TechZim reports that the Minister Supa Mandiwanzira recently said that telecoms companies have lost up to $26 million in revenue due to the use of over the top services such as WhatsApp calls and Skype. Consequently, the minister continued, Potraz (which regulates telecommunication companies) and the people of Zimbabwe also lost money. Potraz, he said, lost $139 000 while “we” the people lost $4 million in potential taxes.
I chuckled when I read that, because aside from not making much sense, there’s nothing wrong with over the top services.
This is simply how technology works. Regardless of the minister’s wishes, or his grasp of Economics, the truth here is that ordinary voice calls and texts are on the decline. Not only here but globally (see here, here, here).
Governments and corporates might not like the decline of voice calls for many reasons. One of the biggest might be the loss of control. The government might resent the limited control they have on third party services such as Skype or WhatsApp as opposed to normal voice and texts which they can access, control or monitor through local telecom companies.
However from a purely economic perspective, it is better for the economy as a whole to use over the top services.
Ask any person in the street whether they are worried that WhatsApp is replacing texts and you’ll get an emphatic no. People are actually happy with the convenience and cheapness of WhatsApp.
The telecoms companies are certainly not as happy, after all they lose money. But I think it’s incorrect for the minister to say that the people of Zimbabwe also lost money in the form of potential taxes. My understanding of Economics (which is admittedly informal and limited) informs me that cheaper ways of communication are better for everyone.
After all consumers communicated using cheaper means, that is through data, rather than texts or voice calls. So the consumers benefited, and the money they may have spent on airtime was spent on something else. Wherever that money was spent it most certainly had taxes imposed, so <em>another</em> sector of the government’s taxes rose. Even when that money was spent on tax free items, the overall commerce of the economy hardly changed.
More importantly from a tech perspective it is a development that has far reaching technological consequences. Consider a situation where there are fewer and fewer voice calls and texts. Obviously more people will seek to buy smartphones that are WhatsApp capable. The smartphones are more expensive than feature phones hence more business again.
Smartphones also have plenty of features whose positive impact on the economy might not be apparent now. These include opportunities for online businesses, improved internet connectivity, greater citizen awareness, more access to information by the citizenry and a boost to the local app ecosystem. The possible benefits of more people adopting smartphones are vast.
That is the way of technology. In fact there were people who were unhappy when cars started replacing horse-drawn carriages. You can guess that those were people who either owned horses or lords who were wealthy enough to have them. It’s true as well that a whole lot of jobs dies with the rise of cars, for example blacksmiths who made horseshoes and cinches.
Similarly one might point out the “lost revenue” of postal services with the rise of the internet. Or that by camera makers when the smartphone started having decent cameras.
It’s true, but it needs to be viewed in the broader context.
These arguments ignore the other side: the jobs created by car makers, the people employed because of the internet and, of course, the many other important technologies and inventions that sprung from these disruptive technological advances.
Clever companies have already realized that there isn’t much money in texts and voice anymore. The next fifty years belong to the web and web applications and content delivery on the internet is where the money is going to be. Companies like AT&T have stayed in the game by evolving and adapting to the times. Those that refuse- like Kodak did with the digital cameras, or IBM with computers will find themselves eclipsed by more responsive firms.
Strive Masiyiwa knows this. That’s why Liquid Telecom recently bought Neotel of South Africa and Raha of Tanzania. Both provide internet services. Together with Zol, Econet will be assured of a place in Southern Africa’s tech space for the next few decades. That’s also why Mr Masiyiwa is so passionate about the Kwese TV project. The internet is the future, and whosoever ignores this simple fact will be left behind.
The minister of ICT should be working on ensuring that more people have access to the internet instead of lamenting over money that was never the treasury’s to begin with.