Data prices must fall

South Africans pay more for data than in other countries where their service providers operate, and those companies are

“More than capable” of reducing prices, the Competition Commission said.

According to @timeslive. Two years ago, amid a public outcry about high data prices and providers' apparent inability to allow customers to carry about unused data, an investigation was launched. That Data Services Market Inquiry report was released on yesterday.

The report said that current comparisons of the prices charged by Vodacom and MTN, the two big mobile providers in SA, in other African markets in which they operate revealed that SA prices are higher than most countries by some distance, even Lesotho, where Vodacom is the effective monopoly provider. In response, Vodacom and MTN have argued that such comparisons are uninformative because the cost and quality differences across countries, including spectrum allocations, may account for the differences in pricing. They have also argued that such comparisons involve headline 30-day tariffs and that effective price, including promotions, short-validity bundles and free data, is a better basis for comparison. “The existing international comparisons on mobile prepaid data prices collectively indicate that SA currently performs poorly relative to other countries, with prices generally on the more expensive end. “Upon the release of the report, trade and industry minister Ebrahim Patel said data prices were critical to the economy.

“The prices are higher than they should be and higher than any other markets elsewhere in the world. The profitability levels are high, reflecting anticompetitive outcomes. This may be the subject of an excessive-pricing investigation,” he said.Patel added that the roaming markets were not working, or not working as well as they should.

“The 21st century is being reshaped by data. If we want to grow the economy, we need to have the lowest possible data prices,” he said.

The commission also cited a challenge for new entrants like Cell C to compete on a fair footing.

“The constant battles Cell C has had with its debt levels and equity refinancing about an extended period are reflective of precisely this challenge for the newer networks. Its current financial woes only serve to highlight this difficulty entrant’s face,” said the report.

The report says MTN and Vodacom must reach an agreement with the commission on substantial and immediate reductions on tariff levels. Especially prepaid monthly bundles, within two months of the release of the report. The preliminary evidence suggests that there is scope for price reductions in the region of 30% to 50%.

Second, all mobile operators must reach an agreement with the commission within three months to inform each subscriber, on a monthly basis, of the effective price for all data consumed by the customer.

Among the recommendations was that should an operator fail to reach the required agreements with the commission within the specified time frames, the commission will proceed to prosecution.