Competition Commission Market Inquiry into South African Mobile Data Services Finds Evidence of Higher Prices

The price of mobile data in South Africa exceeds that of many countries in the world. In addition, profitability for mobile network operators (MNOs) in South Africa exceeds that of MNOs in similar markets, including those markets where South African MNOs are operating. These were among the key findings of the Competition Commission in their final report on the Data Services Market Inquiry, released on Monday, 2 December 2019.

The release of the report on data prices in South Africa was warmly welcomed by South African Ministers Ebrahim Patel and Stella Ndabeni-Abrahams, at an event at the offices of the Competition Commission in Pretoria today.

The Report makes far-reaching recommendations, including

  • a proposed reduction in data-prices charged by the telecoms companies, by a third to half of the current rates
  • reduction on the price differentials on prepaid data that discriminate against low-end, largely poorer users
  • a minimum package of daily free data for prepaid customers
  • reduction in roaming prices and MVNO pricing to below the retail prices charged
  • zero-rating of content for educational and PBO institutions website downloads, to enable access to key information by students and citizens
  • pricing-transparency provisions to enable consumers to see the real difference between the pricing of different telecoms companies
  • alternate infrastructure provision such as wifi, with incentives to speed up their rollout
  • Accounting separation between wholesale network and core network and
  • Legislative amendments to enable the changes required in the market.

The Market Inquiry was initiated at the request of the then-Minister of Economic Development, Ebrahim Patel, after consultation with the Minister of Communications, in August 2017, to investigate the factors or features of the markets and value chains which may cause or lead to high prices for data services, and to make recommendations that would result in lower prices for data services. This followed a public outcry from South African consumers on the price of data in the country.

Minister of Trade and Industry, Ebrahim Patel said today that the findings of the competition authorities are far-reaching.

“They found that there is indeed a competition problem in the market for data. The report notes that data prices are higher than they should be, and higher than in many other markets elsewhere in the world. They found that profitability levels are very high, reflecting anti-competitive outcomes and potentially the subject of an excessive pricing investigation. They drew attention to the structure and practices in the market that results in discrimination against lower paid consumers and they found that the roaming markets are not working or are not working as they should,” Minister Patel said.

“Data costs are critical to the performance, not just of the digital economy, but to the entire economy. If you think of the 20th century as a century that was reshaped by oil and steel, the 21st century is being reshaped by data. The academic literature, and studies by the World Bank have all indicated a strong relationship between data prices and access on one hand and economic performance on the other hand. If we want to grow the economy then we need to have the lowest possible data prices,” Minister Patel said.

“Information and Communication Technologies is reshaping not just the digital economy but a number of value chains across the entire economy. From food companies, banks and car makers, many parts of the economy have become increasingly reliant on integrated digital platforms to be able to produce goods and services. Critical development areas, like provision of healthcare services and skills development, have been impacted greatly. Affordable consumers access to digital services – and, most importantly, for lower income consumers – is thus of critical importance to a functioning economy and democracy,” Minister Patel said.

The Minister of Trade and Industry will table the final report in parliament within the next two weeks, in terms of the Competition Act. The Department of Trade and Industry (the dti) will further engage with the finding to investigation ways of implementing the recommendations of the Competition Commission.

The Competition Commission will seek to engage the industry on bringing down data prices over the next two months. The Commission has indicated that it would seek other remedies under the Competition Act in the event that such engagement does not yield lower prices for consumers.

Minister Patel handed over the report to his counterpart, Communications and Digital Technologies Minister, Ms Stella Ndabeni-Abrahams. The two ministers concur that there is a competition problem in the market, and this warrants a policy and regulatory intervention. Minister Ndabeni-Abrahams noted the report, reiterating the importance of lowering the cost of data in order to ensure that lower income communities are not further marginalised by high mobile and data costs.

Minister Ndabeni-Abrahams remarked:

“Data access and affordability are integral to ensure the full participation of our communities in the digital economy. As a department, we have prioritised spectrum licensing as part of the interventions to reduce the cost of data. We therefore look forward to further engaging with the report and exploring its recommendations.”

Minister Ndabeni-Abrahams indicate that Government will, in due course, engage the affected parties with a view to find amicable solutions without delay.

Minister Patel handing  over the  Data Services Market Inquiry Report to his counterpart, Communications and Digital Technologies Minister, Ms Stella Ndabeni-Abrahams.

Issued jointly by the departments of Communications and Digital Technologies and Trade and Industry.

Sidwell Medupe-Departmental Spokesperson
Mobile: 079 492 1774
Follow us on Twitter: @the_dti

Nthabeleng Mokitimi-Dlamini
Mobile: 0732225522

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