Huh? Cell giant claims SA data is cheap
Vodacom tells data pricing probe that comparing us to the rest of Africa is nonsense
Telecommunications giant Vodacom has demanded access to the Competition Commission’s “current market research” into data in other African countries being cheaper than in SA, saying it was unfair to compare.
The commission and the Independent Communications Authority of SA (Icasa) are investigating the price of data with the aim of bringing costs down and making it more affordable for the poor.
The request in Vodacom's submission is among hundreds of submissions to the commission, some of which Times Select has seen. The majority raise concerns about how the poor have to pay more for data than the rich.
Vodacom claims in its submission that research done for itself had concluded that benchmarking of data prices to other countries was complex. It says significant variations in key economic and geographic factors across countries made it difficult to draw conclusions from cross-country price comparisons.
“South Africa offers one of the best ‘value for money’ in relation to mobile data services,” says Vodacom.
The commission is expected to announce this week that public hearings into data prices will begin in October and that it has been granted an eight-month deadline extension so it can successfully conclude its inquiry.
The commission's inquiry, announced in August 2017, was meant to have been wrapped up two weeks ago. It will now conclude on March 31 2019.
Andreas le Roux of the DG Murray Trust, a grant-making foundation, has argued that the poorest of the poor should have some sort of free data access. Attempts should be made to help the 30 million South Africans living in poverty, “who according to Stats SA survive on R992 a month”.
“Currently, 55% of South Africans would have to spend 15% of their income to buy a very modest 1GB of mobile data. The actual cost is much higher. More than one mobile network provider has, in recent months, aggressively marketed a 30MB bundle for R12, a price point that those living in poverty could possibly afford.
“Yet, this equates to R400 per gigabyte of data or over 40% of the monthly income of 30 million South Africans."
He said it appeared mobile networks were taking advantage of poorer South Africans by charging them disproportionately high rates, with wealthier individuals qualifying for post-paid contracts paying approximately half the cost of 1GB prepaid mobile data.
Koketso Moeti and Paul Mason of Amandla.Mobi said in their submission that “out-of-bundle” data prices were 10 times higher.
“There is significant competition at the top of the market with promotional offers that offer higher-income contract consumers data at 0.03c or less. This means those consumers who are using small data bundles or using data ‘out of bundle’ may be paying 50 times what richer consumers are paying.
“Low-income consumers purchase goods in much smaller quantities and pay a higher price per unit. Why should the poor pay more for data than the rich?”
MTN, in its submission, said its data prices had fallen by 85% and that the company was engaging in initiatives to improve access to connectivity, in particular for low-income subscribers.
“In general, regulation should promote competition, encourage investment, reduce unnecessary costs and remove obstacles for firms to compete.”
It however argues that excessive regulatory interventions, “imposed at low or arbitrary thresholds, will harm incentives to invest, competition and consumers, in particular the poorest consumers”, and calls for impediments to the provision of better-quality and cheaper mobile data services to be resolved.
Cell C argues in part that there were numerous market failures contributing to high data prices, including regulatory issues and networking sharing arrangements.
Cell C says Vodacom and MTN make up the majority of the mobile network operators market and have national coverage, whose networks Cell C depended on.
“Figures clearly show Vodacom and MTN’s entrenched dominant position in the data service market. Together, they currently constitute more than 90% of the data service market. The greater its market power, the more likely a company is able to control the availability of services and thereby increase demand, and so control price.”
Commission spokesperson Sipho Ngwema said the commission had engaged with Icasa about extending the deadline.
“We are confident we will meet the deadline. The extension was requested because of the amount of work that still needs to be done, including public hearings which will happen over two days in October.
“The work we still need to do relates to further investigations and interviews with different stakeholders, who include everyone affected by data costs.
“We need the time to do a thorough job. While we have an adequate team for the task, the commission has been hit hard by a lack of resources. We are extremely under-resourced, which affects our deadlines. The commission is interacting with our different stakeholders to get more resources to address our case backlog.”