Mobile prices in SA – be careful what you ask for

Most people agree that lower telecoms prices are sorely needed to benefit South Africa and support the country’s struggling economy. However, campaigning for free services and trying to force new business models on the mobile operators is irresponsible.

The Right2Know campaign and other groups are calling for everyone to get a basic amount of airtime for free and to regulate prices to stop profiteering from the mobile operators.

These parties are also demanding that cellphone companies improve the quality of service, including “network outages, dropped calls, calls that don’t connect, and data coverage”.

This call forms part of the belief that everyone in South Africa has a right to communication services that are freely available and affordable.

The utopian dream of free, high quality telecoms services may resonate with many South Africans, but it is not dissimilar to calls for the nationalisation of mines and the expropriation of land without compensation.

Great success of mobile communications in South Africa

In “The Big Debate” on eNCA, most commentators accused the mobile operators of profiteering, ripping off the public, and unreasonable pre-paid prices.

What these campaigners failed to mention is that the only reason the poorest people in South Africa have communication services at all is because of Vodacom, MTN, and Cell C.

In fact, a mobile phone is often the only communication device many poor people own. This is thanks to the mobile operators subsidizing both the device and the SIM card.

While it may be a hard pill to swallow, the only reason the poorest people in SA have access to any communications services is thanks to shareholders in the mobile operators and their desire for profits.

The failure of government projects and interference

Compare the success of South Africa’s mobile operators to government backed initiatives to connect the poor – Telkom’s forced roll-out of fixed lines in rural areas, Sentech deploying a national wireless network, and the under-serviced area licences (USALs) projects.

What do all of these projects have in common? They are all government initiated and they all failed miserably.

Do people really want government and the Department of Communications (DoC) to interfere in the operations of the mobile operators to help rural communities?

Let’s not forget that this government, under the guise of helping South Africans, gave Telkom a decade long monopoly, tried to block Seacom and EASSy from landing in SA, and battled in court to stop operators from rolling out their own networks.

Instead of attacking the only companies which successfully brought telecoms services to all South Africans, the activists’ energy may be better spent asking government why its “affordable telecoms projects” failed.

Lower prices and better services always needed

Does this mean that we should stop fighting for lower telecoms prices and better services? Hell no!

Affordable, world class telecoms services – especially broadband – are needed to ensure economic growth and increase South Africa’s competitiveness globally.

Local operators should be encouraged to roll out the latest network technologies, improve services levels, become more efficient and lower their prices in line with international standards.

The best way to achieve this is competition, and this is where government’s focus should be – creating a business friendly environment which encourages investment which in turn will result in a vibrant economy.

Connecting South Africans
Connecting South Africans

ENCA The Big Debate: the right to communicate

Some of the statements made on ENCA’s The Big Debate on the “right to communicate” require some feedback.

Statement from Right2Know – There are countries with far smaller customer bases in the region that are doing far more in terms of rolling out sophisticated infrastructure. Namibia and Mauritius are far ahead of us in rolling out 4G, LTE networks. Poorer countries are doing better in terms of infrastructure rollouts.

South Africa has world class mobile networks, with Vodacom and MTN pumping billions of rands into their networks each year to keep up with global technology standards.

The reason that local LTE deployments have been sluggish is definitely not the fault of Vodacom or MTN. Quite the opposite.

The two largest mobile operators have already rolled out LTE ready networks, and the only thing holding them back from switching on these services is a lack of spectrum.

The Department of Communications and the regulator ICASA are to blame for the continued delay in handing out spectrum. So to criticize Vodacom and MTN for sluggish LTE deployments is simply wrong.

Statement from Right2Know – There are people who use their food money to buy airtime. People will go hungry for airtime. The rational is that the airtime may get me a job, for instance. These are the kinds of hard trade-offs that people have to make in their lives for the right to communicate. This is unjustifiable.

Poverty is a sad reality in South Africa, and all parts of society should work together to fight it. However, the fact that poor people cannot afford mobile products and services is not the fault of the mobile operators.

The poorest people can also not afford computers, high-end smartphones, tablet PCs, or a meal in a good restaurant.

The way to help poor people afford products and services is not to make it free – it is to ensure that they have stable jobs and a steady income. This is how any economy works.

Unfortunately government’s anti-business policies and the unions’ continued battle with industry are hurting job creation. This is, curiously, also done under the guise of helping poor South Africans.

To now call on government to also employ anti-business policies against the mobile operators is misguided, and can even result in the mobile operators cutting back on network investments in poor areas.

Rolling out a national telecoms network is very expensive. Tens of billions of rands are needed to create good coverage and stable networks, with billion of rands more to upgrade and operate these networks.

The only reason that the mobile operators are willing to build networks in rural and poor areas is because there is a business model to support it.

Removing the financial incentive for mobile operators to build or upgrade networks in rural areas will simply mean that the network investment in these areas will stop.

Campaigning for free services and regulated prices may therefore achieve exactly the opposite of what the campaigners are fighting for. It may eradicate the incentive to build networks in under-serviced or poor areas, which in turn will result in declining service levels.

We already know that government’s strategy to force Telkom to invest in rural areas without a business case failed miserably. There is really no need to do this experiment again.

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Mobile prices in SA – be careful what you ask for