Icasa proposal a missed chance to cut prices

SA’s growth and economic competitiveness must be our primary concern. SA’s economy has been weaker than the economies of our peers for some time now. To grow, it is important that all of us focus on driving business competitiveness, lowering costs and plucking lowhanging fruit. This includes regulators and policymakers.

The IMF has forecast growth for SA at 1.5% in 2018 against projected growth rates of between 4% and 7% for other SubSaharan countries.

So far, we have focused on increasing foreign direct investment, and we have seen a short-term rebound this year.

However, we also must acknowledge that SA’s share of foreign investment has declined steadily since 2007, according to the AT Kearney foreign direct investment confidence index. We need to get our business fundamentals right if we hope to make a substantial change.

We know what our priorities should be. We should fix our ailing infrastructure so that we are able to progress our development priorities and set ourselves on a growth trajectory. It is as important that we determine effective regulations which allow for appropriate competition and create jobs. We have not properly considered how regulators can play their part in creating a competitive landscape that enables growth and fast-tracks these enablers.

I am arguing against the Independent Communications Authority of SA’s proposal on call termination rates as I believe it would be a serious mistake for the proposal to be adopted in its current form. It is a missed opportunity by the regulator to reduce prices using one of the levers for economic participation and inclusion in SA — not by enabling the largest voice providers to keep their prices high and punishing the smaller, more disruptive players, as is the case.

This is not a regulation that is solely about rates between operators. We must consider the unintended anticompetitive effect that will sustain high data prices for some companies while placing the opportunity to further reduce the digital divide at risk.

Airtime used for voice calls and data consumption is not included in the basket of goods used to calculate consumer inflation, but it has become a necessity for everyone. The poorest 10% of South African households spend 4% of their income on it. In the township economy, airtime receives an additional mark-up from shopkeepers of as much as 5% — meaning that consumers in these areas are charged above the retail rate enjoyed by other South Africans. Yet, despite the higher price, consumers remain willing to pay for it, because they recognise the value of connecting.

But there is an opportunity cost. The higher prices these consumers pay for data and voice mean there is less money for food and transport. How much easier would people’s lives be if job applicants never had to choose between taxi fare or data bundles?

So I am asking regulators, state-owned enterprises and businesses to come together so that we preserve and create jobs.

Our unemployment rate is 27%, but in fact there are some communities where young people have no hope of ever getting work. We cannot afford any more jobless growth.