Johannesburg - South Africa's ruling party, the African National Congress (ANC), has welcomed a call by the Competition Commission for mobile network service providers to lower their data costs by between 30% and 50% within the next two months or face prosecution.
In a statement, party spokesperson Pule Mabe said high data prices had a negative impact not only on the growth of the information and communications technology (ICT) sector but also other areas of the economy, such as financial services.
“The citizens of our country, especially the working-class, poor, youths, students and women, are robbed of their income which they spend more than 25% on the telecommunications services, including data services. The majority of our people, due to the widening digital divide, are unable to enjoy the benefits of a digital economy, which deprives the poor of full participation in the democracy of our country. This further stifles development and growth of small businesses," said Mabe.
In support of the #DataMustFall movement, the party resolved at its 54th national conference that: “There must be a strong regulatory intervention to deal with the question of the high cost to communicate and the ANC must support the campaign for data to fall and the monopolisation of data. This is regarded as stifling economic inclusion.”
The ANC also made substantive submissions to the Data Market Inquiry and delivered a presentation to the public hearings hosted by the Competition Commission in October 2018.
The party urged the government to activate all regulatory mechanisms, like the Independent Communications Authority of South Africa (Icasa), to ensure that the commission's recommendations were implemented quickly.
“Access to data in the 21st century is important because it facilitates the realisation of many rights enshrined in our bill of rights, as well as enhancing economic participation and the strengthening of our democracy,” added Mabe.
According to a report released by the Competition Commission on Monday, reduction of data bundle prices was one of the major recommendations contained in the final report of the data services market inquiry.
It was also recommended that Telkom Openserve reach an agreement with the commission within two months on substantial reductions in the price of IP Connect (the wholesale ‘internet protocol’ product through which third-party internet service providers connect to Telkom’s network) to remove excessive pricing concerns.
Tembinkosi Bonakele, commissioner of the Competition Commission, said on Monday the report found that the market for data services in South Africa is highly concentrated with a duopoly of the two leading operators, Vodacom and MTN.
Bonakele said data prices were excessive, which may violate the provisions of the Competition Act.
“We believe strongly as a commission this requires strong and decisive interventions. We have noted that there have been recent price reductions but we do recommend in the report that Vodacom and MTN must independently reach an agreement with the commission on substantial and immediate reductions in pricing, especially of pricing of prepaid bundles, which we have found to be more expensive than the so-called contracts and reflect a bias against the poor."
Bonakele added that the commission had given the industry an ultimatum.
“If we are able to reach an agreement for you to address our concerns, that’s fine. If not, I think we have reached a stage as a regulator where we say that this must be an issue that is considered for referral to the Competition Tribunal," he said.
Deputy commissioner Hardin Ratshisusu said in terms of the Competition Act, the commission has the option to refer the matter to the tribunal, start a new case, or enter into a settlement agreement with the affected firms.
“We do urgently implore them to engage with the commission constructively. If they engage constructively with the commission, we are confident that we will reach an amicable solution which will benefit consumers and will take our economy forward."
Minister of Trade and Industry Ebrahim Patel said it is clear there is a competition problem in the data services market because prices are higher than they should be, higher than in many other markets elsewhere in the world, and profitability levels are high.
Patel said this reflected potentially anti-competitive outcomes that may be the subject of an investigation into excessive pricing.
He added that the inquiry also found that the structure of and practices in the market result in discrimination against lower-paid consumers, that roaming markets are not working or not working as well as they should, and that something should be done about it.
“These are quite significant recommendations that seek to address the issue of retail prices and seek to remove the differential in the pricing charge to lower-income consumers and high-income users of data services,” he said.
The report made a number of recommendations to enhance price-based competition, including that Vodacom and MTN reach an agreement with the commission within six months to ensure that their national roaming agreements with other networks are priced, at a minimum, at wholesale rates that reflect a reasonable discount on their own effective retail rates.
It also recommended the development of alternative infrastructure to provide data services in lower-income areas and small secondary cities and towns, and that government at all levels must actively promote the development of free public Wi-Fi in low-income areas, including government buildings, commuter points such as train stations and taxi ranks, and public spaces such as parks, shopping areas and government service offices, as well as the creation and entry of community networks.