CompCom recommends how #DataMustFall
A coordinated government strategy on free WiFi and lower prices for small data bundles are on the Competition Commission's (CompCom's) wish list when it comes to transforming SA's data prices.
This as competition commissioner Tembinkosi Bonakele outlined a long list of recommendations for SA's telecoms sector at a media briefing in Pretoria yesterday. The recommendations are part of the provisional report from the CompCom's data services market inquiry, which was launched in August 2017.
Since 2016, South Africans have been complaining about the high price of data in the country through the social media banner #DataMustFall.
In July 2017, the Independent Communications Authority of South Africa (ICASA) began its own inquiry into the cost to communicate in SA.
Now the CompCom report has confirmed SA's data prices are too high, are anti-poor and retail price structures lack transparency. The commission also called out mobile operators Vodacom and MTN for charging higher prices in SA than they do in their other African operations.
Vodacom's share price dropped 4.29% yesterday after the Competition Commission's comments and MTN's share price was down 2.4% at the close of trade on the JSE, while Telkom's stock dropped 0.39%.
"Lower income consumers may be exploited to a far greater degree relative to wealthier consumers for mobile data prices," Bonakele said.
As part of its recommendations labelled as "immediate relief on data pricing", the commission wants a commitment from mobile operators to reduce the price of sub-1GB bundles "to within an objectively justifiable and socially defensible range of the 1GB price, provisionally a maximum of 25% higher on a per MB basis".
This as the inquiry found that relative to a 1GB data bundle, a consumer buying a 100MB data bundle will pay roughly twice the price on a per MB basis. Someone buying a 50MB bundle will pay up to three times more and a 20MB bundle up to four times more per MB, Bonakele said.
Minister of economic development Ebrahim Patel, who called for the inquiry in 2017, told journalists that some of the main take-aways from the report were that SA has a competition problem and prices are higher than they should be.
"The structure and practices in the market result in discrimination against lower paid consumers and we can do something about this and we must do something about this," he said.
"To summarise it differently, the Twitterverse was right," he added.
Data really must fall
The commission found international benchmarking shows "SA currently performs poorly relative to other countries, with prices generally on the more expensive end".
The commission used existing international comparisons on mobile prepaid data prices, including that of the International Telecommunication Union, Tarifica, ICASA and Research ICT Africa, the majority of which were 2017 statistics. The commission found SA ranked poorly relative to other African countries and its BRICS peers.
The CompCom says it wants a commitment from mobile operators to reduce headline tariff levels in SA and bring down out-of-bundle rates. The commission also recommends a "consistent industry-wide approach to the zero-rating of content from public benefit organisations and educational institutions".
"Absent such commitments, regulators should coordinate around legislative or regulatory means to achieve such outcomes. This may include investigations by the commission into excessive pricing, amendments to the Electronic Communications Act (ECA) or additions to ICASA's End-User and Subscriber Service Charter regulations," Bonakele said.
The commission also admitted there needs to be greater collaboration between regulators to address the historical failure to engage in necessary wholesale regulation.
"For instance, there would seem to be no basis currently on which ICASA could regulate based on findings by the competition authorities, either in market inquiries, or as a result of enforcement action. More effective means of inter-regulator collaboration would strengthen regulatory oversight, enforcement and regulation in these markets."
Free WiFi for all
The commission recommends that local and national government, under the lead of the Department of Communications, actively support the development of free public WiFi in low income areas, including commuter points like train stations and taxi ranks, as well as public spaces like parks, shopping areas and government service offices.
The commission said lower income citizens tend to be further disadvantaged because they do not have the same "off-load opportunities" as wealthier citizens, to save mobile data by using WiFi at work or at home.
"Aside from free public WiFi, government should look to use its own demand and facilities to reduce the costs of investment in both backhaul and last mile infrastructure into lower income areas, and improve the investment case with base customer demand. This would enhance the investment case for private providers to roll out infrastructure and/or use any base infrastructure to innovate around commercial models for business and residential supply in these areas," the report said.
The commission believes the development of alternative infrastructure to provide data services in lower income areas and smaller secondary cities and towns nationally will provide off-load opportunities from the mobile networks to free public WiFi, or even simply lower priced subscription WiFi services.
"It will also provide an additional point of competitive pressure on mobile prices if there is a more pervasive presence. While this is naturally occurring in wealthier areas, there are barriers to investment in poorer areas."
A lack of access to high-demand spectrum was once again brought up as a contributing factor for high data costs.
"It seems to be common cause that the failure to release high-demand spectrum due to delays in digital migration has left mobile operators with both insufficient spectrum and a lack of access to favourable low frequency bands, raising costs unnecessarily," the report said.
"This is because operators need to compensate for the lack of spectrum through increasing the volume of base stations, raising capital and operational costs."
The commission called for the urgent assignment of high-demand spectrum but warned that although more spectrum will reduce operator costs "this will not necessarily result in price decreases unless there is sufficient competitive pressure on mobile operators to do so".
Bonakele said improving affordability and enhancing competition must be central to the assignment of spectrum.
"Any spectrum assignment should be contingent on obligations to pass through cost reductions from greater spectrum access, alongside other obligations to improve affordable access. This may potentially include the provision of free public WiFi in certain lower income areas or commuter routes, or the extension of fibre backbone infrastructure to such areas.
"Pro-competitive assignment may include spectrum caps on larger operators, asymmetric assignments and set asides for new entrants such as the WOAN [wholesale open access network], in a manner that ensures a prospect of commercial success."
The CompCom's long list of recommendations also includes:
* More regulatory scrutiny and potentially action in the wholesale market to enhance price-based competition.
* Existing regulations on facilities leasing must be extended to include ducts and poles, and to impose cost-oriented pricing requirement on such facilities.
* The possible functional and/or accounting separation of the larger mobile networks for greater transparency as to the costs of the radio access network and core network relative to the retail services.
* National roaming arrangements with the smaller networks need to move towards more cost-oriented pricing levels to support the ability of the smaller networks to be more competitive.
* The failure of operators to compete for mobile virtual network operator arrangements needs to be addressed.