Comparison between On- and Off-network GSM Rates in Nigeria

Thoughout West Africa, cell phone users carry multiple phones to defray the outrageous expense of off-network connections. We tell ourselves that it’s cheaper to buy and recharge three phones for three different networks than it is to buy one phone and call between networks.

However, Ethan Zuckerman reports that the head of the Nigerian Communications Commission, Chairman Odukwe claims that Nigerians carry multiple cell phones to separate home-life and work-life, and not because inter-operator fees are too high.

The chairman opines that it’s a matter of consumer choice – people clearly want to carry an official, business phone and a private phone. The crowd moans and groans. They carry multiple phones because the charge of calling between operators is high, and because networks are sometimes unreliable for days at a time.

Hmmmmm. What does the data say?

All amounts listed are for prepaid plans and pulled from operator websites.[1]

For some networks, such as Etisalat, there’s not a huge difference unless you’re using your phone for SMS. For others, such as Zain and MTN, the difference is appreciable.

Let’s look at Joe Nigerian, who spends 60 minutes a month talking on each network, 30 minutes during peak times, 30 minutes off. The following table shows, for each network, what Joe would spend each month if he only had a sim card from that network. The last line of the table shows how much less Joe spends if he has a phone for each network. You can check out my calculations on a Google Spreadsheet here.

Hmmmm. With the exception of Etisalat, it’s quite clear that it’s cheaper to own four cell phones than one.

Although carriers in the Ivory Coast and Ghana are slowly moving to harmonize inter-network rates, most operators in West Africa have long since realized that profit lies in forcing consumers to carry as many phones as possible. They never have to worry about consumer loyalty, because prices structures mean that consumers don’t have a choice. In countries like Benin, off-network rates are as much as 40% higher than on-network rates [4].

Yesterday, Josh asked if governments should regulate SMS prices. He concluded that market forces and public pressure can encourage operators to regulate themselves. I’d like to see the same thing happen for inter-operator connections.

What do you think? Are market forces in West Africa strong enough to bring off-network call prices down, or do governments need to step up to the plate and enforce changes?