From data must fall to data for all
Commission orders Vodacom and MTN to lower their prices and provide daily, free ‘lifeline’ data
The “data must fall” campaign has, for some years now, focused on exorbitant data costs. The Competition Commission showed this week that the complaints and hash tags did not fall on deaf ears when it ruled that data prices have to be slashed by up to 50% and that a limited amount of free data should be available for all.
The competition watchdog ruled that South Africa’s dominant mobile operators, Vodacom and MTN — which control about 70% of South Africa’s cellular services industry — must lower their data prices by 30% to 50% within two months.
It also ordered that prepaid users receive daily free “lifeline” data to ensure all citizens have data access, regardless of income levels. This must be implemented within the next three months. The commission did not specify how much free data should be made available, but said it should be sufficient to ensure each citizen’s participation in the online economy and society.
The watchdog said it would engage industry and relevant experts in determining the appropriate amount of daily lifeline data. The discussion will take into account both the objective requirements for citizens to have basic access and the cost of provision to operators.
It said an industrywide approach to zero rating of content supplied by public benefit organisations, such as nonprofit organisations and educational institutions, should be implemented within the same time period. Users would be able to access this content at zero data cost.
The commission said the list of zero-rated sites should start from such sites that cellular-network operators offer already, but “that the process should seek to establish clear principles and criteria to be applied as well as an application process for those institutions that seek zero-rating”.
Vodacom has zero-rated sites in its Vodacom e-school, an online education portal that provides educational content for learners in grades R to 12 and Vodacom NXT LVL Careers, which is aimed at young job-seekers, enabling them to browse for jobs and upload CVS for free.
MTN also has educational content that is zero-rated.
Arthur Goldstuck of World Wide Worx, an independent technology research and strategy organisation, said the ruling went to the heart of the matter, which is that data prices are “anti-poor”.
He said the competition watchdog’s recommendation that all cellular-service operators provide free data is a “fascinating ruling” because for the first time there is implicit recognition that “the providers of smartphones and the services that run on them have a responsibility to enable the use of those devices.
“If they are selling a device that needs data simply for it to function, they have a duty to provide at least the basic level of data that the devices need,” Goldstuck said.
“Simply maintaining the Playstore app on Android phones, and keeping basic apps updated, uses a level of data that is not affordable for up to a third of smartphone users.”
Goldstuck said data is increasingly becoming an essential service “not far behind water and electricity, as it represents access to the tools to participate in the modern economy. As such, this finding is of critical importance in the way it positions data pricing”.
But Steven Ambrose of Strategy Worx, a business technology consultancy, disagreed with free lifeline data because people will use it up and want more. “The way the system works, is you use it [data] up and then you need more. It’s not like something like airtime that you can store.”
Ambrose said the only way the public can benefit from technology is to be connected all the time by constantly having data. It doesn’t make sense to give people an emergency [lifeline] of data practically and makes zero sense, he said.
He said the “hustle” is that giving away this data might not sound like a big deal, but the majority of people in the country are prepaid users and many of them will receive free data and that will be a huge cost to service providers. “It doesn’t matter how you do the maths, the cost is in the billions of rands. The networks must give away billions of more rands after halving their data prices, which is 50% of their revenue.”
Telecommunication giants MTN and Vodacom said they are hamstrung by high infrastructure costs and a lack of new spectrum. This refers to the radio frequencies allocated to the cellular-services industry and other sectors for communication over the airwaves.
“Radio spectrum is the digital highway on which we depend to carry increasing mobile data at a more cost-effective prices. This is acutely felt in South Africa that has among the lowest spectrum allocation in all our MTN markets,” said MTN in a Sens announcement on Wednesday.
“The release of new spectrum in this market will greatly assist our ability to service more customers with more data traffic,” added MTN.
The company reiterated that it has substantially reduced the effective price of data in South Africa, and invested “heavily” in its network to accommodate growing data demand with limited spectrum availability.
Vodacom said the delayed spectrum allocation has affected the rate at which data prices could fall. It said it has reduced the effective price of data 50% since March 2016.
Goldstuck agreed with the network provider that the commission’s findings underestimate the effect of spectrum limitations. For more than a decade the country has been held back through failure to license spectrum, and operators have been able to roll out 4G (fourth-generation mobile data technology) only thanks to the expensive “refarming” of spectrum intended for 3G, he said.
The Competition Commission needs to give and take, but is only taking, said Goldstuck. Operators have invested tens of billions of rands in infrastructure for widespread access, yet are having to stand in line for spectrum licences that have yet to be created.
The commission noted the delay of the release of spectrum and it called for the urgent licensing of new spectrum.
Tshegofatso Mathe is an Adamela Trust business reporter at the M&G