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Why is our internet expensive?

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TNM pulled a shocker during the week; the company’s CEO made a landmark announcement that the company would reduce its internet tariffs by 70 percent.

From the onset, my reaction was that of disbelief. That figure was a helluva lot. If it was, then this was a public nod that the company had all along been taking gratuitous advantage of Malawians.

It transpired that TNM had only reduced its pay-as- you-go data tariff by that titanic margin. In English, TNM had effected no reduction at all. Here is why; pay-as-you-go is pay-tv eccentric.

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This is a scheme where a TV content company charges you per view. For some reason, these companies make this pricing model unpleasantly expensive.

It is for this reason that most TV subscribers are left with no choice but to opt for monthly subscription bouquets. Whilst pay-as-you-go has no strings attached, the monthly subscription options imprison customers; they are forced to watch TV or else they would be paying for what they did not consume.

Extrapolating the above to TNM’s data pricing model, pay-as-you-go is when you browse the internet using your airtime on your SIM-based gadget. You have probably noticed that when you use this option, your airtime does get consumed but evaporates.

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TNM charges you K25,600 for every GB. However, if you opt for a 7-day 1GB bundle, TNM charges you K 2,500. A one-day 1 GB bundle is even cheaper at K1,800.

If you factor in the 70 percent reduction, the price per GB for TNM’s pay-as-you go shrinks to K 7,680. This is 50 percent of current Airtel’s pay-as-you-go at K 15, 680 for 1 GB.

Why would anybody want to pay K7, 670 for 1 GB data when the same can be had for K 1,800? Bundles as attractive as they appear have their problems; it like MacDonald’s forcing you to stuff three deluxe burgers into your mouth at once and asking you to pay for one.

The choice between pay-as-you-go and bundle is one between two devils; depends on which one is more evil. Even if TNM had reduced its pay-as-you-go by 90%, it would not feel it as that is not the cash cow. The bundles make money for TNM; bundles expire before customers exhaust them. Pay-as-you-go is just a control in the experiment.

That said, why is data ridiculously expensive in Malawi? Number one, Macra charges internet providers hefty license and violation fees. It is for this reason that Macra is so liquid that it can afford to spend one billion Kwacha per month. Internet providers, naturally, pass on these fees to consumers. Remember last time Macra charged Airtel K840 million for an insignificant violation?

Number two, data is heavily taxed in Malawi. Excise tax and VAT make up 26 percent of the data cost. From what the minister of information said, looks like government is not ready to let go of this income bracket. If Macra and government charges such hefty fees and taxes, why should service providers not follow suite? I rest my case, my lords.

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