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SA's 'outdated' Electronic Comms Act stifles fair competition

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 21 May 2024
When addressing cost of mobile data in SA, the contribution from the network operators in terms of network infrastructure must be taken into account, says ACT.
When addressing cost of mobile data in SA, the contribution from the network operators in terms of network infrastructure must be taken into account, says ACT.

South Africa’s Electronic Communications Act is too “outdated” to spur competition in the telecommunications industry.

This is according to the Association of Communications and Technology (ACT), explaining why mobile data prices are still high in South Africa.

Last week, civic organisation Friends of a Free Internet staged a protest at the Independent Communications Authority of South Africa (ICASA) over expensive mobile data costs in South Africa.

However, amid the protest, mobile operators – Vodacom, MTN, Telkom and Cell C – contended they have made great strides in reducing the costs of mobile data since the last spectrum auction held by ICASA.

The telecoms regulator confirmed meeting with the Friends of a Free Internet on Friday to discuss its call for “government to expand affordable internet access to everyone”.

In 2022, the South African telecoms sector teamed up to launch ACT, an industry body that collectively represents the operators on non-competitive industry matters.

The association – made up of Cell C, Vodacom, MTN, Telkom, Rain and Liquid Intelligent Technologies – is led by former ICASA councillor Nomvuyiso Batyi as CEO, and Vodacom Group CEO Shameel Joosub chairs the group.

Asked what needs to be done for data prices to go down in SA, Batyi tells ITWeb via e-mail that the country’s current Electronic Communications Act “is outdated and does not address the current environment”.

“The evolving market now includes over-the-top (OTT) players that reap rewards from infrastructure rolled out by telcos without contributing towards that rollout, investing in local infrastructure, incurring licence obligations while competing with telcos who have to comply with all those obligations.”

Cultivating fair competition

According to Batyi, having regulatory frameworks that do not keep up with the rapid pace at which technology is changing could be a hindrance to ensuring an efficient business and competitive environment.

“The regulatory environment should instead cultivate innovation, fair competition and consumer protection,” she says.

“There should, furthermore, be recognition that the ICT sector is the cornerstone of the economy, and collaboration between various stakeholders is required to create an environment in which the ICT sector and the economy can thrive.”

Batyi points out that the cost of maintaining an infrastructure network on the ground has significantly increased due to load-shedding, infrastructure vandalism and sabotage.

“Reducing the cost of rolling out infrastructure through an efficient wayleave or by providing support in protecting infrastructure from vandalism, theft and sabotage will go a long way in bringing the operational cost down, which will ultimately be passed on to the consumer.”

Furthermore, Batyi believes extending the diesel rebate will reduce the sting of load-shedding overheads, while ensuring the country remains competitive as a digital economy.

“It will help to ensure reliable connectivity at a critical time of record unemployment, stubborn inflation and subdued consumer spending. Other industries benefitting from the rebate receive full or partial relief from diesel fuel taxes through the refund system.”

Batyi explains that the system refunds a portion of the Road Accident Fund levy and the fuel levy to these sectors for non-road uses of diesel. “South African telecommunication diesel use fits this requirement, as the industry has pointed out to government.

“In our submission to ICASA’s inquiry on the effects of load-shedding and the regulatory relief measures they may consider, ACT demonstrated that despite operators’ proactive approach to addressing load-shedding challenges, the sheer magnitude and frequency of outages overwhelm even the most robust contingency plans.”

Batyi adds that another consideration is that the Universal Service and Access Fund (USAF), which has been contributed to by the network operators, has not been used effectively to bridge the digital divide, or to provide digital infrastructure suitable to make connectivity accessible to communities.

She notes the communications department and ACT both voiced concerns regarding the inappropriate utilisation of resources belonging to the USAF.

“Presently, there is ongoing deliberation regarding a novel measure that aims to tackle this matter and modernise the USAF and USAASA [Universal Service and Access Agency of South Africa] in accordance with the digital era. The obligation to contribute to this fund could be suspended until a more appropriate mechanism is established to achieve the country’s universal service objectives.”

Nomvuyiso Batyi, CEO of the Association of Communications and Technology. (Photograph by Lesley Moyo)
Nomvuyiso Batyi, CEO of the Association of Communications and Technology. (Photograph by Lesley Moyo)

Robust network infrastructure

ACT believes that when addressing the cost of mobile data in SA, the contribution from the network operators in terms of network infrastructure must be taken into account.

According to Batyi, South African mobile data costs in the SADC are still among the cheapest compared to countries such as Namibia, Zimbabwe and Mauritius.

She points out that data prices have been falling since 2014, although a lack of spectrum and high cost factors put some restraint on the initial steep reduction in prices experienced in 2014.

“South Africa has some of the best-developed telecommunication infrastructure networks in the world. According to the ICASA State of Connectivity Report 2023, the South African national population coverage for 3G stood at 100% in 2022. National population coverage for 4G/LTE stands at 98%.

“Since the auctioning of the widely celebrated high-demand spectrum in 2022, South African network operators have been upgrading the network capabilities, at the same time phasing out their 2G and 3G legacy network with a more advanced 4G and 5G network. This process, which came at a cost of R14 billion, involves careful planning and allocation of infrastructure investment to ensure no one is left behind.”

It is important to note that the cost of telecommunications services is influenced by a variety of input costs, and spectrum capacity is only one element of many inputs that impact the cost to communicate, she stresses.

“Other economic factors influences are high inflation and load-shedding, coupled with poor ZAR-USD exchange rate from R10.5 in 2018 to R18.2 currently.

“Network operators even before the auction have been reducing the data tariffs; for example, over the two years from 2021 to 2022, one operator had reduced its data tariff by 33% and more recently introduced offers that come with 10GB and unlimited calls for just R299.

“Other indicators from one major operator indicates a decline in headline data price (1GB monthly bundle) from R149 to R85 in two years, which indicates a drop of 43%. These tariff drops make sense because of the competition of OTT where calls are now conducted on using online platforms.”