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CompCom plans data value chain probe

Paula Gilbert
By Paula Gilbert, ITWeb telecoms editor.
Johannesburg, 21 Aug 2017
The CompCom's inquiry aims to make recommendations that will lower prices for data services.
The CompCom's inquiry aims to make recommendations that will lower prices for data services.

The Competition Commission (CompCom) is the latest public body to look into the cost to communicate in SA, on Friday announcing it was launching a market inquiry into data services.

The CompCom says the inquiry, which will take about a year, will cover "all relevant players in the value chain who contribute to or influence prices of data services in SA".

The CompCom probe follows on the heels of the Independent Communications Authority of South Africa (ICASA), which in July launched its own inquiry to determine the priority markets in the electronic communications sector. The regulator said this was part of its plans to address the high cost of communication in SA, including the cost of data.

The CompCom's inquiry is expected to commence on 18 September, after it published the terms of reference in the Government Gazette on 18 August. The investigation is likely to only be completed by 31 August 2018, after which the commission will release its findings and recommendations. Meanwhile, ICASA says it aims to finalise its inquiry by 31 March 2018.

"The commission has initiated the inquiry because it believes there are features in this market that prevent, distort or restrict competition within the sector. Through the inquiry, the commission aims to determine what may cause or lead to high data prices with a view to ultimately making recommendations that will result in lower prices for data services," it said in a statement.

The CompCom probe is also a response to a request by economic development minister Ebrahim Patel, who in May expressed concerns over high data costs and highlighted the importance of data affordability in SA.

The debate over the high cost to communicate in SA has been raging for some time and gained traction in September 2016 when South Africans took to social media to complain about high mobile data costs under the banner #DataMustFall.

Following this, Parliament's portfolio committee on telecommunications and postal services spent two days hearing submissions from the communications department, ICASA, civil society organisations, telecoms operators and the public on the issue.

As part of his "inclusive growth action plan", finance minister Malusi Gigaba said in July that Patel and telecommunications and postal services minister Siyabonga Cwele would need to direct the CompCom to investigate data prices, with their deadline set for last month.

Earlier this month, ICASA's acting chairperson, Rubben Mohlaloga, told the Select Committee on Communications and Public Enterprises that the regulator was looking at tackling "crazy" out-of-bundle mobile data rates and that he believed "there is a need for a decrease in the average price per MB".

Inquiry's objectives

The Competition Commission said its inquiry will cover all market participants involved at any point in the value chain for any form of data services that are provided to customers such as government, businesses and end-consumers in SA.

The main objectives are to obtain a clear understanding of the data services value chain, including the interaction and commercial relationships between different levels of the value chain, and the relationship with other parts of the ICT sector and the broader economy.

It is also important to "assess the state of competition in the market at every stage of the value chain for provision of data services in order to identify areas of market power where customers or consumers may be exploited or excluded by firms and to identify any other structural, behavioural or regulatory factors that may influence competition or pricing", according to the gazette publication.

The CompCom will also look to benchmark South African data services pricing against those of other countries and establish whether data supply quality and coverage is adequate by international standards and SA's developmental needs.

The inquiry also aims to assess market structure and the general adequacy and impact of the current regulatory regime. It will look at strategic behaviour by large fixed and mobile incumbents as well as the costs faced and profits earned by operators. It will assess the current arrangements for sharing of network infrastructure as well as investment in infrastructure by operators and access to and allocation of spectrum. Another key factor is the adequacy of regulation to promote new South African entrants, particularly historically disadvantaged individuals.

When it is complete, the inquiry will make recommendations to government as to how the market could be made more competitive and inclusive, and how data prices can be brought down. It will also make recommendations to the sector regulator on the competitive impact of the regulatory framework, and any need for amendments.

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