services in rural and urban areas. These objectives will never be achieved unless CAZ is fully independent. At the moment CAZ does not have the power to issue and enforce regulations without the approval of the Ministry of Communications and Transport. It also can’t compel the operators to behave in certain way. This needs to change. The other area relates to some clarity between CAZ’s role and the Zambia Competition Commission (ZCC). The general trend in other countries has been for the sector regulator to take the lead in enforcing economic regulation if the sector is at an early stage of development. Implementing the basic elements necessary to ensure a competitive environment, such as drafting interconnection rules and creating a licensing framework, requires a high degree of expertise. Once there is full competition and the market has developed, the competition commission would tend to play a more significant role in enforcing competition law, working in tandem with the sector regulator.

    Step 2: We restructure Zamtel so that it becomes a company just like any - non of this “code” commercialisation. Proper restructuring. Everyone in Government accepts that Zamtel needs to be commercialised.

    Step 3: We institute a meaningful universal access policy. Government needs to allow free entry into the international segment to new providers that currently are not present in the market, and let the market determine the number of providers.
    I have already told you how the conversation go on this one. So I won't repeat it. I believe MrK has expressed it better.

    Note carefully that I don not want Zambia to go straight to Step 3 without step 1 and 2. I have said it repeatedly : I am against the idea of lowering the gateway licence charge to allow a second gateway to emerge before other important steps are taken such as regulatory capacity enhancement and commercialisation. Zamtel in its current state is not ready to face stiff competition - and could just die away at extreme cost to tax payers (like the mines did). What myself and others are calling for is a carefully calibrated proceess.

    Step 4: We change the ownership models of Zamtel e.g. consider breaking it up in two (Zamtel Int and Zamtel Domestic) and Government can retain the domestic entity or go for the PPP. Yakima has proposed that Zamtel Int can effectively be a firm in which all the industry players can all have stake through an incremental model that keeps in check unnecessary gold plating but provides sufficient incentives for additional gateway capacity investment.

    Here people have raised objections that it is not necessary. I believe it is necessary in ensuring that consumers gain a better outcome overall. Step 3 is possibly a necessary but not sufficient condition to deliver that. We need Step 4. My reason for this are three fold:

    First, Government continued ownership of Zamtel (post step 3) may lead to greater burden on tax payers. Especially if Zamtel runs into trouble and asks for a Government bail out (post commercialisation). World over Government ownerships tends to weaken the incentives for companies to behave properly.

    Secondly, continued Government ownership creats a conflict of interest in the market. Government ownership may well mean that CAZ are not able to do their job. We would be asking the Government Regulator to regulate the market in which it Government has some interest. This is why the current state is laughable. CAZ are basically Government, trying to regulate another aspect of Government (Zamtel). Regulators are only useful privatised industries. If you reject privatisation of Zamtel you may as well abolish the CAZ. You say uh..but Government only has 47%..the practical reality is that this is a Government owned company under Zambian law.

    Finally, continued Government control over Zamtel may distort competition even after liberalisation of the gateway. This would most likely happen because by virtual of being Government owned, Zamtel may well be able to secure better credit than private sector firms. It would be able to borrow cheaper because it has Government as the "guarantor". This is unfair to other firms.

    For these reasons I would favour a determined but carefully managed approach towards privatisation or a model in which the private sector retains the majority stake.

    The only people who oppose breaking up Zamtel's monopoly are employees and politicians.
    Politicians I can understand, because they don't wanna upset urban dwellers who benefit from experience the benefits of cross subsidisation. They also never pay their bills. They know a good and efficient Zamtel would never let that happen! Employees love the protectio of being a public sector employee!! But actually they may actually benefit from a productive and efficient Zamtel in the long term.

    I am a friend of Zamtel employees. The people who want it to remain what it is are not.
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  12. Has anyone ever noticed that you get a much better connection calling from outside Zambia to inside Zambia, than you get when calling from within Zambia to Europe?

    Is that some kind of expatriate thing?
    ReplyDelete
  13. David KabamfwileJul 27, 2007 05:23 AM
    The model Cho depicts in his recent post is a desirable goal and may be the ultimate destination as telecommunications in Zambia evolves. Our current economic,social and cultural standing may not support the immediate quantum leap we all desire.
    We can use absolute competition as a catalyst or we can allow for a measured growth at the pace of our economic and social development.
    The competition model would entail selling off Zamtel to foreign investors who would unbundle it. The conseqeuncy would be that
    unprofitable aspects like microwave links and switches to rural areas such as Luangwa boma or Mikango (including radio and TV delivery )would be in jeopardy since the target population has no economic means to support the cost of delivery.
    Zamtel has being undergoing comercialization infact a performance review program is ongoing with a reputable accounting & Consultancy firm. The current Managing Director Simon Tembo holds a PHd from a Japanese university( He is no magician) but he has tremendously improved operations, Zamtel is making neccessary changes in investment e.g optical fibre deployment, and downsizing number of employees.
    Our objective as a nation is develop a telecommunications delivery system that is specific and relevant to our needs.Our cultural and social patterns as Zambians do not demand nor support the technological utopia depicted. There is no economic muscle to support 3G telecomunication, there is probably 1 millions active mobile suscribers for all mobile service providers in Zambia right now-there will be a point of market saturation.
    I would rather Zambians support local companies, as the Chinese model shows you can reform and empower indigenous firms to compete sucessfully on the global market.
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  14. i have read most postings about zamtel and the gateway.

    i have also seen the map you have posted. my questions are

    1. you want caz to liberise the international gateway have you thought about the stumbling block to these private cell companies taking over the communications in our country?

    2.they have spread allover zambia but the reality the market can not support such a massive operation. the people are so poor to spend amounts that will be music to their eyes.it's more like hitting a snag/rock.

    3.these guys that head these corporations seem to have similar qualifications,so whats slowing down the others?vision is what celtel has not just qualifications.

    being educated is only to help someone analyse their innovation
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  15. Arthur,

    These are difficult questions indeed with no easy answers…

    1. you want caz to liberise the international gateway have you thought about the stumbling block to these private cell companies taking over the communications in our country?

    The issue of the companies taking over the country is valid.
    But I would like just to say, it is not about security as we have been told. The real issue is the one you identify, which is the prospect of foreign owned companies dominating the industry.

    I would say two things to this.

    First, the key to ensuring that the industry does not get dominated by foreign firms is to make sure Zamtel becomes commercialised and operates on a robust financial footing. We need a strong Zamtel in the market to prevent the sort of things you are talking about.

    Secondly, I don’t see anything wrong with Zamtel-Domestic remaining in Zambian hands but operating private. Government can infact specify that any one who wants to invest in Zamtel or buy it must have a Zambian dominated board. The Americans do this all the times with airlines. Foreign companies can’t control more than 25% of an airline registered and operating in the USA. We can do the same with Zamtel – Domestic. We can ensure that Zambians are always in charge of it.

    What we must not do is stop foreign companies from investing in mobiles or internet etc. We must allow a good open access policy that makes these things possible.


    2.they have spread allover zambia but the reality the market can not support such a massive operation. the people are so poor to spend amounts that will be music to their eyes.it's more like hitting a snag/rock.

    My view on this is that the market can support.
    Competition will ultimately lead to lower prices. Lower prices mean farmers can have good telecommunications. Fishermen will be able to have more information and so forth. Improvments in telecommunications will help everyone even the very poor because it will create more jobs both direct and indirect.

    3.these guys that head these corporations seem to have similar qualifications,so whats slowing down the others?vision is what celtel has not just qualifications.

    I agree 100%. I would add that Celtel as a private company knows if it does not make profits heads will roll. In Government owned enterprises often failure is followed by promotion so that you can be moved on quietly to another job and not cause embarrassment.
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  16. David KabamfwileJul 27, 2007 04:54 PM
    We have now gotten to the heart of the matter.
    The question I was attempting to solicit an answer to is-
    Will a competitive environment in the telecommunications sector in Zambia really translate into free access and even lower charges for all?

