SA telecoms pricing: This is how we compare

In 2008 the Department of Communications (DoC) commissioned an international peer benchmarking study which involved detailed comparative reviews of tariffs, usage, access and quality of service in five nominated peer countries.  The five countries, selected for its relevance to the South African market, were Chile, Korea, India, Brazil and Malaysia.

Price benchmarking was done taking variables like purchasing power parity (PPP) – a theory which uses the long-term equilibrium exchange rate of two currencies to equalize their purchasing power (Wikipedia) – into account.

The results of the study, which focused on fixed telephony, mobile telephony and data services, were recently unveiled in Parliament by the new DoC Director General Mamodupi Mohlala.  The results pointed to something which consumers have been complaining about for a long time:  the prices of South Africa’s telecoms services are significantly higher than their international counterparts.

“South Africa is with some notable exceptions a high, and in some instances, very high cost to communicate country in relation to its peer group of countries,” the DoC said.

The results

Telkom’s prepaid and postpaid fixed telephony services were the two most expensive services on fixed local call rates per minute.  Telkom was also the most expensive for a fixed business basket of services. 

South Africa mobile penetration has grown impressively in South Africa.  It has risen from the fourth ranked country among the benchmark nations in 2000 to first in March 2008, and is now the top ranked country in terms of mobile penetration rates.

Mobile usage in South Africa is however low, most likely due to high cellular rates.  Mobile broadband tariffs for high volumes (larger than 2GB) are expensive in South Africa due to the absence of uncapped plans which are available in the other benchmarked countries.

South Africa’s SMS prices are the second highest among the surveyed countries while SMS usage is the fourth highest behind Malaysia, Korea and India. 

South Africa performed particularly poorly when it came to broadband services.

South African Internet tariffs were found to be consistently high and uncapped broadband plans in South Africa were not commonplace.  The level of South African Internet access is relatively low and there is slower growth than in the other countries.

Chile, Korea, India, Brazil and Malaysia all have maximum broadband speeds faster than South Africa.  In South Africa the fastest fixed line broadband service is a 4 Mbps ADSL offering from Telkom, significantly lower than Korea’s 100 Mbps fiber optic/LAN connections and Brazil’s 30 Mbps services.

It was further found that South Africa has the highest price for an international 2 Mbps leased line – twice as much as the next most expensive country.  The country also has ‘very low international bandwidth’ compared to the other benchmarked countries.

The following table gives an overview of some of the findings in the broadband market.

 SA Telecoms pricing – comments and views

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