Data prices are ‘anti-poor’

Findings that SA prices are high and lack transparency are the latest salvo in the war on costly data

The Competition Commission last week confirmed what South Africans have been saying for years: the cost of cellular data is too high. The provisional report from the commission’s data services market inquiry, which has dragged on since August 2017, no doubt contributed to the fall of Vodacom and MTN shares. It says the convoluted pricing structure “lacks transparency” and is “antipoor”. It’s hard to disagree. A look around Sub-saharan Africa shows how cheap data can be — often from the same SA networks operating in our neighbouring countries.

“Consumers of small data bundles, generally being poorer consumers, pay inexplicably more on a per

MB/GB basis,” commissioner Tembinkosi Bonakele says in a statement. “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, [for] a 50MB bundle up to three times more and [for] a 20MB bundle up to four times more.”

Obfuscation has long been a strategy used by the mobile (and other) industries to keep their prices high. Special deals and promotions are often used as examples by networks to show they offer cheap packages — but just as often used by consumer advocates to show how hard it is to work out what the exact pricing is.

“In general, data pricing also lacks transparency, which undermines price competition,” says Bonakele. “Operators prefer to make use of promotions

and free data rather than to drop headline prices ... few consumers know what they really pay per MB.”

The operators are quick to demonstrate decreasing prices, but it’s not the average person’s reality. The Alliance for Affordable Internet says 2-billion people live in countries where 1GB of mobile data is unaffordable. In SA “a seemingly affordable mobile internet connection (priced at 1.48% of ‘average’ monthly income) actually costs the majority ... 6%-19% of their income”.

The commission’s report is blunt: “benchmarking confirms SA prices are high”, it says, citing the International Telecommunications Union, the Independent Communications Authority of SA (Icasa), Tarifica and Research ICT Africa from 2017 — which MTN says is out of date. But it does offer a useful analogy. An Icasa 2017 report says Vodacom charged SA customers $11.06/1GB but only $8 in the DRC and $1.12 in Egypt. MTN’S $11.95 in SA is less than Botswana’s $12.53, but much higher than prices in Nigeria ($3.15), Rwanda ($2.32) and Zambia ($3.41).

But, the commission points out,

“the latest benchmarking data from Research ICT Africa also shows that SA performs unfavourably against other African countries, where its 1GB data price ranks among the more expensive countries in their RAMP index with the gap widening”.

SA consumers will hope these findings will result in a positive response to finance minister Tito Mboweni’s impassioned call during his budget speech that “#Datapricesmustfall”.

Prices in Sub-saharan Africa show how cheap data can be — often from the same SA networks