It’s official, data MUST fall

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In 2017, the #DataMustFall movement in South Africa spurred the powers that be into announcing an enquiry into the cost of data in the country.  Almost a full two years later, the Competition Commission has found what anyone who compared local mobile providers’ prices with their pricing in other African countries could have told them: South Africa’s data prices are too high.

Data must fall December 2019

In its final report, the Commission ultimately found that the data services market is “highly concentrated” with a duopoly of the two leading mobile operators, MTN and Vodacom. As a result of the duopoly, “data pricing is excessive”, and the Commission wants both mobile operators to independently reach an agreement with it to reduce pricing substantially.

Among the recommendations the Commission has made to provide immediate relief on high data prices is a “lifeline package”. This would require the mobile operators to offer all prepaid subscribers a certain amount of free data daily. The Commission said this will ensure all citizens have data access on a continuous basis, regardless of their income levels.

Mobile operators have been given three months to reach an agreement on this point, and a two month deadline to reduce the prices of all non-monthly prepaid data bundles below 500MB to reflect the same cost per MB as the 500MB 30-day bundle. If they are unable to come to the party, the Commission has threatened them with prosecution for excessive pricing by means of the Competition Tribunal.

“This package of remedies will not only lower prices for all consumers, and particularly the poor, but will lead to greater economic and social inclusion moving forward as the country moves into the digital age,” the Competition Commission said in its report, calling for mobile operators to cease “ongoing partitioning and price discrimination strategies, that may facilitate greater exploitation of market power anti-poor pricing”.

The Competition Commission believes there is scope to reduce data prices between 30% and 50%. While South African consumers are thrilled at the prospect of lower data prices, the mobile operators are not quite as pleased. Share prices in MTN and Vodacom dropped substantially following the Commission’s publication of the report.

According to MTN, it is unfair to blame the operators for the high cost of data. “For more than a decade, government and regulators have failed to release the spectrum that the mobile industry has so critically required to bring down the cost to communicate,” MTN South Africa said in a statement.

“To simply lay the blame for data costs at the foot of the operators is wrong. MTN in South Africa has had to compensate for the lack of spectrum by spending over R50-billion in the last five years to build a world-class network for all South Africans, covering over 95% of the population with 4G coverage, without any 4G spectrum having been allocated.”

In fact, MTN says that it has had to get innovative with the little spectrum it has, providing an example comparing MTN Nigeria with MTN South Africa. “A comparison across the continent is helpful in illustrating this point. Nigeria is often cited as an example of a developing country with lower data costs than South Africa. In South Africa, MTN has just 38MHz of spectrum. MTN Nigeria has almost triple that, with 110MHz,” the operator said.

“To counter this suffocating lack of spectrum, MTN South Africa has had to get innovative with the little spectrum it has, resulting in significant ‘re-farming’ (reallocation) of spectrum to allow it to keep enhancing its 3G and 4G coverage to connect the unconnected. But the R50-billion MTN has invested in its infrastructure in the past five years is simply unsustainable. The spectrum crunch has resulted in MTN South Africa having to invest up to more than double per subscriber than what is seen, on average, with other fixed and mobile operators.”

Unfortunately for them, ordinary people’s demands for cheaper data and the Commission’s findings mean that MTN and Vodacom have no choice but to bring down costs. The commission has also recommended that the government introduce regulations to combat excessive data pricing in the country, leaving the mobile operators with even fewer option.