    Telecommunications infrastructure requires high capital expenditure, infact the only reason Celtel has expanded so quickly is because its new owners have
    Lots of oil money. Zamtel and MTN would even do better than Celtel if they could source such easy finance ( Cho Govt no longer guarantees Zamtel loans).

    Because of high operating costs and a cultural drag that leads to 50% underutilization of network capacity, it is unlikely lower than current charges would result.
    Zamtel for example has made available its excess capacity on Microwave links to Chipata,Siavonga and other areas to Celtel and MTN.
    Celtel has had to install VSAT links to access more remote areas, this is why I argue that the status qoa gives a glimpse of the ultimate scenario. The high costs
    Of operations against limited effective consumer numbers simply do not allow for even lower charges in spite of competition.
    The trend in the global arena shows a come back to mergers of Telecommunications providers desperate to lower operating costs by sharing infrastructure e.g. Cingular/AT&T in US.
    If Zamtel was unbundled as Cho suggests with the international gateway under one firm and the national transmission network under another. The competing mobile service providers would
    actually face high costs of operations because the firms operating the gateways would charge economic rates to also make profit against their own costs.
    Furthermore international calls account for only 10% of total volume of national daily telephony traffic.

    In conclusion we have already outlined the threat foreign investors pose to national interests such Zamtel's ability to deliver
    National defense communication system, radio and TV service and more importantly cross subsidization to rural and urban markets.
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  17. ”Will a competitive environment in the telecommunications sector in Zambia really translate into free access and even lower charges for all?”

    Hands down, yes.
    Competition in any industry including the telecommunications sector always translates into lower costs and better welfare gains for consumers.
    The only time competition may not deliver a superior solution is under a “natural monopoly” operating in a perfectly contestable market.

    In other words, if for whatever reasons investment in infrastructure is extremely lumpy (or indivisible), and the regulator can regulate in such a way that long run average costs(LRAC) equalled long run average revenues (LRAR) , then society would be better off under a natural monopoly than under perfect competition (or even duopoly).

    The problem with Zambia's situation is two fold:

    First the regulator is not able to carry out its duties properly to move ZAMTEL to the LRAC = LRAR position (but we can sort that out by ensuring CAZ have enough powers and ZAMTEL is made private so that there’s no conflict of interest)

    Secondly, ZAMTEL is not a natural monopoly. In the fixed land lines, with a liberalised Gateway access, and no cross subsidies from IGW Zamtel would face competition that would drive the price down for fixed land lines!!
    In the UK the same thing happened when cable and wireless entered the market and challenged BT. Nowadays you can get a cable and wireless (now called Telewest / Virgin Media ) landline.
    Of course now you can actually get a BT land line and get your services from someone else.

    So whilst I agree with you that the infrastructure has high capitals, its certainly is not indivisible. And certainly the high cost is not necessarily a barrier to entry if there’s a sufficient business case that would yield returns and buyers have access to credit. The current situation in Zambia is that ZAMTEL without IGW cross subsidies would make the market more contestable and new entrants would emerge supplying at lower costs. The poor coverage of ZAMTEL (80% of fixed lines are in Lusaka and Copperbelt) provides enough room for another firm to enter and deliver good and competitive prices.

    Thirdly, in competition, to achieve a good outcome for consumers, you don’t have to enter the market – what is needed is a threat of entrance. So even if no one ever enters the market, liberalisation would make it more contestable. ZAMTEL would have the incentive to innovate and expand the network lest some else comes in and takes their place. The threat of entrance is all that is needed to make them behave properly. And that comes with an open access policy for the gateway.

    ”Because of high operating costs and a cultural drag that leads to 50% underutilization of network capacity, it is unlikely lower than current charges would result. “

    This is and has always been ZAMTEL’s line.
    No one really accepts this except ZAMTEL. The operating costs are high but the rents are more than enough to cover it. ZAMTEL is inefficient and that is why the operating costs are high. ZAMTEL is also underutilised precisely because it behaves like a monopoly. Restricting capacity to get higher rents.

    ”The trend in the global arena shows a come back to mergers of Telecommunications providers desperate to lower operating costs by sharing infrastructure e.g. Cingular/AT&T in US.”

    Not true at all.
    The general trend in the market is effective regulation and making these natural monopolies more contestable.

    I suggest you look at the British Model carefully. There you find BT competing against Telewest (Virgin Media). BT now being able to carry the service for any service provider from car phone warehouse to others.


    ”If Zamtel was unbundled as Cho suggests with the international gateway under one firm and the national transmission network under another. The competing mobile service providers would actually face high costs of operations because the firms operating the gateways would charge economic rates to also make profit against their own costs.”

    Again this is misleading.
    Actually it is built on the classical understanding of how monopolies (e.g. airports) extract rents from those they serve downstream (e.g. airlines)

    But actually, the point made by Yakima (another contributor on New Zambia – who will comment on this am sure when he comes to it), is that an incremental model of ownership where the mobile operators have a stake in Zam-Int operating the gateway, would deliver a vast superior solution. It would ensure capacity expands whilst avoiding the concerns you have raised (which are essentially about ‘gold plating’ – building unnecessary capacity just to raise costs)


    ”Furthermore international calls account for only 10% of total volume of national daily telephony traffic.”

    Its not the total volume, it’s the cost per unit they represent to mobile operators. MTN made negative profit on international calls last year, effectively meaning the domestic callers cross-subsidised the international callers to make the service worthwhile.

    ”In conclusion we have already outlined the threat foreign investors pose to national interests such Zamtel's ability to deliver National defense communication system, radio and TV service and more importantly cross subsidization to rural and urban markets”

    Again this seems like unnecessary fear to me.
    There are ways of handling security concerns and I have discussed them on New Zambia. We can’t just go round fearing foreign investors without articulating the threat more precisely.

    What we want is a proper empowerment policies – let us focus on that, not on saying everything foreign should be feared.
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  18. David KabamfwileJul 28, 2007 04:01 PM
    Cho,
    "Hands down, yes.
    Competition in any industry including the telecommunications sector always translates into lower costs and better welfare gains for consumers".

    Am not a economist, am wireless engineer with working experience in Zambia and now the US.
    We have in the US a telecommuniction environment as competitive as you can get, however nobody I know calls Zambia directly from
    the home phone or cell phone ( whatever carrier one chooses). We all purchase calling cards to avoid the high charges carriers impose, been a telecom
    worker I understand the carriers in the US despite competition have to off satellite,transit and other applicable charges.
    I do not know you experience in the UK , however I have seen ads for low cost calling options on ukzambians website.

    The point I was making is no matter who ends up owning or operating the gateway in Zambia, the cost of
    calling outside Zambia will still be high for many Zambians especially given the state of our economy.

    I hope Cho is not disputing the fact that Cingular/AT& T, Verizon/MCI and I know even BT has sought merger/alliances in the past.
    Merges and alliances help telecomms access bigger markets at marginal costs,this is fact unless business operates differently in your neck of the woods.
    Regulation I agree helps protect consumer interests and ensures a fair playing field. Regulation, however has limited impact on operating related costs.
    Unless you expect CAZ to force Zamtel to sell gateway access at below cost, your expectations are unrealist.

    "What we want is a proper empowerment policies – let us focus on that, not on saying everything foreign should be feared."

    How many foriegn investors have abused our generous empowerment policies,I can cite examples in every sector ( agriculture,mining,retail etc). They come in force our govt to make all kinds of concessions only to leave us in the cold, once their money is made.

