Data prices in South Africa are a hot topic as many users have implored mobile networks to decrease data costs.
While more affordable data is a great idea, mobile networks have also made good points outlining why they are currently unable to provide the significant data cost cuts customers are asking for, and have also provided feedback on what measures could be taken that would allow them to enact such significant price cuts.
Central to the conversation has been the #DataMustFall movement, which brought the data price discussion into the limelight.
This is how the #DataMustFall movement started, as well as the resulting discussions relating to data price cuts.
Tbo Touch, the CEO of TouchCentral FM, gave mobile networks 30 days to reduce their data prices.
“All Networks have 30 days to make a change! We will all move our subscription to the network that cares about its customers #datamustfall,” said Tbo Touch on Twitter.
Touch also said he was going to meet with ICASA to discuss the price of mobile data.
Thousands of South Africans joined his campaign, seeking cheaper data prices.
The Right2Know campaign also supported the movement, saying the high price of data and airtime was hurting the right of South Africans to communicate.
“Too many ordinary South Africans are deprived of their right to receive and impart information because of rip-off airtime and data costs,” said Right2Know.
It suggested the following:
- ICASA must become more independent and rein in telecoms companies.
- Digital spectrum must be used for the public interest, including the delivery of free public Wi-Fi.
- Greater community participation in governance and management in telecoms infrastructure.
- South Africans must rally and mobilise for their right to communicate.
It was noted that Vodacom, for example, had not reduced its data prices since April 2013.
MTN, however, claimed its data prices had decreased by 73% in the previous 5 years.
Vodacom CEO Shameel Joosub said that the authorities criticising data prices weren’t taking promotional offers into account when comparing pricing to international prices.
“We’re selling 243 million-odd bundles through promotions just on data. 696 million bundles in total,” said Joosub.
“If you don’t take bundles or promotions into account, how can you come up with a proper understanding of what the data rates are?”
EE Publishers highlighted that comparisons between South Africa’s data prices, and prices in countries like Nigeria and India, were unfair.
In Nigeria, the article highlighted, 4G coverage was limited to the centre of three major urban areas, and prices were also misleading because the Nigerian currency had almost halved relative to the rand throughout the course of the previous year.
India also had limited 4G coverage which was almost exclusively available in the centres of large urban areas.
The report also highlighted that Nigeria and India both have very high population densities – meaning it is easier to reach more people in smaller areas.
This drives down costs, making it easier to offer lower prices.
The article also highlighted that the movement had also overlooked that there were many countries with similar or higher data costs than South Africa – including the UK and France.
Acting ICASA chairperson Rubben Mohlaloga said ICASA would look into regulating data prices in South Africa.
ICASA would take guidance from SADC regulations, said Mohlaloga.
“Our main goal is to ensure that all South Africans receive good quality communications services at affordable prices,” said Mohlaloga.
Mohlaloga also said the licensing of spectrum could play a key role in introducing competition to the market, which would help drive the roll-out of affordable broadband services.
Joosub said the effective price for mobile data on the Vodacom network had declined by 18.9% in the quarter ending June 2017.
“There is more work to be done on this front, and we will be introducing additional measures this year to give greater control to customers by improving our out-of-bundle pricing,” said Joosub.
Vodacom said it had introduced new initiatives to lower the out-of-bundle data spent by customers.
“Together with our successful data pricing strategy of making data more affordable, this has resulted in a 56.1% increase in data bundle sales,” Joosub said.
ISPA, meanwhile, said bringing down the price of mobile data did not appear to be a priority of ICASA.
It said the regulator was stalling by publishing a process to determine which areas to focus on.
“The priority market for intervention is obvious and there is no need to waste more time,” said Dominic Cull, ISPA’s regulatory advisor.
The Competition Commission announced it would conduct an investigation into data services in South Africa.
This followed then-Telecommunications Minister Siyabonga Cwele suggesting high data prices may need to be referred to the Commission.
“The purpose of the inquiry is to understand what factors or features of the markets and value chain may cause or lead to high prices for data services, and to make recommendations that would result in lower prices for data services,” it said.
The Commission said its assessment would include:
- Market structure.
- The adequacy and impact of the regulatory regime.
- Strategic behaviour by large fixed and mobile incumbents.
- Costs faced and profits earned by fixed and mobile network operators.
- Current arrangements for sharing of network infrastructure.
- Investment in infrastructure by operators and access to spectrum.
- The adequacy of regulation to promote new South African entrants, particularly historically-disadvantaged individuals.
- The Commission will also benchmark South African data services pricing against those of other countries and will establish whether data supply quality and coverage is adequate by international standards.
The goal was to make recommendations on the following:
- Recommendations to the government as to how the market could be made more competitive and inclusive, and how data prices can be brought down.
- Recommendations to the sector regulator on the competitive impact of the regulatory framework, and any need for amendments.
The inquiry was slated to begin on 18 September.
MTN said it planned on reducing its out-of-bundle data prices as it sought to improve data bundle purchase rates and the revenue received from these bundles.
“We have been reducing these rates basically across the whole portfolio,” MTN CEO Rob Shuter said.
“We would rather people think about it as the pay-as-you-go rate rather than the out-of-bundle rate.”
MTN South Africa CEO Godfrey Motsa said the changes were particularly aimed at lower-income customers.
“We look at a certain segment which we call the vulnerable customers, and we reduce the OOB rate to 29c per MB for these users,” said Motsa.
“Once they reach a certain data usage threshold, this price moves up to 60c.”
MTN announced out-of-bundle data rate cuts of up to 75%.
Customers who did not make use of data bundles would pay R0.29 per MB of data usage, while those who purchase bundles would pay R0.49 once these bundles expired.
