I’ll huff and puff until mobile data costs fall

I’m throwing my hat in the ring to become a Fallist. I’m batting for cheaper data. I’m saying it and I’m squarely on the side of the consumer. I got it off my chest, putting it out there. I am a Fallist: #Datamustfall.

Why?  If it appears that I’m opportunistically jumping on the bandwagon of a chorus of voices calling for cheaper data, then so be it. It simply seems to me to be the right thing to do. There’s also the case of disappearing data. Who gives any mobile operator to determine when data must be taken after one has paid for it? Sounds very undemocratic to me.

But let’s examine the facts before I become too emotional about it. The chief protagonists in this game are government (responsible for policy), the regulator, namely the Independent Communications Authority of South Africa (ICASA), mobile operators, and consumers.

One of the three main functions of ICASA is to regulate telecommunications in the public interest. My take is that ICASA is simply not living up to its mandate. It has let the consumer down badly, in the sense that it has allowed operators to arbitrarily set data costs. The encouraging thing, though, is that government has hauled ICASA before Parliament to explain what it’s doing in this regard. Waiting with bated breath for the outcome.

The strategic repositioning of Telkom has shaken matters up a bit, but only on the low-end data side, while MTN is clearly the price leader on the higher mobile data volumes (see table 1 below). It is clear that Telkom is playing it safe and basically still testing the waters as it transitions from being a fixed line operator to a mix of both fixed line and mobile.

Table 1: Postpaid mobile data prices

Mobile Data Prices
Package Vodacom MTN Cell C Telkom
500MB R45 R39 R39 R39
1GB R75 R79 R69 R59
2GB R109 R99 R99 R99
3GB R169 R169 R169
5GB R259 R199 R199 R199
10GB R499 R299 R399
20GB R999 R499 R499 R699

Source: Mybroadband

I’m struggling to understand Vodacom’s rationale for its pricing, which is clearly the highest in most categories.

But let us look broader from a policy perspective.

The National Development Plan, 20130 (NDP) has identified, as one of its enabling milestones, the universal availability of high-speed broadband internet at competitive prices. The high domestic cost of broadband internet connectivity is a major hindrance “to amongst other things. scientific and technological advancement. The goals identified in the NDP include that of universal access and availability of a wide range of converged services at a “cost and quality at least equal to South Africa’s main peers and competitors “.

The National Broadband Policy (South Africa Connect), adopted in 2013, states that the high prices charged for communications services are identified as one of the primary factors hampering South Africa’s competitiveness. It further emphasises that access to broadband must be affordable to lead to economic growth. South Africa remains one of the most expensive countries in the African Broadband Price Index (Research 1CT Africa Broadband Policy Brief No. 3. June 2014).

In order to realise the policy intent of Government – as derived from both the NDP and SA Connect – to make broadband more affordable for end users, effective competition in broadband markets is necessary.

The Minister of Telecommunications and Postal Services directed ICASA last year to prioritise the commencement and conclusion of an inquiry and the prescription of regulations, as contemplated in section 67(4) of the Electronic Communications Act, to ensure effective competition in broadband markets. Precious little has subsequently happened.

A World Bank / IFC report says for every 10 percentage-point increase in high-speed Internet connections, there is an increase in economic growth of 1.3 percentage points. South Africa can certainly do with an increase in its GDP.

There is also general acceptance that with the increased uptake of smartphones in South Africa, many users are looking for data-centric contracts. However, the operators are not exactly playing aggressively enough in this space.

It is clear from the above that although much is happening in the data space, the consumer is not exactly seeing a positive spin-off.

My take is that operators are too myopic, in that they do not design products for the mass market at more affordable prices. The opportunity is ripe for an early mover to capture a good market share, and simultaneously position itself as a champion for the consumer. Raymond Ackerman did this successfully at Pick n Pay, and operators can take a leaf out of his book.

ICASA needs to be more proactive, and deliver on their mandate.

In an environment like this, where institutions are failing the consumer, this leadership vacuum lends itself to exploitation for political gains. However, it is encouraging to note that some respectable NGOs are championing the cause for cheaper data. I hope they (also) become more vociferous about disappearing data.

Last, but not least, let us not forget that the NDP has set some ambitious goals, but without enabling ICT infrastructure in place, South Africa will not achieve its GDP targets, which may lead to unintended socio-economic consequences. So let us put narrow self-interest goals aside and strive to achieve something small  – such as cheaper data, which can have a major national impact.




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