    Zamtel is probably the only gem left in our pocket,unless you can give a better reason than Celtel/MTN complaints of not been able to afford a license,am not buying.
    Zambia has vested too much in that company to allow a foriegn player whose objectives will certainly be at variance with our national interests, to get away with it.
    Zamtel for now is part of the competition, Zambia is not the only country with one international gateway.
    Do let my passion for Zamtel get in the way, am open to viable and realist ideas.
    ReplyDelete
  19. David,

    I appreciate your comments and viewpoint, and your hands-on experience with telecom equipment brings unquestionable value to the table. Based on your last statement, namely that, "Zamtel for now is part of the competition, Zambia is not the only country with one international gateway," I think you may have misinterpreted aspects of the incremental ownership/investment model described in the Mulongotism blog.

    The model was actually originally proposed as a third alternative to either the status quo or outright privatisation of Zamtel without thoughtful precondition, as has been done in other industries. The central concept is to leverage money from private entrants seeking profits from telecom service markets to finance the expansion of the physical infrastructure which would in turn be majority owned by the Zambian people. None of the current gateway infrastructure would be sold, and most of the infrastructure added under the model would also belong to Zam-Int (gov), while all of it remained under its operational control and maintenance oversight. Zamtel could in fact continue to operate as a domestic service operator without much internal disruption (as Zam-Dom, with only the provisions of its access to the public infrastructure altered). If as you assert, network capacity is underutilised due to "cultural drag", thereby presumably preventing economies of scale from lowering prices, rather than Cho's contention of the reverse case, then Zam-Dom would have no difficulty obtaining favorable access to shared international gateway facilities at rates similar to its present costs due to lack of competitive bidding at auction.

    In the event that capacity exceeds demand, then auction prices have no reason to exceed the minimum reserve value, which is defined as the cost of maintaining and operating the gateway, plus statutory profit to the taxpayers (ideal distribution of which is debated elsewhere). It is only in circumstances where capacity is insufficient to meet demand (there was a time when we thought there was plenty of hydroelectric to fuel development too), that the model really has much effect.

    If there are technical specifics having to do with the systems involved of which I am unaware, then please consider me eager to be enlightened, the model is designed primarily from a corporate governance and competition perspective. My understanding of the earth station is that it consists of two primary dishes, pointed roughly East and West respectively, with associated relay equipment for the routing of transmissions to local systems. To my knowledge, although there is speculation on provincial substations equipped with their own satellite receivers, no substantial appropriation has yet been made in this regard. In layman's terms, it looks like a bottleneck to me, not quite as dangerous as only being able to substantially import electricity via the Zimbabwean grid, but worth addressing before it becomes crisis. Any substantive details as to the recent announcement of planned investments in international fiber optic connections would be likewise appreciated.

    I think that Arthur's fears that high-cap international players will find a way to leverage long-term control over the telecom market are far more prudent to plan for than the possibility that Zamtel is forced to crawl due to baby telecoms being coddled by an overindulgent marketplace. We can take steps now to recognize the forces of international capital manuevering for sweeping telecom market shares, which ultimately dwarf the Zambian market, and integrate them into the way that investment is translated into domestic infrastructure development and ownership.

    As Cho has pointed out in the past, attracting foreign investors is not difficult when times are good, it is stopping them from packing up everything and leaving when times are bad that is hard. The goal of this ownership model is to increase the amount of money spent on physical telecom infrastructure (ultimately from domestic rate payers under any model unfortunately), in proportion to excesses of demand over supply, and without unduly "gold plating" the cost of any particular part of it, or unduly advantaging or disadvantaging any particular domestic market player current or future.
    ReplyDelete
  20. David KabamfwileJul 29, 2007 03:39 PM
    Yakima-
    I appreciate your comment.

    Modeling is an essential part in solution design, indeed models simulate pre-existing conditions, the problems those conditions present and how the model created will resolve them. Also included should be an analysis of the end scenario.

    The model presented in the post you refer to, in my view does not reflect an accurate depiction of the existing conditions in the Zambia telecomm environment.
    The model does not adequately address the root cause of these problems cited namely -

    I) High rates for international gateway use.

    ii) Lack of universal access to telecomm service especially for rural population in Zambia.

    iii) Zamtel's structural problems.

    iv) CAZ lack of effective regulatory authority.

    It also portrays the environment as non competitive in some parts. It is therefore the considered
    View that in order to design a model that prescribes the an effective remedy, we need to articulate
    The current scenario, define the problems and show how the model will address specific problems.

    I would like to submit that a Telecomm company that presents end to end solutions is best suited to meet customer needs and is most likely to charge low charges. This is true in the case of BT in the UK and AT& T in the US. These companies own network infrastructure including international & national gateways, Switches, fixed and mobile phone platforms etc.
    Admittedly these companies are private, having completed an elaborate transitions from state owned or monopoly entities.
    Zamtel today is no longer a monopoly or completely state owned. AS I have shown is previous posting it is in a state of transition with a competent leadership. Having been commercialized years ago, Zamtel is no dependable on the public purse, infact the company recently gave more a significant amount over and beyond its tax and dividend obligations.

    The current Zamtel network dimension is presents more than sufficient international gateway bandwidth for the Zambian population, especially
    with the addition of a fiber link thru Zimbabwe to the international link in the Indian ocean.

    The debate therefore should probably be how do we enhance and empower telecomm providers in Zambia to extend access and lower cost for the population.
    I have suggested a credit bureau though difficult to establish would be a key factor.
    In my view it is relevant not just for telecomm providers but for other sectors. I understand the vast majority
    of the population is marginalized, but a start with the few that have economic prowess might stop the abuse the increases operating costs for businesses in the absence of a risk/debt assessment criteria.
    ReplyDelete
  21. David,

    I am all in favour of crafting a second model to address the challenge of encouraging greater development of the telecom infrastructure. I am perplexed by the apparent combination of high rates and underutilized capacity, if not explained by subsidized costs or simple failure to pay by governmental and private customers. Cho alleges that the bulk of unpaid or otherwise subsidized services are the result of government customers, in which case a consumer credit bureau wouldn't help much.

    It also appears that Zamtel's competitors are able to avoid the issue of consumer credit by offering services on a pre-paid basis. Where a credit bureau will be most useful for development is in bolstering the lending industry's role in fostering farm development, rural SMEs and home ownership. However, these services will be difficult if not impossible to extend to the majority of the population, especially in rural areas, without a reform of the way the banking system treats small depositors in general. Some discussions on that here and here.


    I appreciate your point that Zamtel is not a static entity, and is in the process of internal reform to some degree. I am curious as to why and in what form the company would be transferring more revenue to the government than its tax and dividend requirements would indicate? Does the company have sufficient access to investment capital to extend its services into rural areas to the extent that Celtel has with mobiles?

    If competing (and apparently also redundant from a capacity perspective) gateway infrastructure is licensed and operated by well financed companies, will Zamtel be able to continue to offer competitive international rates to customers, especially if existing demand is diverted away from the earth station to new facilities?

    I would recommend the more recent Irish experience with telecom reregulation as being a closer example to the Zambian circumstance than US/UK markets, being a smaller nation which maintained a parastatal monopoly on landlines during an initial phase in which mobile telephony was opened to competitive development. They appear to have fostered many domestic providers, including landlines now as well, while also enabling the presence of multinational telecom actors in the marketplace.
    ReplyDelete
  22. Zamtel is a dinosaur which is slowly dying as it is pecked to death by nimbler competition as well as adavancing technology.

    Its dogged defence of its monopoly of the international gateway is soley to protect it's monopoly. Most of its profits come from the high international charges as well as the favourable balance on the ITU accounting unit swap system.
    Zamtel has always charged high rates for international calls and has always has a positive balance in its favour when it swapas ITU units and hence has built up a healthy forex balance in its favour with the ITU.

    This however is increasingly untrue. Two factors have come together to destabilise the market. The appearances of hundreds of cheap VSAT has meant bypassing the International gateway is now very simple. Put any Voip device and link it to an operator outside Zambia and you can immediately make international calls at rates as low as $0.10 a minute. . Access to a VSAT satellite allows users the capacity to bypass Zamtel terminating international calls: in other words, they can take the international call income and feed it into Zamtel’s infrastructure as a local call.

