Vodacom and the Competition Commission have announced that they have reached an agreement regarding the Data Service Market Inquiry which will result in the mobile operator dropping monthly mobile data prices by over 30% across all monthly data bundles for contract and prepaid customers.
Speaking at a media briefing in Pretoria, Competition Commission commissioner Tembinkosi Bonakele said that the agreement is subject to confirmation by the Competition Tribunal and certain conditions are confidential to protect competition in the market.
“The Commission is delighted to announce that it has reached a significant agreement with Vodacom to reduce the cost of data and promote digital inclusion,” Bonakele said.
As part of this agreement, Vodacom has agreed to drop its monthly data prices across the board by up to 40% over a two-year period.
“On price reductions, Vodacom has agreed to a multi-year substantial reduction of monthly data bundles across the board,” he said.
“Effective from 1 April 2020, prices will come down by over 30% across all channels. For example, the key 1GB monthly bundle will drop from R149 to no more than R99 per GB.”
This represents a 34% price decrease, which will be followed by a further price decrease on the same date next year.
“Customers who buy the lowest volumes of data, which are typically the poorest customers, will see the greatest benefit of these price decreases,” Bonakele said.
These price changes will be phased in over two months from 1 April 2020.
The company also agreed to extend personal discounts to indigent customers in 2,000 areas where most of the population have income levels below the upper-bound food poverty line.
Free SMSs and zero-rated services
Bonakele announced that Vodacom would offer two free SMSs daily to prepaid customers who had at least one activity that generated revenue during the previous thirty-day period.
Vodacom will also launch its ConnectU service to offer zero-rated services to all customers. These will include a zero-rated search function powered by Wikipedia which will allow customers to search for any topic online.
Additionally, Vodacom will allow customers to view and apply for job opportunities at no charge on seven zero-rated portals through its ConnectU platform.
“To provide a free basic means for communication, Vodacom has undertaken to provide customers with free access to Facebook Flex,” Bonakele said.
“Consumers can also access local and international news headlines, trends, as well as weather free of charge.”
Improved transparency for mobile data pricing
To improve the transparency of its offerings, Vodacom said that it would include information on savings consumers can take advantage of when buying promotional offers, and it would make it easier for consumers to find these offers.
Vodacom will also display the cents-per-MB figure for all data bundles through its various channels, which will allow customers to more easily compare the value offered across different packages.
Prepaid customers will also be able to access detailed information on their historic purchases and data consumption.
Spectrum sorely needed
Speaking at the Competition Commission media briefing, Vodacom CEO Shameel Joosub said that data prices would be decreased again on 1 April 2021, resulting in a total data price decrease of around 40%.
“Following the release of the Data Service Market Inquiry report, Vodacom decided that instead of fighting with the Commission, it would engage constructively with the issues raised in the report,” Joosub said.
He added that while this price drop is in line with the Vodacom Group contract with its stakeholders and its aim to improve mobile data accessibility, the lack of available spectrum remains a serious challenge for mobile operators in South Africa.
Joosub said that Vodacom hopes for high-demand spectrum to be allocated this year to aid mobile operators in improving network quality and reducing data prices.
“We make this move proactively in the hope that spectrum will be allocated this year,” he said.
“The spectrum delays do not affect the agreements that have been made. The trust factor for Vodacom is ‘drop the prices and spectrum will come’.”
Data Service Market Inquiry
The Competition Commission published its final report on its Data Service Market Inquiry in December 2019, which called for MTN and Vodacom to drop their data prices.
“The preliminary evidence suggests that there is scope for price reductions in the region of 30% to 50%,” the report stated.
It added that Vodacom and MTN must independently reach an agreement with the Commission within two months on a reduction in the headline prices of all sub-500MB 30-day prepaid data bundles to reflect the same cost per MB as the 500MB 30-day bundle or cost-based differences where such cost differences have been quantified.
The Commission also instructed Vodacom and MTN to cease their employment of “partitioning strategies that contribute to anti-poor pricing and inferior service outcomes”.
“Given their collective market position, adjustments to their prices should impact on market-wide pricing,” the Commission said.
The Competition Commission’s report also found that all mobile operators must offer South Africans on prepaid packages a “lifeline package” of free daily data.
Response and deadline extension
MTN and Vodacom’s immediate reaction to the publication of the Competition Commission’s was disagreement with the Commission’s assessment of South Africa’s mobile market.
“We respectfully disagree with the analysis and recommendations contained in the summary report and, as we study the full report, will continue to engage constructively and vigorously defend against over-broad and intrusive recommendations,” MTN said after the publication fo the report.
Vodacom also said that there was a “significant difference in opinion” between the Commission and ICASA on the state of mobile data pricing in South Africa.
“Vodacom notes the release by the Competition Commission of its Data Services Market Inquiry Final report earlier today and ICASA’s discussion document on the Market Inquiry into mobile broadband services in South Africa published on Friday,” the mobile operator said.
“While Vodacom is currently reviewing the two documents in greater detail, it is immediately evident that there is a significant difference in opinion between the Competition Commission and ICASA on a number of issues that are critical to data prices in South Africa.”
Vodacom said the Commission downplayed the role of spectrum in reducing data prices, while ICASA is aware of its role in achieving cheap and high-quality mobile broadband.
“Vodacom has consistently stated that delayed spectrum allocation has impacted the rate at which data prices could have fallen,” the network told MyBroadband. “Vodacom has reduced the effective price of data by circa 50% since March 2016.”
ICASA stated that South Africa’s data prices are neither extremely high or very low relative to other countries similar in size and level of development.
In February 2020, the Competition Commission extended the deadline for its recommendations to March 2020 and was engaged in discussions with both Vodacom and MTN about the proposed changes.
While Vodacom has now reached an agreement with the Commission regarding mobile data prices, MTN has yet to announce whether it has settled with the commission on the findings of its report.
“We are talking to all of the other operators and are quite advanced in reaching agreements with both MTN and Telkom,” Bonakele said,
“I am hopeful that we will conclude those soon.”