Mobile pricing report sparks debate

Research ICT Africa (RIA), which issued a recent report on the high cost of prepaid mobile in SA, has encouraged debate around the issue, lest the “high price of communications in SA is again swept under the carpet”.

SA's two dominant cellphone operators, Vodacom and MTN, this week challenged RIA's report, which identified the companies as consistently the most expensive networks in SA. The report points the finger at MTN as being “constantly the most expensive in the low-user basket”, with Vodacom identified as a regular second. RIA, furthermore, suggests the operators do not compete for price; that the two dominant players have set a precedent for high prices in the mobile industry and have managed to withstand pricing pressure from price cuts by later entrants.

RIA's report, the product of a year-long study, also implicates SA's regulator in the mobile industry exorbitance. The Independent Communications Authority of SA (ICASA), says RIA, is not as effective as regulators in other African countries or internationally. “Operator tariffs are filed with the regulator, ICASA, without any process of assessment or objection.” ICASA subsequently countered the study, saying, “coverage comes with a price”.

Executive director of RIA, Alison Gillwald, says the reactions of the various interest groups are “not surprising”. She says, however, they prompt clarification and “hopefully further debate”. To this end, Gillwald has released a follow-up report, “Myth buster on reasons for SA high prepaid mobile pricing”.

data prices can be equated with reductions in voice calls and particular prepaid mobile voice calls, which is what the majority of South African consumers are affected by”; and “it's all ICASA's fault”.

In terms of ICASA's rejoinder, she says: “ICASA [sadly] played directly into the hands of operators by defensively responding to the report that at least some of the reason for high prices was ineffectively regulated prices.”

According to Gillwald, Pieter Grootes, ICASA's GM for markets and competition, justified SA's high communications prices by endorsing the operators' contention that “coverage comes at a price and greater geographic coverage comes at a greater price”.

In reaction to Grootes' assertion that SA has far wider coverage than other nations, an aspect not factored in RIA's report, Gillwald says: “[It] would be impossible to do a comparison across so many criteria across the entire continent, hence the use of the internationally accepted Organisation for Economic Co-operation and Development pricing baskets.”

Despite ICASA's defence of the status quo, says Gillwald, SA has failed to create an environment conducive to investment and sustainable enterprises due, in part, to lack of common public policy objectives of affordable access to communication.

Gillwald says, however, the country's high cost of communications cannot be blamed on ICASA.

The high costs, she says, are steeped in complex factors and relate to poor market structure. “Weak political appointments over more than a decade, without strong technical competencies, has undermined the capacity of the regulator and other institutions in the sector, and with them the sector's role in the national transformation project.”

Gillwald refers to the national ICT policy colloquium, presently under way: “Let's hope that as a country we can acknowledge the policy failures of the last decade-and-a-half and move swiftly to address these in both our market structure and institutional arrangements, so that at last our policies can support the pro-poor agenda they have fictitiously claimed to serve in the past.”