MTN also said it would double the value of selected prepaid voice and data bundles for the next two months.
The Competition Commission released a provisional report which set new rules for mobile networks – including the pricing of data.
“An assessment of headline retail prices of all mobile operators demonstrates that consumers of small data bundles, generally being poorer customers, pay inexplicably more on a per MB/GB basis.”
“Relative to a 1GB bundle, a consumer buying a 100MB bundle will pay roughly twice the price on a per bundle basis for the same data period validity.”
The Commission proposed the following:
- Networks should introduce immediate relief on data pricing.
- Networks should reduce the price of sub-1GB bundles to “a maximum of 25% higher on a per MB basis”
- Improved affordability and enhancing competition should be central to the assignment of spectrum
Vodacom said it would review the provisional data price report published by the Competition Commission.
It confirmed it would meet the 14 June deadline for making further submissions and comments on the report’s recommendations.
Vodacom said the data used by the report was out of date, as it was based on data prices from 2016 and 2017 – which affected the conclusions of the report.
“The information used … doesn’t take into account hourly, daily, weekly and fortnightly bundles, which is 80% of our volume sales in pre-paid offerings,” added Vodacom.
Vodacom said it needed spectrum, and the lack of spectrum allocated had significantly reduced the pace of data price decreases.
In contrast, said Vodacom, the other countries used in the report already have licensed 4G spectrum – impacting their ability to lower their data prices.
In his state of the nation address, President Cyril Ramaphosa promised to reduce mobile data prices.
“Wherever we have gone, young people have continuously raised the issue of the excessively high data costs in South Africa,” said Ramaphosa.
“To provide impetus to this process, within the next month, the Minister of Communications will issue the policy direction to ICASA to commence the spectrum licensing process.”
“This is a vital part of bringing down the costs of data, which is essential both for economic development and for unleashing opportunities for young people,” he said.
Ramaphosa also asked the telecommunications industry to help bring down the cost of data to bring it in line with other countries.
Following Ramaphosa’s statements, Vodacom told MyBroadband that it was continuing to push for the licensing of spectrum.
“Vodacom recognises the need for affordable data prices and continues to appeal to policymakers and the regulator to license 4G and 5G spectrum to drive down the costs of producing a gigabyte of data,” the mobile operator said.
“A key factor curbing the pace at which data prices could have fallen in South Africa is the fact that there have been lengthy delays in completing the digital migration.”
However, it highlighted that there are several factors even within the spectrum allocation process which could actually hurt data prices.
“Acquiring spectrum with a condition, for example, that requires us to build a network that delivers 4G connectivity to 100% of the population with download speeds above 100mbps would require a staggering investment in the network.”
This investment could result in higher data prices, it warned.
However, it said, it was and would continue to be committed to slashing data prices.
“Vodacom has reduced effective data prices by 57% in the past three years and remains committed to providing even greater value to customers.”
The Competition Commission published a report based on its Data Service Market Inquiry.
The report said there was “scope for price reductions in the region of 30% to 50%.”
It also said that all mobile operators must offer South Africans on prepaid packages “a lifetime package of daily free data.”
It said that this would ensure all citizens have access to data regardless of income levels.
December 2019 – Networks respond
MTN said it disagreed with the analysis and recommendations in the summary report.
“As we study the full report, we will continue to engage constructively and vigorously defend against overbroad and intrusive recommendations,” said MTN.
Vodacom said it was immediately evident that the Competition Commission and ICASA had a difference in opinion on several issues relating to data prices.
It highlighted the effect that delayed spectrum allocation has had on data price cuts.
“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.”
Telkom said it agreed with the report’s claims that Vodacom and MTN dominate the South African market.
“Telkom is pleased that the data market enquiry has affirmed the view that the South African market is a duopoly with no effective competition,” Telkom said.
“The Competition Commission must interrogate the structure of the market and review all the components that give effect to current data prices,” the company added.
Cell C said it welcomed efforts to bring down the cost of data.
“An industry that promotes sustainable investment, effective competition and affordable services to consumers is a win for all,” said Cell C.
“Cell C recognises that lower data costs are a catalyst for economic growth and therefore welcomes steps taken to bring down the cost of data.”
The Competition Commission extended the deadline for its data recommendations as it was still in “productive” discussions with Vodacom and MTN regarding these changes.
The deadline was extended until March 2020 to allow sufficient times for the talks to be concluded.
The Commission said the talks were at an “advanced stage.”
Vodacom announced it had cut is 30-day data bundles in alignment with the Competition Commission’s findings, which resulted in prices up to 40% cheaper than before.
A 1GB data bundle now costs R99, while a 50MB bundle decreased from R20 to R12.
MTN also announced that it had reduced the prices of its monthly data bundles in accordance with the Competition Commission’s findings.
Price reductions were between 25% to 50% and meant that MTN would charge no more than R99 per GB.
Both MTN and Vodacom committed to offering free data to access essential services through zero-rated platforms and initiatives.
Cell C also agreed to offer a lifeline package and access to zero-rated access to essential content.
Data prices – 2017 to 2020
While data prices have decreased since the #DataMustFall movement started, the lack of spectrum allocation has meant that prices haven’t come close to being halved – which Joosub said was possible with new spectrum.
Data prices of MTN and Vodacom in 2017 and 2020 are compared below.
|Data prices – 2017 vs 2020 (Bundle rates)|
|MTN – 2017||MTN – 2020||Vodacom – 2017||Vodacom – 2020|
|50MB||R25 (62.5MB)||R20 (100MB)||R12 (30MB)||R12|
|150MB||R35 (125MB)||R29||R29 (100MB)||R29|
|300MB||R85 (375MB)||R60 (350MB)||R59 (250MB)||R55 (325MB)|