Minister of Economic Development Ebrahim Patel has stated that bringing data prices down will be a priority for the government in 2018. Patel said the cost of data will come down following a competition market inquiry into data services. National Treasury directed the Competition Commission to investigate data prices in 2017.
The commission is looking to identify areas where consumers may be exploited or excluded. It also wants to identify structural, behavioural, or regulatory factors influencing competition or pricing. The assessment will include the market structure, the impact of regulations, the investment in infrastructure by operators, and their access to spectrum.
The commission will also benchmark South African data services pricing against other countries. Recommendations on how the market could be made more competitive and inclusive, and how data prices can be brought down will then be made. The commission expects to finish the inquiry by 31 August 2018.
Patel also announced plans to build fibre networks in South Africa.
He said the government will expand infrastructure through finalising the release of new spectrum – thanks to the migration from analogue to digital TV broadcasting.
“We’ll conclude key policies including the entry of cross-border ecommerce in South Africa,” added Patel.
Mobile data prices in South Africa came under scrutiny in 2017, with consumers uniting under the banner of #DataMustFall. The campaign made its way to Parliament, and ICASA is proposing regulations to make mobile data more affordable. The calls did not fall on deaf ears, and MTN CEO Rob Shuter said entry-level and OOB data prices need to be addressed.
Vodacom CEO Shameel Joosub also acknowledged that mobile data prices should come down, and they are focused on addressing high out-of-bundle pricing.
Vodacom and MTN have consistently said getting more spectrum will help them to launch faster, more affordable mobile data services. The Department of Communications and the Department of Telecommunications have failed the industry, however. The spectrum assignment process has dragged on since 2006, which means spectrum that can make mobile broadband faster and cheaper is being wasted.
Without additional spectrum, operators have to rollout more towers and invest more in their networks to provide a high-quality broadband experience. These costs are passed on to consumers, who pay higher data prices.
The Internet Service Providers’ Association of South Africa said that to bring down the price of mobile data, the industry needs more competition through wholesale deals. Its argument is that what happened in the ADSL market – where prices remained high until competition at the ISP level was introduced – can take place in the mobile market.
Aggressive price reductions and better services are often a result of increased competition, it said. South Africa’s mobile market has enough infrastructure players – Vodacom, MTN, Cell C, Telkom, and Rain – but more competition can be introduced by assigning more spectrum to operators and by making it affordable for ISPs to offer mobile data services.
ADSL vs Mobile
The effect of competition on broadband prices can be seen in the ADSL market, where prices plummeted after additional ISPs and undersea cable operators were allowed to enter the market. The charts below show the price of ADSL data in South Africa, and the price of mobile data (Vodacom) since launch.