Vodacom, MTN must reduce prices by 50% and give users free data

[quovadis]

It is expropriation as the state is taking control of a private company's assets.

And competition hasn't "demonstrably failed".

1) Nothing is stopping people from switching to Telkom.
2) The price has remained mostly the same for the past 6 years, which means it has actually been decreasing because of inflation.

So consumers have choice, they can easily switch to whomever they want and prices across the industry are decreasing. On what planet are you living on where this is a "market failure"?
And just remember, this is inclusive of load shedding (more $), stupid policies around spectrum (more $), more taxation (more $), high amounts of theft (more $).

Maybe if the government sorted out the electricity supply and crime that drives up the cost of running a business, we would see even faster decreases.

Agree to disagree. You're not taking into consideration the following:

• Telkom isn't available in some areas to purchase the bundles / vouchers. In some areas your only option is a voucher which is from the local spaza or guy on the corner and in most cases you can only choose MTN or Vodacom or sometimes only MTN or Vodacom.
• We're not talking about the affordability of 1GB of data but the absolute bottom of the market - the 15MB every few days because that's what is affordable.
• What is the underlying cost consideration to price 15MB differently to 30MB or at the same rate as 500MB even if the expiration is identical?
• Competition has failed because MTN and Vodacom aren't investing the same in infrastructure, don't have the same footprint yet their pricing is almost identical across the board - funny that.
• The spectrum argument affects the overall pricing not the gearing of ratios at the bottom end of the market.
• Load shedding, Taxation, Theft does not affect the ratio at the bottom end.

 

[SaiyanZ]

It is expropriation as the state is taking control of a private company's assets.

And competition hasn't "demonstrably failed".

1) Nothing is stopping people from switching to Telkom.
2) The price has remained mostly the same for the past 6 years, which means it has actually been decreasing because of inflation.

So consumers have choice, they can easily switch to whomever they want and prices across the industry are decreasing. On what planet are you living on where this is a "market failure"?
And just remember, this is inclusive of load shedding (more $), stupid policies around spectrum (more $), more taxation (more $), high amounts of theft (more $).

Maybe if the government sorted out the electricity supply and crime that drives up the cost of running a business, we would see even faster decreases.

Just my 2c. If there is price collusion in a market, you would also get a chart like that with most players having the same price.

These companies also spend a massive amount on marketing. Literally everywhere you go, whilst they also post huge profits and expand business into Africa. We as customers are paying for all this marketing for new customers and expansions instead of just paying for a service.

 

[Bewlen]

I did a quick mental mathematical comparison of the ratio of 10mb of data to 500mb of data and applied the price ratio to the 100g coffee illustrate the point. And no, I was stating that there is a base cost of the tin container (ie. 10 small cans costs more than the equivalent mass of coffee in 1 larger can) which needs to be considered only in the case of coffee, not that the ratio should be linear - something that data does not have to the same extent.

The duopoly has resulted in a price discrimination towards poorer customers.

You are playing around with marginal percentages, while I am trying to argue the core principle. Even so, your argument remains shaky, you still cannot answer this: should the 100g Ricoffy not then be regulated to be the same price per gram, as the 700g? If not, why not?

 

[Stonemason]

You are playing around with marginal percentages, while I am trying to argue the core principle. Even so, your argument remains shaky, you still cannot answer this: should the 100g Ricoffy not then be regulated to be the same price per gram, as the 700g? If not, why not?

Simple, because the packaging costs fror 7 tins of coffee, is considerably more expensive than the cost of a single 750 gram tin.

 

[quovadis]

You are playing around with marginal percentages, while I am trying to argue the core principle. Even so, your argument remains shaky, you still cannot answer this: should the 100g Ricoffy not then be regulated to be the same price per gram, as the 700g? If not, why not?

Because the tin itself costs money or do you think that the 7 small tins costs the same as 1 big tin as well as the associated processing and packaging costs? Data doesn't have a container which is why its more linear?!?!

 

[Swa]

Force free data from 2 providers, all consumers move to these two providers, kills of cellc and Telkom. Mission accomplished.

Sorry the ANC must stay away.

Well you see that's why it's from all providers.

The tin is not close to being 7x more, so cost increase should be even less fhan linear.
Your argument about R30 is purely hypothetical and nonsensical. Also irrelevant.
Whether its 5x data packages, or 5x cans of coffee, the original argument stands. So 7 cans of 100g ricoffy should cost the same as 1 can of 700g ricoffy according to your argument. Sorry, no.
Price controls are a fundamental cornerstone of communism, and should be throroughly rejected.

Funny enough buying 7 of something is sometimes cheaper than buying the large one, even though it theoretically costs more to manufacture.

 

[Bewlen]

Because the tin itself costs money or do you think that the 7 small tins costs the same as 1 big tin as well as the associated processing and packaging costs? Data doesn't have a container which is why its more linear?!?!

Again, you insist on playing around with the percentages. So then let me play your game: at what percentage, would you believe government price controls to be warranted, to the extent that government should implement price controls? It would be great if you could actually put some numbers on it.