    Faced with this kind of competition, Zamtel’s commercial strategy can either do one of two things. It can rely on Government and the regulator to try and hold back the tide of "grey market" competition or it can adjust its international rates downwards to meet the competition. Until recently, the most common business model for African telcos was that profits made on international traffic subsidised both investment in and calls at a domestic level.

    With international competition and porous access to the international market through digital calling, the cornerstone of the old order - the international "accounting rate" system administered by the ITU - has completely collapsed. Minutes from calling cards in the developed world (used by the diaspora) are getting into countries through a large number of different routes (often disguised) that do not involve the incumbent telco. The proliferation of services like Skype, Vonage, Yahoo, GMail means one can now make international call at a fraction of the cost charged by Zamtel.

    I for one use Skype to call my technicians in the field at $0.11 per minute regardless of whatever network they use. A chinese friend of mine call his family in China for only $0.05. per minute.

    Zamtel's monopoly is not helping anyone nor is the ridiculous international gateway license price. When people complain that Zambia is a horrible place to do business it is things like this that make it so. With high telephone charges like this how can anyone think of making international calls. Yet to do business you have to. So what do you do you buy your self a Vonage adapter or a VOIP IP PBX and link it up to your internet connection and save yourself up to 60% on your international phone bill.

    I can call mycellphone from Skype at a lower cost than any cell phone provider in Zambia.

    Zamtel must wake up. They could go bust and be out of business in 5 years.
    ReplyDelete
  23. Zamtel does not engineers to run it. It needs a perosn with exceelent business skills in the telecomms industry. Zamtel has been run by engineers for more than 20 years now and the results are there to see.

    Lots of technological white elephants brilliant projects technologically but commercially disasters.

    Zamtel's poor commercial execution is its Achilles heel. Dealing with Zamtel on a commercial basis is a nightmare.

    As a person with personal experience with Zamtel, I can tell you that it is always more effective to link up with people you knew at UNZA or secondary school or relatives is more effective than dealing with Zamtel's commercial department.

    Then there is the price gouging Zamtel's charges for leased line and other valued added services are extortionate and unaffordable. If Zamtel had been pricing its business compettively there would have been no need for ZESCO, Celtel, MTN, Zambia Railways and CEC to build their own networks.

    There now 5 major microwave networks running between Lusaka and Ndola a multiplication of efforts and a waste of capital. VSAT networks also abound. It is actually cheaper to link Lusaka and Ndola using two VSAT at 128K dedicated than using ZAMTEL. This is ridiculous !!!
    ReplyDelete
  24. Celtel is a prime example of getting the business side right and not the technology.

    Engineers love nice shiny things that allow them to show off their skills. Businessmen deliver services and deliver them at a profit.

    The most succesful businesses have been the ones that deliver a service at aprice point thta entices a large customer base while delivering this service or product where the value proposition the customer feels their getting value for money. This means high margin, high quality products and services which clients find good value for money.

    A case in point is Toyota they deliver high quality motor vehicles that undoubtely provide customers with an exceelent return onthier investment. Toyota manaufactures and delivers this product at significantly lower cost than its competitors and their reliability and all round quality again beats their competitors vehicles.

    Zamtel delivers a shoddy product and he customer expeireince is most time nothing short of shocking or apalling. trying getting a quote from Zamtel for a 128K link between Kitwe and Mongu today. I challenge you whether anyone will be able to give you a quotation in a reasonable time period. You will be ushered into shabby offices which need painting and be served by staff whose customer care skills are below par. his ther normal service any customer gets when dealing with Zamtel. Dirty unkempt premises are the norm. uf you think I ma joking plese visit Lamya house in Lusaka house particularly the building housing RT and carriers. The toilets are undescribable and the whole place has run down fel of your typical government office. Visit the equivalent office in Ndola behind the post ofice and the situation is similar.

    Visit MTN or celtel facilities and things are a world apart. Clean toilets, nicely tied cables, neatly weel looked after offices.

    Zamtel needs to wake up. They are no longer a government department nor one of the Kaunda era shoddy parastatals. This is the 21st century !!!
    ReplyDelete
  25. ”Zamtel today is no longer a monopoly or completely state owned.” - David

    I would be interested to know your definition of “monopoly”. My view as stated in the original post above is as follows:

    Zamtel has 100% control of the international gateway (it is by definition a monopoly provider of gateway services).
    Zamtel has 100% control of the fixed line market (it is by definition a monopoly provider of fixed line services). Moreover, it uses its gateway dominance to further entrench its position in the fixed line market – through interconnection charges and also uses its artificially high gateway charges to subsidise its cell phone and fixed line markets.
    Zamtel is part of an oligopoly in the cell phone market. However, it uses its presence in both the cell phone market to the detriment of others.


    ”Zamtel must wake up. They could go bust and be out of business in 5 years.” - Anonymous

    Actually what happens is that when a Government backed firm goes broke due to inefficiency, the Government steps in with a bailout. That money would definitely come from tax payers. So not only would businesses choke because of high international calls, but now consumers would also suffer because money which should be spent on providing cleaner water and affordable housing would be spent on a fixing a problem that should never have been there in the first place.

    This is why it is necessary that Government pursues the four point plan of “enhanced regulation”, “commercialisation”, “and liberalisation of gateway” and “consideration of an adequate long term ownership model”.
    ReplyDelete
  26. Yakima,

    With Zam-Domestic remaining in Government hands under the current model, I am concerned with the potential conflict of interests with the Government regulator.

    Whats your view?

    Perhaps a modified version that recognises full private ownership in Zambian hands?
    ReplyDelete
  27. David KabamfwileAug 3, 2007 06:17 PM
    Gentlemen-

    let's recap, when climbing a tree one starts at the base. I think we go so far ahead of ourselves, the basics are getting lost.
    May I suggest these as our basics-

    1) Zamtel is the dominant telecom service provider in Zambia, due to its long legacy as pioneer firm.(with deployment dating to precolonial era).Zamtel operates the international gateway in addition to national microwave links, fixed lines,internet,data and mobile phone service.

    2) Zamtel has administrative inefficiency issues and challenges providing telecom access to customers i.e long delays in fixed phone line delivery,data etc.

    3) There are 2 other mobile service providers namely Celtel & MTN which compete with Zamtel's Cell Z.

    Now, as far as understand the discussion the objective are-

    a) Increase access of telecom services for the Zambian population ,especially the rural.

    b) Low charges for telecom services especially international call charges.

    c) Efficient and profit oriented telecom firms especially in the case of Zamtel which has a history of state/political interference.

    There has been an assertion that because Govt has a stake in Zamtel and controls the CAZ which it is using to maintain dominance of the IGW, the telecom environment is not competitive and this in term ensures high costs for telecom services in Zambia.
    I discredit the validity reason as the sole cause of high charges because -

    1)There other viable options around Zamtel's IGW dominance.

    2) The gains fro Zamtel IGW dominance are marginal because of the low volume of international calls originating fro Zambia.

    3)The other 2 firms are only competing with Zamtel ,in the provision of mobile service. infact it was Zamtel's introduction of Cell Z ( with per second biling) that forced Celtel and MTN to lower their charges for mobile services. This also reinforces my assertion that having Zamtel offer end to end solution presents significant benefits to customers in this regard.

    As I have shown in previous posts Zamtel though dogged with structural challenges provides a wider range of telecom services (i.e radio/Tv,data,defence network ) than the 2 companies ( Celtel & MTN)which only offer mobile telephony.
    Zamtel's Cell Z has an ambitious project of expanding its current coverage and has an increasing customer base ( current second the Celtel - note Zamtel only introduced its prepaid GSM network in 2003/ 5 yrs after Celtel).

