The Competition Commission of South Africa has presented the findings in its Data Services Market Inquiry and found – to the surprise of nobody – that the cost of data in South Africa is too high.
The Commission found that the local market is highly concentrated and a duopoly consisting of MTN and Vodacom has emerged. The pair of network operators are the largest in the country and as such competition has been left to wane, according to the Competition Commission.
“The main conclusions from the report confirm the basic thrust of the results previously released. As I went through the executive summary it was clear that the finding of the Commission is we have a competition problem in this market for data services. Prices are higher than they should be and higher than in any other markets in the world,” minister of trade and industry, Ebrahim Patel said at a media event this afternoon.
In order to address these issues, the Competition Commission has suggested a number of interventions take place with a view to not only encouraging healthy competition, but also bringing affordable internet access to more folks.
The most important of these interventions is that Vodacom and MTN must immediately and substantially reduce the pricing of prepaid bundles. The Commission found that prepaid connectivity is often more expensive than post-paid connectivity. This, the Commission said in April, reflects a bias against the poor.
As to the level of that pricing reduction, the Commission has suggested the scope falls in the region of 30 – 50 percent. Vodacom and MTN will need to reach agreements with the Commission independently.
In addition to Vodacom and MTN, all mobile network operators in South Africa may soon have to provide a “lifeline package of daily free data”. Depending on what that package is, we’re always thankful for free data and we’re sure most South Africans will be.
The industry as a whole has three months to act on these interventions, with Vodacom and MTN only being given two months to adjust pricing.
This is good news for consumers but we can’t help but feel that Vodacom and MTN will oppose the findings made by the Commission.
Government will now work on implementing the findings made by the Competition Commission and we should see that coming to fruition within the next six months.
[Image – CC 0 Pixabay]