Telecoms14.01.2025

Plans to lower data prices in South Africa

Communications minister Solly Malatsi plans to introduce policy directives in 2025 to lower data prices by encouraging increased competition through international investment, such as Starlink, in the telecoms sector, Business Day reports.

Malatsi’s spokesperson, Kwena Moloto, told the publication that the country’s high data prices prevent many South Africans from accessing critical services and economic opportunities.

Malatsi previously spoke about the issue at the inaugural AfricaCom Ministerial Summit.

“We have to find policy interventions to bring relief and to get poor people, mostly in rural areas, to become active in the digital world,” he said.

The minister said he believes that by connecting people, they are provided with better business opportunities as the future of livelihoods on the African continent lies in entrepreneurship.

Moloto said the Department of Communications and Digital Technologies (DCDT) hopes to create a more dynamic market conducive to increased competition, improved services, more accessible prices, and greater Internet access.

He said the minister aims to release a policy directive for public comment soon, with the intention of finalising it by midyear.

The policy directive will include regulatory reforms aimed at equity ownership requirements, which Moloto says have previously been a barrier for investors.

Introducing equity equivalence programmes will allow international companies to more easily invest in South Africa’s telecoms market while ensuring that these investments benefit South Africans.

Equity equivalence programmes involve foreign companies investing in local infrastructure, skills development, and enterprise support, thus positively contributing to South Africa’s economic empowerment goals.

MyBroadband learned in November 2024 that Malatsi was in talks with the Independent Communications Authority of South Africa (Icasa) to encourage the creation of an equity equivalent programme for multinational telecommunications companies.

One point of criticism directed at the department believed to be preventing a more competitive market is the failure to unlock new spectrum.

However, Moloto said more must be done to lower data prices than merely unlocking new spectrum. He said that barriers to entry need to be lowered to encourage new entrants into the market.

Moloto said that one particular entrant that can increase competition is global satellite Internet provider Starlink.

Starlink, owned by Elon Musk, uses low-earth orbiting (LEO) satellite technology to provide Internet connections in even the most remote areas. So far, the service is available in 16 African countries.

However, regulatory issues are believed to have made Starlink reluctant to launch in South Africa.

Starlink’s reluctance to launch in South Africa

South Africa was previously one of the first countries on Starlink’s list of planned rollouts, with pre-orders for the service launching locally in February 2021.

However, in March 2021, Icasa issued new regulations that changed ownership equity laws for telecommunications companies in South Africa.

These new regulations stipulated that it was no longer sufficient for national network operators and service providers to be 30% owned by historically disadvantaged groups, which include black people, youth, women, and people with disabilities.

Instead, telecommunications providers with a national footprint had to be 30% black-owned.

Therefore, the old ownership equity requirements remain in effect, but the cloud of regulations that could change at the drop of a hat has hung over the industry for three and a half years.

In April 2021, Icasa told MyBroadband that Starlink must comply with the black ownership requirement.

Six months after the regulations were published, around November 2021, Starlink pushed back its planned launch in South Africa to 2023.

Nearly a year later, in September 2022, it was changed to “unknown’, where it has remained until today.

Although SpaceX never confirmed that this regulatory change and the uncertainty around it caused it to halt its South African plans, well-placed industry sources have said they were the reason Starlink deprioritised the country.

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