    We debate can the best model for making Zamtel more efficient and profitable, my position is we need to consider all aspects including national interests, Zambians economic,social and cultural standing,impediments in current business function.
    I believe we can come up with a model that reforms and empowers Zamtel, to perform profitably with local ownership.
    ReplyDelete
  28. There is also something all of you have left out. When did any of you see a financial report from Zamtel ?

    Ever since ZIMCO was broken up Zambian parastatls operate in a supervisory vacuum.

    ZIMCO used to be a buffer betwen parastatals and politicians. ZIMCO used to set standards for business management and reporting.

    Now we have no idea of the performance of any parastatal excpet for ZANACO whihc has to publish it financial statement as required of any bank by BOZ and the law.

    No-one knows Zamtel's turnover. No one can tell you the number of employees. No one knows what strategic plan or business plan it is following.

    This state of affairs is worrying. My sources indicate Zamtel's finance department is in shambles with reports months in arrears and finanlized accounts maybe even years in arrrears as well a stalled ERP project that is delayed by various reasons mostly internal.

    If Zamtel don't know how much they have, how much they spent, how much they earned and how much they are owed then a chill runs down my spine. How are they running the firm?
    ReplyDelete
  29. ”Now, as far as understand the discussion the objective are-

    a) Increase access of telecom services for the Zambian population ,especially the rural.

    b) Low charges for telecom services especially international call charges.

    c) Efficient and profit oriented telecom firms especially in the case of Zamtel which has a history of state/political interference.”     - David

    The objective is to give consumers a better deal than they get at present.

    (a) and (b) are essential indicators since, all things being, equal lower charges to consumers increases what economists call “consumer surplus". Assuming low charges are accompanied by expansion in services, it would generate gains to producers as well. However there are not the only indicators.

    Crucially (c) is not an objective but could be part of the solution to ensuring greater welfare gains.


    ”There has been an assertion that because Govt has a stake in Zamtel and controls the CAZ which it is using to maintain dominance of the IGW, the telecom environment is not competitive and this in term ensures high costs for telecom services in Zambia.-David

    This statement illustrates the crux of the misunderstanding.

    Your statement is incorrect. It should read like this: There has been an assertion that Zamtel’s control of the international gateway and its presence in both the cell phone and fixed markets, coupled with CAZ’s weak regulatory powers, paints a picture of the telecom industry that is uncompetitive and is not currently benefiting consumers as it ought to (in terms of cheaper calls or expansion of fixed line and cell phone services).


    ”When did any of you see a financial report from Zamtel ?” - Anonymous

    I am sure David has :)
    On a serious note. Last year Zamtel informed the nation that it was owed four months worth of debt by Government departments or $60m.

    In 2003 the Zambia Competition Commission looked at Zamtel as part of its submission – concluding that it needed to reform.

    But you are right – Zamtel’s position is not open for scrutiny.
    ReplyDelete
  30. David KabamfwileAug 4, 2007 07:06 PM
    Cho-

    It was my custome to read Zamtel's financial report every year when I worked for them. Anyone in Zambia has the right to ask for financial information from Zamtel, they are obligated to produce one every year. Lets be serious what company does know it income and expenditure details. When was the last time you heard Zamtel failed to meet its financial obligations.

    Why is it beyond your conprehension to grisp that the fact that Zamtel's current position is a result of historical consequency rather than a choice.
    You have no difficult with other telcomm firm's position in market share, say BT.
    I look at the whole environment, Zamtel is a player just like Celtel or MTN.
    Why has mobile telephony vs fixed thrived in Zambia?
    you will find cultural reasons e.g mobility,privacy etc.
    What is the state of internet use among Zambians?
    I know you will just on Zamtel's inability expand fixed line phone.
    I will be getting data from former workers at Zamtel to show rate of debt default among average customers.
    Cho has state Zamtel is owed $ 62M by governemet depts, this is true.
    You are refering to school, clinics,police stations and other public offices that together have made telephone calls that make up that amount. Zamtel can shut down service and take drastic measures to collect this debt in the end its the average Zambian trying to reach the police, clinic etc that feels the pitch.
    The Govt can not provide fuel for police and hospital vehicles, you expect them to pay a phone bill!

    I do not know how out of tough you with real life in Zambia, but get yourself up to speed fast. Zamtel is the least of our problem as a nation.
    You and I live in the western world;
    why does the bus or train show up
    on time?
    Why do people pays their bills on time?
    Why does every function seamlessly?

    It's a culture of order, a history of aspiring for a better life,value of education,curiosity I can go on and on. (Shaka was looting while Beethoven was writing symphonies)
    Why need to address Zamtel's inefficiencies in the broader context, we have other companies like Zesco, Lusaka water failing to provide basic services because of the same underlying problems?
    ReplyDelete
  31. David KabamfwileAug 4, 2007 07:11 PM
    Correction - Before you get on this line 9 in preceeding post-is supposed to read what company does NOT know its income and expenditure details.
    ReplyDelete
  32. Mr. Kamabafwile you are a very fortunate individual. I have asked around and no one can tell me when they last saw Zamtel's last financial reports. I have not seen a financial report from Zamtel since the ZIMCO days.

    ZAMTEL right now is try to implement an ERP system however that project has stalled.

    ZAMTEL's financial systems right now are not the best. They are months behind in posting and are even further behind producing finalised financial reports.

    Everybody is relying on management accounting reports which I hear are not of the highest quality.

    Why I mentioned ZIMCO was in the ZIMCO days they all had a reporting structure and had to report within a corporate structure.

    ZAMTEL now basically reports to State House. I would love to see the financial reports Mr. kambafwile is alluding to.

    As for government owing $62 million dollars well the government should clean up is act.

    Maybe disconnecting the government could relive the presure of the long suffering consumer.

    Why should we pay our bills and subsidize the government ? Disconenct them I say and let them pay.
    ReplyDelete
  33. Unfortunately Mr. Kambafwile, ZAMTEL has not set in corporate standards of late for business excellence or innovative management.In fact to the contrary.
    ZAMTEL can not come even close to being regard as an example of a well manged business with clearly defined business strategies and excellent busines processes.

    Since Mr. Kumar left we have had a sucession of CEO who have been less than stellar.

    1. Woods Simbeye

    No political backing. Outmaneuvered and pushed out by backbiters. Started cleaning up Zamtel's act however did not stay long enough to make very big impact.

    2. Douglas Mutesha

    Lots of political backing. However by all accounts a complete disaster. Bad industrial Relations, poor financial management, poor all round businees management skills. For the first time Zamtel workers were being paid late, suppliers even later. Fired by the board and not brought back despite winning court case.

    3. Simon Tembo

    Hardworking Engineer. Technocrat with no political backing. Has begun to implement high technology projects for modernizing network. No improvement yet on the commercial side. Too early for a verdict

    So since Kumar left ZAMTEL has had 3 CEOs and has lurched from one strategy to the next.

    Simon Tembo has a mammoth task and he has little time to perform it in.

    I can break some of them down as follows:-

    1. Modernize The network and change to an IP based network.

    2. Reduce the workforce to a more appropriate size to the revenue generated.

    3. Increase network coverage.

    4. Turn the provision of data services and links into ZAMTEL cash cow.

    5. Introduce triple play based business in order to increase revenue streams and introduce new products for businesses.

    6. Move the fixed line business to the same prepaid model as the Cellphones in order to reduce customer debt to manageable levels.

    7. Improve Customer Services to levels better than equal to comparable telecoms businesses anywhere

    8. Aggressively tackle the loss international revenue. Co locating equipment at Intelsat and terminating direct into a low cost operator abroad could provide ZAMTEL with a solution for this. A product ZAMTEL could then launch a Skype like software based VOIP product that could then allow any Internet subscriber to user ZAMTEL to make calls.

