While we bicker, data pricing punishes poor

SOUTH Africa’s telecommunications industry has never been in such a heightened state of flux as it is today. The regulator, Icasa, has managed to enrage the two biggest operators, MTN and Vodacom, which have both now lodged voluminous applications at the high court in an effort to get new call termination regulations overturned.

The stakes are high — billions of rands could flow from Vodacom and MTN to smaller networks Cell C and Telkom Mobile. It’s a move by Icasa calculated to undermine the pair’s long-running duopoly over the market (together, they control 90% of the market by revenue) and foster greater competition and lower retail prices.

Although the scale of “asymmetry” or price advantage offered to smaller players is open to question, there’s little argument — even, begrudgingly, from the two big players — that the rates ought to come down.

Yet the legal battle now looming was probably inevitable. Even though they benefited — some would say unfairly — from a regime that favoured them until recently, Vodacom and MTN are

Vodacom charges R2/MB for ad hoc or out-of-bundle data. That’s more than R2 000/GB

probably behaving as they should in moving to protect the interests of their shareholders, even if that means they’ll be accused of defending a cosy duopoly. Of course, their lawsuits won’t endear them to the public, and Cell C is already airing radio adverts aimed at fostering consumer resentment towards MTN over its challenge of the Icasa regulations.

But even as the highly paid lawyers on both sides prepare to do battle, I can’t help but feel that the country is focusing too much on this (admittedly still very important) issue to the detriment of other pressing telecoms matters.

The cost of voice telephony is a big concern for the millions of South Africans for whom every rand saved means more money available for other basic necessities. So, it’s right for Icasa to intervene in order to facilitate the sort of competition that will achieve lower retail voice tariffs, provided it doesn’t damage the market in the process. If it has followed the correct procedures in drawing up the regulations and determining the rates — Vodacom and MTN insist it has not — then they must be enforced.

But with all the focus on voice telephony, has Icasa missed the boat by not paying sufficient attention to an area that is arguably much more crucial to South Africa’s economic development: the cost of mobile data? Although voice tariffs have plummeted in the past year, the average cost of data on South Africa’s two big mobile networks has not fallen nearly as quickly. In its latest quarterly results, Vodacom revealed that its voice tariffs had fallen by 25% year on year, whereas the average cost per megabyte had fallen 16%.

Vodacom still charges its customers an outrageous R2/MB for ad hoc or out-of-bundle data. That’s more than R2 000/GB. Those are the preposterous fees prepaid consumers, including the poorest South Africans, are often expected to pony up to get on the internet, whereas the wealthy minority in the suburbs — those fortunate enough to be able to buy large, discounted data bundles or uncapped services on their fixed-line connections — pay as little as a few cents a gigabyte. Something is wrong with this picture.

So, while the protagonists on both sides of the termination rates issue dig in for a protracted battle, it’s important we don’t forget about what else is important here. It’s time to get moving on broadband.

South Africa has made a hash of the migration to digital television, mostly because of government bungling. Digital TV may soon be the subject of another legal quagmire. That must be avoided at all costs. While the broadcasters have been sitting in their playpen, throwing sand in each other’s faces, progress on terms of licensing access to spectrum in new frequency bands — crucial for delivering next-generation wireless broadband services — has stalled for far too long. This is an indictment on Icasa and the Department of Communications.

It’s often tempting to throw one’s arms up in despair at the lack of progress South Africa has made in terms of these fundamental issues. We need simply to follow best practice elsewhere in the world, but for some reason we want to debate every issue until we’re blue in the face and then sue the crap out of each other if we don’t like the outcome. It’s time for leadership across this sector.

McLeod edits TechCentral.co.za. Find him on Twitter @mcleodd