 

[Vrotappel]

Well you see that's why it's from all providers.


Funny enough buying 7 of something is sometimes cheaper than buying the large one, even though it theoretically costs more to manufacture.

Then it still ends up killing the smaller players.

 

[quovadis]

Again, you insist on playing around with the percentages. So then let me play your game: at what percentage, would you believe government price controls to be warranted, to the extent that government should implement price controls? It would be great if you could actually put some numbers on it.

You're being obtuse. And for the record - I agree with the competition commission that at the bottom end of the market that 10MB of data should cost the same as 500MB of data on a PER MB price. There is no cost difference between providing 500MB of data or 50x10MB of data over the same period and if there's a marginal cost it's certainly not at 6x the price. Furthermore, if you truly think that anyone can do anything of substance with 500MB of data per month I challenge you to do so. That 500MB will allow you to load the home page of a few websites twice a day and forget twitter, facebook or anything with media. In fact your viewing this thread and replying probably used 2 days allocation.

 

[DreamKing]

You're being obtuse. And for the record - I agree with the competition commission that at the bottom end of the market that 10MB of data should cost the same as 500MB of data on a PER MB price. There is no cost difference between providing 500MB of data or 50x10MB of data over the same period and if there's a marginal cost it's certainly not at 6x the price. Furthermore, if you truly think that anyone can do anything of substance with 500MB of data per month I challenge you to do so. That 500MB will allow you to load the home page of a few websites twice a day and forget twitter, facebook or anything with media. In fact your viewing this thread and replying probably used 2 days allocation.

I can. I use less than 300MB per month.

YOU LOSE!!!

 

[quovadis]

I can. I use less than 300MB per month.

YOU LOSE!!!

You sound like a perfect customer for MTN and Vodacom. Did you buy that at 300mb once off or bit by bit?

 

[Bewlen]

You're being obtuse. And for the record - I agree with the competition commission that at the bottom end of the market that 10MB of data should cost the same as 500MB of data on a PER MB price. There is no cost difference between providing 500MB of data or 50x10MB of data over the same period and if there's a marginal cost it's certainly not at 6x the price. Furthermore, if you truly think that anyone can do anything of substance with 500MB of data per month I challenge you to do so. That 500MB will allow you to load the home page of a few websites twice a day and forget twitter, facebook or anything with media. In fact your viewing this thread and replying probably used 2 days allocation.

Funny that, I thought you were being obtuse.

Aaaaaaaaaaaaaaaanyhoo, it boils down to the fact that you think there is a point where government intervention and regulated price controls are necessary. That percentage for you is x% ("they are charging 550% too much and should not be allowed to do it"). I simply do not believe this to be the case. That percentage to my mind, is 0% ("they are charging 550% too much and I believe the market will force corrections").

It does seem that you believe data to be a human right. I happen to disagree with this. Call me a capitalist. Are you leaning towards socialism, or only in this specific instance?

 

[Swa]

So you are suggesting a "bureau" of sorts, where prices should be approved, or investigated and regulated if deemed "predatory". Negating the free market principles. And that has "nothing to do with communism"?

Fact is, players like Rain and Telkom are disrupting with lower prices, and they have seen huge growth. As the trend continues, it will force prices down if consumers see and exploit the value.

If the competition comm was serious, should they not rather force the release of spectrum?

What we are seeing now, is an experiment in populism. Sounds great to legislate prices down for data. But what if your industry is next? Lower prices legislated for building material? Or groceries? Or cars? Can you imagine the job losses? As the ANC loses grip, this is a great tool to entrench populism, but completely destroy the economy.

Every free market has controls for regulatory intervention where the market has failed. You get cases where large companies will use their dominance to force out smaller ones or buy them out simply to shut them down. But let's not kid ourselves here. Telecoms in not and never has been a free market. Spectrum is a finite resource otherwise I insist on my slice as well to put up an internet tower. There are certain responsibilities that come with that and Vodacom and MTN have neglected to utilise spectrum efficiently for the benefit of their customers.

Actually, not everyone uses the full bundle of data they get with a contract while the small prepaid bundles are usually completely utilised. That makes a very good argument for different prices.

The old breakage argument. One that becomes completely irrelevant if the operators didn't enforce artificial expiration dates.

It is expropriation as the state is taking control of a private company's assets.

And competition hasn't "demonstrably failed".

1) Nothing is stopping people from switching to Telkom.
2) The price has remained mostly the same for the past 6 years, which means it has actually been decreasing because of inflation.

So consumers have choice, they can easily switch to whomever they want and prices across the industry are decreasing. On what planet are you living on where this is a "market failure"?
And just remember, this is inclusive of load shedding (more $), stupid policies around spectrum (more $), more taxation (more $), high amounts of theft (more $).

Maybe if the government sorted out the electricity supply and crime that drives up the cost of running a business, we would see even faster decreases.

