Be careful what you wish for

Members of Parliament (MPs) recently lambasted the Independent Communications Authority of South Africa (ICASA) for not forcing Vodacom and MTN to reduce their prices.

According to the MPs, the communications regulator’s poor performance means that it allows mobile operators to rip off the poor.

The parliamentarians highlighted that South Africa was ranked 30th out of 46 “as having the most expensive pre-paid mobile tariffs among African countries”.

While most people will agree that mobile prices should be reduced, and that ICASA’s performance can improve, what is seldom talked about is the quality and coverage of local networks versus their international counterparts.

Mobile services: price versus quality

Professor Alison Gillwald’s presentation at the public hearings on the cost to communicate in South Africa benchmarked local mobile prices against other African countries.

Gilwald showed that South Africa (and Vodacom specifically) ranked 24th out of 43 African nation when looking at the cost of cheapest mobile voice and SMS products.

Ghana (with MTN being the dominant player) was the cheapest country, offering a similar basket to Vodacom at 26% of the price.

The cheaper rates look great for Ghana and MTN Ghana, but what was not mentioned by MPs is that their regulator has imposed fines on all the Ghanaian operators for poor service levels.

Various quality standards were not met, including call setup rate, network congestion and dropped calls.

Lower prices may not automatically lead to lower quality levels, but the principle of ‘you get what you pay for’ is applicable in most industries – including the telecoms market.

Coverage and technology

Other aspects which should be kept in mind when comparing mobile prices are the coverage offered by operators, and the technologies used.

Vodacom, MTN and Cell C cover nearly all of South Africa, and these companies have grown their 3G and LTE coverage to between 70% and 90%.

South Africa’s mobile operators are also early adopters of the latest mobile technologies, such as LTE, which benefits consumers.

Ghana’s mobile coverage is not as extensive as South Africa’s, especially when looking at 3G (mobile broadband access).

Operators in Ghana have not yet invested in any LTE deployments, which means that their users do not enjoy faster mobile data speeds associated with the latest technologies.

To achieve good coverage, higher speeds, and better service levels, involves big investments into network infrastructure. This comes at a price, which is obviously passed on to consumers.

Create competition and price cuts will follow

For MPs to ask ICASA to force mobile operators to cut prices may not be the best option. A better way forward is to trust what has worked the world over – competition.

ICASA and the Department of Communications should simply ensure that there is enough competition in the market, and that a fair playing field is created.

Maybe even more important is to provide the mobile operators with the ability to grow their networks, launch new services and improve their network quality.

This includes handing out spectrum, which is currently wasted, and bring about legislative changes to make network deployments faster, easier and cheaper.

To be clear: mobile prices can and should come down. However, this should be achieved without compromising network quality.

More on mobile quality

Mobile operators rip off the poor: MPs

It wasn’t me: Vodacom on Cell C network problems

Cell C network upgrade plans

Best prepaid prices: Vodacom vs Cell C vs MTN vs Telkom Mobile

Latest news

Partner Content

Show comments


Share this article
Be careful what you wish for