Abstract
Consumer surplus is one of the important measures of the welfare benefits to mobile telephone service subscribers. The need to measure consumer surplus for telephone services such as mobile, and assist regulators in establishing appropriate price levels between consumers and service providers continues to increase. Oftentimes, regulators in developing regions such as Sub-Saharan Africa intervene in regulating telephone call termination regimes as a way of achieving lower retail prices and promoting competition in the telecommunications markets. In so doing, the aim is to improve the welfare of consumers by reducing retail voice rates.
This paper assesses the impact of reduced mobile call termination rates on the welfare of telecommunication services’ consumers in Malawi. The study computes the gains in the consumer surplus for mobile telecommunications services in Malawi using data over a ten-year period from 2012 to 2021, during which the national regulator, MACRA, intervened by determining the interconnection rates following a market analysis study. The results show that consumers benefited during the years where there was a reduction in retail mobile termination rates.