    9. Make the fibre-optic backbone a reality and pricing it properly to encourage massive up take especially for the data users.ZAMTEL has in the past overpriced and made exciting projects completely unaffordable. DOMSAT was supposed to have attracted many commercial users and instead was a complete commercial failure due to over pricing and inappropriate technology which could only support voice well. This should not happen again.
    ReplyDelete
  34. David

    ”Why is it beyond your conprehension to grisp that the fact that Zamtel's current position is a result of historical consequency rather than a choice.”

    There’s no need to be personal. Its not beyond my understanding.
    I fully understand how Zamtel got to its current position, as am sure does everyone.
    If you want to discuss history we can do so. I prefer to focus on the future – we are positively looking forward to be future and asking whether we can do better than we are currently doing.
    Whether Zamtel is a monopoly by choice or not is beside the issue. The issue is how we can reform the telecommunications market to deliver substantial long term benefits to consumers.

    ”You have no difficult with other telcomm firm's position in market share, say BT”.

    There’s nothing wrong with a firm being dominant in a sector as long as delivers superior welfare gains compared to other models. Everyone is aware of the “natural monopoly” argument. Sometime one supplier is preferred to two or three. You are focusing on market share. That is not the point. The point is market power and the ability to prevent or deny entry. As it turns out there are enormous differences between the British Telecommunications market and the Zambian one. The barriers of entry to the British telecommunications sector are significantly lower due to the regulatory regime and liberalisation e.g. I can set up a company that can supply services using BT landline phones. The examples are plenty.

    ”I do not know how out of tough you with real life in Zambia, but get yourself up to speed fast. Zamtel is the least of our problem as a nation.”

    Please check the New Zambia “label cloud” to your right and confirm that this covers a wider range of topics. Zamtel is just one issue and one you are particularly interested in. No where have I posited that this is the most important topic.

    ”Why need to address Zamtel's inefficiencies in the broader context, we have other companies like Zesco, Lusaka water failing to provide basic services because of the same underlying problems? “

    I don’t subscribe to global solutions. I prefer to treat each problem on its own and then look for transfereable lessons. The energy and water topics have not yet been discussed on this blog. But you are absolutely right, these are important topics – and I invite you to write a piece on these areas and we can discuss it.
    ReplyDelete
  35. Anonymous

    It sounds like you are the right person to make Zamtel tick!!

    ”Why should we pay our bills and subsidize the government ? Disconenct them I say and let them pay.

    And this is a classic problem.
    Consumers are losing twice! They pay their taxes and on top they get shabby services before Zamtel cannot reinvest any money it has because it is held up in debt.


    ”Reduce the workforce to a more appropriate size to the revenue generated.”

    That is a stumbling block!
    Zamtel employees actually do not want liberalisation because they fear job losses!
    But actually in the long term as the company expands it will be able to take on more employees and with better prospects.
    ReplyDelete
  36. David kabamfwileAug 5, 2007 11:01 AM
    Cho-
    Am sorry - this is personal for me , am Zambian, will have to go back to that mess ,equally frustrated about Zamtel's inefficiencies. However, my experience in the west , has given me a glimpse into why companies service companies in Zambia are performaning poorly.
    The whole political,economic, social and cultural framework is at variance with the structural fundamentals neccesary to operate efficiently.
    This British council in Zambia, realised around 2000, that attaching poverty,development challenges in an environment of poor governance was counterproductive, this focused on Govt leader, developing ethics and good governance program. The became setting ethical and governance benchmarks. I feel as long as a culture of accountabilty,ethics and long term development planning as missing at government level, this terrible effects of their absences will continue undersmining the consumers needs.
    Cho and some anonymous have made significant points, there is no doubt in my mind Zamtel has tremendous issues- I worked for these guys. But expecting Zamtel or any other provider to provide expensive faetues like VOIP in an environment where the major consumer - GRZ is iresponsible and unaccountable is counterproductive. Its' like giving Buckingham palace in it's present glamour to Chief Lukwesa in northern province, what do you think will happen?
    The question is not whats going wrong at Zamtel it's how do we get from this mess to what Cho and every zambian wants. I say the answer should be bigger than Zamtel's needs.
    I urge Cho to bring to bear his immerse economic knowledge, Magande needs some input.
    ReplyDelete
  37. Getting ZAMTEL right is key to gettting ICT right in Zambia.

    The infrastructure ZAMTEL has on the gorund is awesome.

    ZAMTEL can be used as a lever to deliver profitably ICT to every Zambian.

    IF ZAMTEL gets things right you have sorted out Zambia's ICT future.

    Before Celtel did an awesome expansion to get to every single Zambia district no one had ZAMTEL's reach. Even then ZAMTEL simply beats every other operator on several measures.

    ZAMTEL can completely change the ICT landscape.

    Do not scoof at ICTs. 10 years ago cell phones were luxury items for the very rich now practically everyone who is economically active has acellphone.

    VOIP is no longer expensive. it is the technology of the future. ZAMTEL has to go IP if it is to remain viable.

    VIP technology can allow the massive telecoms revolution of the last 10 years to be broadened and deepened.

    Mr. Kambafwile, when were you last in Zambia ? Celtel alone has an estimated 1.2 million subscribers and ZAMTEL and MTN together have another 400,000.

    That is 1.6 million subscribers in a population of 12 million.

    I type this in my sitting and I can see 5 cellphones. My Nokia 6170, my wifes Samsung D500, my mother in law has a Noka 1100, My daughter has a Nokia 1100 and my maid has a Motorola.

    My mother has phoned me today from Mabumba village 25 kilometers outside Mansa with her Nokia 1300.
    I was also SMSing my cousin who has gone to Nchelenge to do some business. I was able to use Mobile Top UP to buy some air time electronically by transferring K100,000 from my bank account to Celtel using my phone right here in my sitting room. I then shred some of it electronically using my phone with my Mum and my daughter.

    I am able to access the Internet either on my phone or the broadband wireless link and believe me Mr. Kambafwile I am only a middl class Zambian citizen resident in Ndola.

    Telensity is now at maybe 1 phone for 8 people. These are exciting days in ICTs however not exciting enough for everyone here.

    Essential reforms are needed to lower telecommunications costs. ZAMTEL is a big piece of the jigsaw puzzle.
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  38. David kabamfwileAug 5, 2007 01:18 PM
    Anonymous-
    Thank you , for your take on this subject.
    Your being Ndola might be really helpful for this discussion. oh you can use your name here. no intimidation.

    First for Zamtel to establish a VOIP platform across Zambia would require changing equipment, they are having trouble raising money to expand their current platform, do you think you can afford a raise in current charges to help fund VOIP. initial deployments cost are high the result is very low costa especially for international calls.

    I agree Zamtel may be slow reaching all of remote Zambia- do not paint a picture Zambia is not in most provincial centers and celtel always prop up their subscriber numbers, infact the real number of active subs is less than a million. It's like Zamtel counting every telephone phone number they have ever activated regardless of deceased,seized, disconnected, relocated cases.

    How bad have things gotten at Zamtel?
    The listening to radio Pheonix online and the papers- I recently picked up that - they won the trade fair exhibit, bought over 150 new vehicles,sourced new equipment fro ZTE china to expand Cell Z network, Cell Z are running a competition win 3M ZK for using their cards, the implementing fiber to CB inconjunction with Kariba North bank, the have activated the IN( intelligent network) to move fixed line customers to prepaid platform etc.
    I left zamtel just when Cell Z was runnning the dream ad, have things gone downhill or are you guys seeing the glass half empty?
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  39. Well we get really emotional over ZAMTEL as it is Zambian. Celtel's figures seem right.

    Everybody I know now has a phone. I literally mean everyone. My kids school like just about every other school has banned cell phones.

    Anyone who is economically active in the urban areas has a phone. Celtel are the ones mainly responsible for this. A Sim cards is now K5,000.

    Kiosks selling airtime are everywhere whether it is in Kantolomba or Kansenshi or even in Mabumba village where my MUM stays 30 kilometers outside Mansa.

    So I think Celtel figures should be about right.