I'm getting so tired of that argument. It's the same one Dstv uses to increase prices each year "below" inflation. Telecoms prices in most countries undergo something called deflation. I.e. they are supposed to get even cheaper. You can't use inflation in one industry against pricing in another as inflation is a product of pricing.

Then it still ends up killing the smaller players.

Only if they rely on small data bundles. Really 10MB bundles shouldn't even exist today and if they do they shouldn't cost more per MB than larger bundles.

 

[quovadis]

Funny that, I thought you were being obtuse.

Aaaaaaaaaaaaaaaanyhoo, it boils down to the fact that you think there is a point where government intervention and regulated price controls are necessary. That percentage for you is x% ("they are charging 550% too much and should not be allowed to do it"). I simply do not believe this to be the case. That percentage to my mind, is 0% ("they are charging 550% too much and I believe the market will force corrections").

It does seem that you believe data to be a human right. I happen to disagree with this. Call me a capitalist. Are you leaning towards socialism, or only in this specific instance?

I think you need to familiarise yourself with socialism because it has nothing to do with a regulation within a capitalist society where there is market dominance and price discrimination focused primarily on the bottom end of the market.

 

[konfab]

I'm getting so tired of that argument. It's the same one Dstv uses to increase prices each year "below" inflation. Telecoms prices in most countries undergo something called deflation. I.e. they are supposed to get even cheaper. You can't use inflation in one industry against pricing in another as inflation is a product of pricing.

Well ain't that cute...
BUT ITS WRONG.

Inflation is a product of money supply increases and nothing else.

 

[Johnatan56]

It is expropriation as the state is taking control of a private company's assets.

And competition hasn't "demonstrably failed".

1) Nothing is stopping people from switching to Telkom.
2) The price has remained mostly the same for the past 6 years, which means it has actually been decreasing because of inflation.

So consumers have choice, they can easily switch to whomever they want and prices across the industry are decreasing. On what planet are you living on where this is a "market failure"?
And just remember, this is inclusive of load shedding (more $), stupid policies around spectrum (more $), more taxation (more $), high amounts of theft (more $).

Maybe if the government sorted out the electricity supply and crime that drives up the cost of running a business, we would see even faster decreases.

Your argument 2 is just dumb, cost for providing the service per Mbps has definitely decreased for them above the rate of inflation, it's not like they are never upgrading their networks.

You can definitely show that the market failed if you look at their profits.

I wouldn't have picked Telkom if I lived outside of a major city, I'd go with the more expensive alternative because then I could use it.

I still think the providers should be allowed to charge at different rates for 4G vs 3G connections, as LTE is a lot cheaper for them to implement from a per Mbps /spectrum efficiency standpoint. I understand that it might be difficult as users might not understand the difference, but I think it would work, maybe do somehting like a ratio, so 4:1 for LTE/4G versus 2G or 3G, but that could end up a billing nightmare.

 

[konfab]

Your argument 2 is just dumb, cost for providing the service per Mbps has definitely decreased for them above the rate of inflation, it's not like they are never upgrading their networks.

That is one hell of a claim.
The salaries of their employees increases at around inflation.
Their equipment and capital goods costs also increase at inflation.

Yet the costs to their customer is still the same? You need some major evidence to back up your claim.

You can definitely show that the market failed if you look at their profits.

Why?
Oh right, market failure is when people actually do well. Got ya fam

Please give me a good and solid explanation of what you think a market failure is, with examples.

You want a market failure? I just have to point you towards the electricity and water markets in South Africa.
Eskom tells people that they must not buy any of their product because they cannot satisfy demand.
Municipalities tell people that they must stop buying water because they cannot satisfy demand.

Now apply this type of thinking to MTN and Vodacom.
Have either of these companies ever told their customers they must use less data because their networks cannot handle it? No they do the opposite, they spend millions trying to convince people to buy their products.

 

[Bewlen]

I think you need to familiarise yourself with socialism because it has nothing to do with a regulation within a capitalist society where there is market dominance and price discrimination focused primarily on the bottom end of the market.

Pretty familiar with it, but thanks. Apparently though, price regulation has nothing to do with socialism, no matter what all those studies say. Fancy that.
Oh wait, I see, you put those two qualifiers in there.... yup, that changes everything.

 

[quovadis]

Pretty familiar with it, but thanks. Apparently though, price regulation has nothing to do with socialism, no matter what all those studies say. Fancy that.
Oh wait, I see, you put those two qualifiers in there.... yup, that changes everything.

You're the only person who's drawing a comparison equating socialism and regulation in this case.

 

[Swa]

Well ain't that cute...
BUT ITS WRONG.

Inflation is a product of money supply increases and nothing else.

And the criteria is the increase in prices of goods. You can't use prices increasing in one sector to say prices in another underwent a price decrease because they form part of the measurement themselves. Iow they are the very thing you are measuring. It is not some external measurement you can then apply to them.

That is one hell of a claim.
The salaries of their employees increases at around inflation.
Their equipment and capital goods costs also increase at inflation.

Sauce for this please. Equipment costs usually go down over time.