Interfering with mobile data prices is a bad idea – Vodacom

Vodacom has cautioned the Independent Communications Authority of South Africa (ICASA) against intervening with mobile data prices, adding that the authority should adopt a “wait and see” approach to competition.

The operator took issue with a number of statements made by ICASA in its Discussion Document on the Mobile Mobile Broadband Services Inquiry, particularly those regarding the need to regulate “market failure”.

Speaking at the public hearings on the inquiry, Vodacom said that it agreed with ICASA’s view that mobile data services in South Africa should be affordable, of high quality, and widely available.

However, Vodacom said the discussion document does not account for other processes taking place simultaneously, such as the spectrum ITA, WOAN launch, and Competition Commission ruling.

The mobile operator said one of the key gaps in ICASA’s findings was related to its finding of a possible market failure in terms of mobile data prices.

“ICASA does not clearly identify the market failure it is trying to solve,” Vodacom said, adding that the only evidence ICASA provides of potential market failure is in its price benchmarking.

This is found in its comparison with mobile data prices in China, which it says outperforms South Africa on both price and quality.

“This is not a market failure – concluding that a market is failing if prices are higher than in China would leave very few markets in the world that are not ‘failing’,” Vodacom said.

Vodacom added that itself and many other operators had already committed to reducing mobile data prices as part of a settlement with the Competition Commission.

“As a result of the Competition Commission Inquiry, Vodacom has accelerated its pricing transformation, reducing the prices of 30-day bundles, improving personalised offers, and extending reach,” the operator said.

Vodacom added that these changes generated annual customer savings of R2.7 billion.

Spectrum to have a major effect

A key component of Vodacom’s argument revolved around the spectrum ITA, which is expected to have a major effect on the price of mobile data locally.

“ICASA should not impose further remedies without considering the impact on the market of the spectrum assignment,” it said.

“We would caution the authority to adopt a ‘wait and see’ approach – have the ITA or WOAN run its course before rushing to interventions.”

The mobile operator noted that a market review is a forward-looking process and must take account of other overlapping processes that are impacting the market.

With regards to the spectrum ITA, Vodacom demonstrated the effect that the temporary additional spectrum provided to networks as a result of the COVID-19 pandemic, showing how its network had been able to handle a significant increase in data traffic and provide much better service under normal conditions.

This graph is detailed below.

Vodacom ICASA slide 1

Now read: The South African mobile operator with the happiest customers revealed

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Interfering with mobile data prices is a bad idea – Vodacom