South Africa

Commission orders network providers to reduce data prices

Johannesburg – The Competition Commission has ordered Vodacom and MTN to reduce their data prices in two months or face prosecution. 

  The Competition Commission recently released its final report after the market inquiry on data pricing in August 2017, following concerns of high data pricing by the Department of Economic Development.

  The findings indicated that Vodacom and MTN charged South African consumers much more for similar data bundles than they did in other countries.

  In SA Vodacom charges about R115 per 1GB but in Egypt charged R18.20; MTN charges R148 for a 1GB data bundle, but R40 in Uganda.

  Commissioner Thembinkosi Bonakele said despite recent price reductions, the pricing discriminates against the poor as they pay more per bundle, compared with contracted users.

  Lower-income consumers who bought smaller data bundles paid higher costs per megabyte than those who purchased larger data bundles.

  “There have been recent price reductions, but we recommend that Vodacom and MTN reach an agreement with the commission on reduction of pricing, especially of prepaid bundles which we have found to be more expensive than contracts. This reflects a bias against the poor,” said Bonakele.

  Network providers previously blamed the lack of spectrum in SA as contributing to high data pricing, as it cost more to maintain the existing spectrum.

  The commission’s chief economist James Hodge said: “Looking at submissions we received, the additional cost of a lack of spectrum in fact indicates that this is less than 5% of the capital expenditure and operating costs; so they cannot explain the difference in the pricing.” 

  In the past five years until last month, Vodacom’s prices for 30-day prepaid bundles remained unchanged, he said.

  “This suggests there is partitioning strategies and exploitative price discrimination,” said Hodge.

  Bonakele said the cellphone providers must change their pricing in the next two months to avoid prosecution. “Failure to reach an agreement within two months will lead the commission to consider prosecution for excessive pricing,” said Bonakele.

  Vodacom and MTN are recommended to reduce their headline prices on all 500MB 30-day prepaid data bundles to cost the same as the 500MB 30-day bundle for contract users.

  All mobile operators should, within three months, provide for a monthly lifeline package of daily free data.

  Vodacom spokesperson Byron Kennedy said 

data speeds and LTE coverage is of higher quality than in other African countries. “Another area where there is a difference in opinion pertains to the impact of the delays in allocating available spectrum. Icasa says there are reasons why spectrum assignment is critical to achieving cheap, high quality mobile broadband, whereas the Competition Commission has downplayed the role of spectrum in reducing data prices. Vodacom has consistently stated that delayed spectrum allocation impacts the rate at which data prices could have fallen. Vodacom has reduced the price of data by circa 50% since March 2016,” said Kennedy. 

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