SA’s mobile data prices are much higher than those of its African peers and a selection of other countries worldwide – with particularly MTN and Vodacom charging higher prices to domestic consumers than they do in other countries, the Competition Commission has found.
The commission on Wednesday released a provisional report on the data services market inquiry which started in August 2017.
The share prices of MTN and Vodacom both fell on the back of the release of the preliminary findings.
Among the key findings were that SA’s data prices compare poorly to counterparts in the BRICS and SADC nations, and that the pricing structure of mobile data is “anti-poor” and “lacks transparency”.
Lower income consumers could be exploited to a far greater degree than wealthier consumers, Commissioner Tembinkosi Bonakele noted in a statement.
“Consumers of small data bundles, generally being poorer consumers, pay inexplicably more on a per MB/GB basis.
“For example, relative to a 1GB bundle, a consumer buying a 100MB bundle will pay roughly twice the price on a per bundle basis for the same data period validity. A consumer buying a 50MB bundle will pay up to three times more and a 20MB bundle up to four times more,” he explained.
Lack of transparency
“In general, data pricing also lacks transparency, which undermines price competition.
“Operators prefer to make use of promotions and free data rather than to drop headline prices. As a result, few consumers know what they really pay per MB,” he added.
The commission also found that the lack of spectrum is part of the reason costs are so high.
“The failure to release high demand spectrum due to delays in digital migration has raised the costs of mobile operators unnecessarily,” Bonakele said.
But, even though releasing spectrum would reduce operator cost, it would not necessarily result in price decreases, he added. There must be “competitive pressure” on operators for them to reduce prices.
“Careful thought must be given to the design of the spectrum allocation process to ensure that competition is prioritised.”
The commission believes having the necessary infrastructure could reduce costs for operators and potentially result in lower prices over time.
The commissioner also noted the concentrated nature of the market, the two largest operators – Vodacom and MTN – are able to price independently, unconstrained by competitors, he said.
“Cell C has historically been more aggressive on headline prices, but the larger networks have found it profitable not to follow their pricing downwards. This shows the resilience of their market position.”
The commission believes that addressing fixed line infrastructure will go a long way towards supporting competition in the data service market. Fixed line supply is still a major provider for households and businesses. WiFi is also an “important alternative source” of data, Bonakele noted.
“Given the low level of competition between mobile operators, the inquiry is of the view that we cannot focus exclusively on trying to fix mobile competition as a solution to high data prices,” he said.
The market appears to continue to service wealthy, historically white, urban areas. “The market is failing lower income and rural households which most need the benefit of lower data prices, and who require alternatives to mobile where there is a pricing structure that exploits this position,” he said.
All stakeholders will be able to make sumbissions on the findings and recommendations by June 14, 2019. A final report will be published later this year, after considering the submissions made and further engagements with stakeholders, Bonakele said.
Source link : https://www.fin24.com/Companies/ICT/sa-data-prices-high-anti-poor-and-lack-transparency-competition-commission-finds-20190424
Publish date : 2019-04-24 20:00:22