If the government wants free or subsidised mobile data it should, as with the police service, provide it – or, as with housing, fund construction companies charging full market prices.
This is the view of Free Market Foundation CEO Leon Louw, who said the COVID-19 outbreak highlights the critical need for more spectrum to lower the price of mobile data.
Louw said data is not a “human right” any more than food, clothing, transport, or medicine.
Yet the Competition Commission demands much cheaper or even free services from mobile network operators.
Louw highlighted that no one requires RDP home builders to do it for free or fund subsidies to provide people with free houses.
“Why then should mobile networks be accused of ‘anti-poor’ policies and be bullied into pricing strategies that will curtail essential infrastructure investment and commercial value?” asked Louw.
He argued that the biggest victims of the Commission’s misguided interference will be the poor, who are entirely dependent on network investment.
The government’s own role in keeping data prices high, through its failure to allocate more radio frequency spectrum, is not widely understood.
Data usage has skyrocketed since the COVID-19 crisis, and now a lockdown is in effect. It has reignited misinformed howls of rage that data in South Africa in too expensive, said Louw.
“Mobile networks are struggling to cope with the massive surge in demand yet, unlike in nearly all other competitive sectors, they have not increased data prices,” said Louw.
Instead, they are reducing prices following the Commission’s Data Services Market Inquiry report, released in December 2019.
“There is a loony notion where almost everyone believes whatever nonsense is regurgitated about SA supposedly having abnormally high airtime and data charges,” said Louw.
“This myth does not stand up to objective scrutiny. Pricing of data in SA has unique aspects, but nevertheless prices here, on average, fall into the middle range globally.”
Louw said industry insiders alleges that the Competition Commission got its sums wrong.
“They should release the basis of their analysis, then we can assess the accuracy of their evidence and assessment.”
The solution to reduce data prices is for the government to release more spectrum, something it has failed spectacularly to do. This includes the botched digital migration strategy.
Without more spectrum, MNOs must add billions to their network investment. Their Capex can be significantly reduced through more spectrum.
“Insufficient spectrum prevents prices from falling. The ultimate victims are consumers, especially the poor,” said Louw.
South Africa’s most spectacular success story
Louw said the mobile sector is one of democratic South Africa’s most spectacular success stories. “The Commission is trying to undermine it,” Louw said.
South Africa has world-class networks despite the government’s spectrum throttling. Our national population coverage exceeds 99 percent – higher than some of the world’s wealthiest countries, he added.
Louw said instead of attacking our mobile networks, the Commission and ICASA should implore Communications Minister Stella Ndabeni-Abrahams to get on with her job of releasing wasted spectrum.
“She announced that extra spectrum will be available during the COVID-19 crisis but, absurdly, this may have to be returned when the crisis is over,” said Louw.