    ZAMTEL are at this moment in time looking like they might lose their dominant position in telecoms because of:-

    1. The Internet

    Even here it is big. Internet cafes everywhere. Everyone is now aware they can use it instead of telephones. With Internet access avaible at k120 per minute it is a quarter of the cost of a phone call. You can do much more with Internet than a phone. You can not only talk with a webcam you can see each other you can chat.

    2. VSAT

    There are literally thousands of VSATs now in Zambia. These VSATs provide the capability of bypassing International Gateways etc.

    3. Celtel

    Celtel seem to be very focused and have a definite strategy. Grab as much market share, add value added services, squeeze as much revenue out of the users. They have at least 80% of the cellular market. They have the widest range of products available. They have the widest reach.

    4. VOIP

    Everyone wants it. It is being implemented. There are several nationwide netwoks already in place with Stanchart, Barclays, ZRA, KCM, Mopani and FQM among others have VOIP networks.
    Any company with branches in more than one town with data link between branches in place is already talking of, looking at VOIP or even implementing VOIP. Communication Authority have tried to obstruct its use but it is obvious that leakage is already happening and soon even more revenue will be lost ZAMTEL.

    The fibre optic project could be still born. ZAMTEL tenders a lot of projects but a good proportion if not the majority do not see the light of day.

    ZAMTEL is our baby we want to see it win not lose another market to foreign owned firms. We need Zambian champions, world class firms that can take on anyone in the world and win.

    Celtel, MTN none of them are doing anything ZAMTEL can not do it is just that ZAMTEL has a big burden on its back a governemtn that seems to cripple it with poor policies that maybe designed to help ZAMTEL but end up hurting it.
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  40. Brian,

    I have a nephew with exact the same name and surname in Ndola living in Kansenshi....

    Very spooky!! When you mentioned Nchelenge I was even more worried....because last time I was there with Brian over Xmas..

    Will be back in Ndola towards the end of the year as I am getting married there :)
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  41. before i go any further it makes me proud to be zambian because i think we are the only africans that are so interesting,why we have never been tormented by civil wars or savage behaviour. thank you KK for this.

    why would some stupid zamtel chap include gov. as its debtors? has gov. ever paid for its service?

    if they want to be a bit competitive let thm come up with ideas like cheaper by direct debit payment.considering how much they lose in trying to get bills paid.

    how many zambians are outside to have a force in making someone reflect about international calls or how many expatriates do we have?

    if you want zamtel to make a profit they should have a satisfied customer base to encourage others to apply for land lines.

    lower prices are not the way to go because how are we going to buy the equipment produced in countries that have high production costs?

    ba kabamfwile when you say its about profits then you disappoint me with the great postings you have,it's all about profit,because how do you raise money to pay salaries? are you going to pay the workers with thankyou we are covering mwansabombwe. maybe yes but what do they use to provide for their families.

    no matter how you get educated you don't grasp the basics of providing a service.it's profits that make you happy and provide for your future.

    before i say anymore i say thankyou and use it to educate your children and the teachers use it to pay for food.
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  42. Cho,

    "With Zam-Domestic remaining in Government hands under the current model, I am concerned with the potential conflict of interests with the Government regulator. Whats your view? Perhaps a modified version that recognises full private ownership in Zambian hands?"
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  43. Oops! Premature comment publication there, sorry!

    That is a tough question! I am not convinced that, in the case of public utilities such as Zam-Domestic, it is in the public interest to concentrate ownership of the company in the hands of a small number of individuals, even Zambian ones. Any small group of Zambian investors capable of matching "the People's" equity investment in Zam-Dom's current capitalization in such a transfer, would probably generate more overall development if they utilize their capacity to start their own private firm (telecom or otherwise).

    Perhaps the best way to avoid conflicts of interest with government regulators is to establish a model which vests ownership in the population more directly, bypassing government's "middle man" role. For example, each adult citizen is considered to own a single share of the company (limited in that they could not sell their share, as happened in several CIS countries). The company could then be considered to be the same as other private players in the market by government regulators.

    The difficulties with such a model are numerous, not least of which would be the cost and complexity of interfacing with each and every shareholder, whether in selecting a board of directors or distributing profit dividends. Possible solutions include distribution of "voting shares" to a smaller percentage of shareholders via periodic lottery for the former, and Alaskan Model permanent fund structure in the latter case.
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  44. Yakima,

    Here is a thought.

    I think local authorities are quiet acceptable as owners of companies in a regulated market.

    The conflict of interest in not obvious.

    But how that translates to the current conondrum is beyond my immediate evening reach.
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  45. The issue is simply balancing long term targets with short term goals as well as the nation well being with special interest groups.

    Unfortunately short term goals and special interest groups always seem to grab the agenda and drive it.

    In the name of National Security we are asked to put up with:-

    1. Price gouging by a monopoly on international access

    2. Oligopolistic tendencies where it seems Celtel have grabbed a big slice 80% of the market and seems to have come to a pact with the other operators to compete more on marketing gimmicks rather price reductions for the consumer.

    3. Price gouging in the leased line market by ZAMTEL in the leased line market Which only has two other competitors in the market not really exerting themselves.

    4. A very inefficient completely unfocused and badly run major player stumbling around in the telecommunications market and not seeming to produce much value except for its workers (good perks but low productivity and overmanning)politicians (basically free services since governemnt seems to pay its bills once a year some inside sources say Government bills have reached levels equal to one years usage)and favoured suppliers (Chinese firms seem to have the ability to win tender after tender and these are paid for by suppliers credits extended by Chinese state owned banks), while providing shoddy rather over priced services.

    Telecommunications i.e. ICT are now a vital part of any properly functioning economy get power,telecoms and transport right and everything else falls into place.

    In Zambia all three sectors are in my view very poorly managed and each have held back Zambian development. In my opinion if you fix these you can easily change Zambian economic growth from the much crowe about but not visible to the man on the street 5% to a more life changing 8%. Yes without investing any more money but just put sensible, workable policies we can increase growth ratees by that much.

    Let me explain, these sectors of the economy must run smoothly for everything to fall into place.If transport is efficient, things will be moved from place to place faster and more cheaply leading to lower prices and more efficient production. If energy is done right we can power our machines and equipment cheaper and better. If telecomucnications is done right we can manage and move information better and belive me information is the lifeblood of business. The etter informed businessman always has an edge.

    We are talking about ICTs here. ZAMTEL's inefficiencies, poor management and lack of a comprehensive strategy are a break or impediment ot economic growth. it is sand in the gers of our already stuggling economy. We need to get this sand out. this machine must run more smoothly. information should flow rapidly, more efficiently and at a lower cost. If we can do this, by my off the cuff estimates we can easily add a full point of GDP growth or more.

    ZAMTEL is not part of the problem in ICT in Zambia it is the main problem. I have said it before and I will say it agin. Fix ZAMTEL and you fix Zambia's ICT sector.

    Running it for the benefit of politicians, employees and a few suppliers does not help Zambia.

    We need to fix it. This includes running it like a proper business and not letting it hide behind artificial monopolies on crucial infrastructure like the international gateway or raising barriers to entry by charging exorbitant licensing fees.


