The Competition Commission (CompCom) has reached a deal with small mobile carriers, Cell C and Telkom, following data price reduction recommendations in its Data Services Market Inquiry Report published in December.
The CompCom recommended that telcos reduce data costs and instructed the leading operators, MTN and Vodacom, to cut their mobile data pricing by half.
While Telkom was not cited in the inquiry report as having high data prices on the mobile front, the competition authority proposed industry-wide measures to improve transparency to consumers over the effective price per MB.
It also recommended the introduction of forms of free or zero-rated data for essential public benefit organisations’ Web content to assist poorer consumers.
As a result of the market inquiry report, Vodacom has since reached a multi-year agreement with the CompCom, to reduce monthly data bundles by over 30%, and saving consumers R2.7 billion in data costs.
Similarly, MTN reduced data prices, but without the blessing of the competition watchdog.
MTN announced data price cuts with a reduction on its monthly bundles of 1GB and below by between 25-50% and the 1GB monthly bundle will decrease by 33% to R99.
The telco added it will now offer lifeline data to its South African customers, providing subscribers with 20MB of free data daily – or the equivalent of 600MB per customer every month – through its instant messaging platform, Ayoba.
On Tuesday, the CompCom announced it had reached a deal with Telkom and Cell C, the remaining telcos.
It said it sealed an agreement with Telkom on substantial reduction of wholesale broadband access costs in order to remove excessive pricing concerns in respect of IP Connect raised in its report in December.
“One of the findings was that there was a case, at face value, of excessive pricing against Telkom Openserve with regards to IP Connect, a wholesale product used by Internet service providers (ISPs) to connect fibre and ADSL clients,” says the CompCom in a statement.
According to the new deal, Telkom’s wholesale division, Openserve, will introduce a new wholesale product suite to replace IP Connect.
“The structure and the proposed initial pricing of this new offering from Openserve would reduce wholesale charges to ISPs for fibre broadband wholesale customers and in this way remove the pricing concerns raised in respect of IP Connect.”
The new Openserve offering, which is structured as an aggregated end-to-end solution, will allow ISPs to manage their costs and compare the Openserve fixed broadband prices with those of other wholesale broadband providers more easily, says the CompCom.
“This, as a result, will enhance competition in the fixed broadband connectivity market.”
Commenting on the deal, CompCom commissioner Tembinkosi Bonakele says: “The commission welcomes the effective price reductions for wholesale broadband fibre infrastructure to ISPs, as this should result in lower prices to consumers and even small businesses which are increasingly reliant on fibre networks to run their businesses.”
The CompCom says Telkom has agreed to improve transparency of pricing in line with the inquiry recommendations.
“Telkom will display the cents/MB for all its data-only packages and will notify its customers of the in-bundle effective rate per megabyte (cents/MB) in its purchase confirmation messages to subscribers.”
Additionally, Telkom has agreed to offer zero-rated access to essential government services and educational institutions, including the primary URLs of more than 60 universities and TVET institutions.
“It is also offering free access to other knowledge-enhancing sites such as Wikipedia, Everything Science, Everything Maths and DBE Cloud,” says the CompCom.
Bonakele welcomed the commitment by Telkom to zero-rate essential educational and government services Web sites, saying: “Poor consumers especially will benefit from the zero-rated initiatives, and displaying the cents/MB prominently will help consumers make informed decisions over what bundle offers the best value.”
Meanwhile, the CompCom also announced it signed a memorandum of agreement (MOA) on the implementation of mobile industry measures to improve access to data and increase pricing transparency for consumers with Cell C.
The competition watchdog says the MOA is a voluntary commitment by Cell C as there were no adverse findings or contemplated prosecution against the operator in this regard.
With the deal, Cell C committed to offer a free lifeline package capped at a bundle size determined by Cell C, accessible to its prepaid customers.
According to the CompCom, Cell C “will further enhance its lifeline package with a person-to-person capability for data essential messaging via the Cell C app (and portal), which will undergo systems development”.
It says: “In addition, the package will include: delivery conversion to SMS (ie, SMS delivery fall-back) for customers who are not on the app; five free SMSes per customer per day (Cell C to Cell C) plus seven free Call Me per day (across network and currently available), as well as free basics (Internet.org) access.”
“The negotiations with Cell C and this agreement are a further demonstration of the commission’s desire to bring about transformation in the data services market that promotes greater access to Internet and digital inclusion. The agreement further moves the industry towards a common approach to zero-rating of public benefit sites and transparency,” says Bonakele.
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