New Telecom Company Launches in Uganda -01-2013

A new telecommunications company, K2 Telecom, was launched on New Year’s Eve bringing the number of operators to seven. However, some executives of established companies greeted the new arrival with predictions of gloom.

One said the telecoms market is already over licensed and congested, while another said the new service provider will add nothing since existing service providers have already done what needs to be done.

These reactions are expected, and they fall short on truthfulness. Current subscription figures relative to the potential size of the market – the total population and the various services it could buy – poke holes into the congested market theory.

And few telecom subscribers, given the dodgy reliability of the services they pay for, would agree that the existing service providers have done all that needs to be done.

A new player in the Ugandan market bodes well for consumers, at least theoretically. As telecom companies battle for subscribers, they should offer better services and lower charges to set them apart from their competitors.

That is if they have not done that already, which is true in Uganda’s case and is a damning indictment of our regulators, a testament of the value attached to customers, and the absence of effective consumer advocacy.

Even then, consumers have benefitted in one noticeable way from the deregulation of Uganda’s telecommunications sector: reduced charges.

New entrants offered lower charges from those of established companies and launched aggressive promotions. Older users can recall a time subscribers had to pay a monthly service fee: this, together with the high costs of sim cards, disappeared with more competition.

It’s unfortunate that the quality of services offered by telecom companies are still poor. A recent market performance review by the Uganda Communications Commission says that expansion in the sector did not come from new sim acquisitions but from second sim buyers.

Many conclusions can be drawn from this, one being that second sim buyers were attracted by better services (and lower prices, of course).

Details about the K2 Telecom are still sketchy, but its entrance is a godsend if it can prod its competitors to not only cut charges, but to also improve their current services and, better still, introduce new ones. The telecoms market still lags behind in this regard, and anything to challenge the status quo should be welcomed.

The Monitor Newpaper
January 4 2013