    Cheaper and more eficient iCTs everywhere and leading to greater economic growth.
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  46. David KabamfwileAug 11, 2007 02:05 PM
    At the pain of repeating myself, let me explain the national interest/security label-

    Zamtel's current network matrix was conceived under socialist model to meets Zambia's telecomms, TV and radio and defence communications needs. This means ZNBC TV and radio from Mass media in Lusaka, Army and Airfor ce communication system, signals are feed into Zamtel's microwaves links in Lusaka and are delivered thru links to all provincial centers. Since GRZ owns ZNBC, the defence systems and public institutions hosiptals, schools, clinics, ministries etc. that need telephony services to function that is how Zamtel is owed $62M by GRZ.
    We all agree Zamtel needs reform, the question is how to do this with GRZ (representing the need for ZNBC/Defence/public offices) in the picture.
    What will happen if a private investor buys Zamtel- Domestic and GRZ is still failing to pay it's bills?
    The status quo is bad but do we have the fundamentals in place to support quality and efficent service provision.
    The Govt still has issues funding Schools including UNZA (still experiencing closures), hospitals,etc.
    This call for VOIP deployment- is this meant for international gateway traffic or do we mean VOIP telephony access in places like Kaoma.
    I worked for Verizon second largest phone company in US they are yet to implement VOIP telephony. Over 40% internet access in the US is thru dial up over PSTN. Where do we get this dream that Zambia can leap from it's current status to 3G (third generation) telecommunication.
    We can aspire for better service and infrastructure. But Quality service has a price tag -The bemba have a proverb- isabi echo bailobela kwasama akanwa ( meaning Keep your mouth open like fish and all kinds of crap will end up your throat!!)
    Celtel operates in the same environment as Zamtel. however they do not have GRZ as major consumer of it's services.

    The people of Zambia are the ultimate beneficiaries of ZNBC TV and radio,Security from the defence system and telephony service dependent on Zamtel's network.
    We therefore need to look for reform models that take this into account when addressing Zamtel issues.
    We need to start with Government, specifically I have a very big problem with the calibre of people we elect to form Govt. Zambia may have a fuctional literacy of 25%, but we can not afford MP's with grade seven education.
    Govt should be able to budget for all service needs!
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  47. David,

    Thank you for your summary of the historical context for the relationship between GRZ and Zamtel. It helps to remember that none of the nation's current problems sprang full formed from the ground today, but have been present or nascent in some form for decades or even centuries.

    I agree with you that government has a mandate to act in the interests of its citizens, and therefore maintains an important role in the delivery of utility services such as telecommunications. Without good governance, no amount of corporate responsiveness will be able to provide ideal service levels to customers, and you are correct that it therefore behooves reformers to address the state of governance in developing reform models. Adequate provision must be made in advance of any changes to ensure continuity of service to vital elements of the public infrastructure, such as hospitals, police, and national defense forces.

    I would like to try and address your question, "I worked for Verizon second largest phone company in US they are yet to implement VOIP telephony. Over 40% internet access in the US is thru dial up over PSTN. Where do we get this dream that Zambia can leap from it's current status to 3G (third generation) telecommunication?" I think that there are several reasons why this dream is not only feasible, but actually close to optimal.

    I have often thought it ironic that Zambia of all places is not utterly covered in copper cables, however this is obviously not the case. The US market on the other hand is probably the most extensively wired in the world. The costs of introducing new technology to a market so completely served by existing technology are quite different from the costs in an underserved market such as Zambia. Consumers make very different choices when confronted with a choice between two methods of service delivery, or delivery at all. There is no reason why Zambian drivers should be expected to buy Ford Model-T's, and it is a bit late to start laying tons of copper cable now, while the rest of the world is transitioning to fiber optics and wireless.

    If Zambian telecom is utilizing 1st generation technology, then it makes sense to only employ those bits of 2nd gen tech which are vital to support implementation of 3GT. The rest of the 2GT is useless, and would be wasteful if implemented. This extends to all the businesses and public services which make use of ICT, who may be unable to take advantage of 3GT in other aspects of their operations due to lack of support from the telecom infrastructure. Implementation of 2GT would have a deleterious effect on the competitiveness and modernity of the Zambian economy as a whole.

    It makes sense to aim for the shortest, least expensive path to enabling best practices throughout the economy, and the effects of either good or poor performance by utility providers tend to be especially widespread. One of the few advantages of underdevelopment is the lack of infrastructure also means a lack of overhead costs to maintain it and recoup the investment costs.
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  48. David KabamfwileAug 12, 2007 12:48 AM
    Yakima-

    Thank you for your kind feedback.

    I agree that there is no need to invest in fading technology,if there is a viable solution with a longer life spans.
    However VOIP can not be widely implemented successfully in Zambia because of the following;

    1) VOIP relies on a seamless data or internet platform to funtion, this means Zamtel must replace it's current voice processing platform with a data processing platform. Switches most of which have just been replaced with 3 class ZTE switches will need to be replaced with very expensive Cisco routers.

    2) There is also the Challenge to send data packets to and from the customer equipment -there are currently 2 options wireless and cable.
    In the US VOIP telephone providers such as AT& T callvantage, Vonage and Comcast deliver over cable. In this arrangment a customer needs -i)high speed internet connection to the house.
    ii) A DSL or cable modem.
    iii) VOIP telephone adapter
    iv) A regular telephone.

    This method would obvious not work in Zambia because of the high cost of just the customer equipment,never mind the high speed internet.

    Wireless method would mean deploying a WiFi network in the coverage area e.g Lusaka would need wireless transmission points each with router connected to the data/internet platform in all the residential areas, i.e towncenter to Chelston- because WiFi uses unlicensed frequency band ( 2.4MHz) the coverage area of each point would be small.
    The customer then needs a VOIP capable phone to process the wireless signal - currently only T-Mobile in the US is trying out this handset in limited markets. it may not even work out for the US market because of cost and the inavailability on WiFi networks in most of US cities.
    In Zambia deploying a WiFi network would be far too costly and would only benefit a few.
    VOIP telephony in Zambia can only work in a limited role- such as a bank with VSAT data links to other branches. A Cisco router such as a 2600 with voice ports connected to this kind of link can provide 4 or 8 VOIP telephone line capability, providing a 1000 lines however is a whole different matter.
    In view the current GSM networks offer the most suitable telephony solutions for Zambians.
    GSM networks work on existing switching and transmission platforms, handsets are cheap.
    Internet use is still rudimentally in Zambia, there is no significant need for bandwith to warrant a 3G network, very few people can afford laptop.( I just rememmbered the Nigerian case of schools kids using the UN $100 laptops to view porngraphy).
    There is a classic case of technology/cultural drag the kids must have been struggling to find what the laptops were good for, till one of them said Ah look what i found!
    There is a lesson gentlemen- be careful what you wish for!
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  49. Regarding whether ZAMTEL is effectively operating a monopoly on international calls and land lines...what is preventing another company (Celtel, MTN) from investing in an international gateway? It looks to be the ridiculous fees to operate such a gateway.

    So Zamtel has a defacto government monopoly supported by egregious fees to open another gateway. What should piss all Zambians off is that this is essentially a tax on all of us consuming telecom. A tax by a very ineffective gov'ment supported company -- when they can't collect payments from gov't entities that means they are charging those of us who can pay a premium to make up for it. In a competitive market ZAMTEL would suffer for this incompetence and would likely be out of business. A barometer I use for what industries the gov't should be involved in is whether it is an industry that can or will only be administered effectively and efficiently outside the private sector; that would be postal service, trash collection, police, defense to name a few (these are not done well/at all here rather the gov't is involved in any money making industry). The telecom industry would certainly exist and run very well given the opportunity for true competition...it is even under the current scheme.
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  50. A.Smith,

    Quite right.
    Of course now Government appears to have understood the arguments.
    The proposed ICT bill has some proposals that would almost see the end of ZAMTEL unless it reforms.

    You can access it here . CAZ in particular will receive new life especially in the area of economic regulation.
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  51. Fibre optic project:

    http://www.lusakatimes.com/?p=6898
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  52. We are never short of ideas about the way forward
    for Zamtel.The company embarked on stragic plan 3yrs ago but nothing has been implemented.Do we blame management? not 100% ? govt? yes.Because their fear that sometimes the cure may make you worse off than the disease is illogical
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  53. Anonymous,

    The fundamental problem is that it is extremely difficult to develop mechanism that keeps parastals at arms length from political influence. It is a problem of incentive design.

    A large part of ZAMTEL's debt is owed by Government.

    I discuss these issues in the on-going thread on "parastatal madness".
    ReplyDelete

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