Picture: ISTOCK
Picture: ISTOCK

The Competition Commission will investigate data costs in the country that are among the highest in the world, inhibiting the growth of the telecommunications sector.

The establishment of a market inquiry into the state of competition in the data market and the inquiry’s terms of reference would be announced by September 1, Economic Development Minister Ebrahim Patel said on Thursday.

Patel has urged data suppliers not to await the inquiry’s outcome but to reduce data costs on their own accord as soon as possible. The sector is dominated by major players such as Vodacom and MTN.

The commission called for an investigation into competition in the cellphone data and voice market in April saying it could further stimulate competition and level the playing field for small operators. It made the comment after deciding not to proceed with a Cell C complaint against MTN and Vodacom that their price differentials for calls to the same network compared with those to different networks prevented competition.

The Independent Communications Authority of SA is also studying internet data services and pricing that it will use to regulate the market. Finalising it is likely to take two to three years.

Patel said in a written reply to a parliamentary question by the DA’s economic development spokesman, Michael Cardo, that much evidence suggested South African data costs were higher than they could be. This constituted an impediment to economic productivity.

Access to data services also varied significantly between urban and rural locations.

The minister said the commission would investigate the data services value chain and its interrelationship with other parts of the information and communications technology sector and the broader economy. It would benchmark South African data costs against those of other countries and establish whether data supply quality and coverage were adequate by international standards and were aligned with the country’s developmental needs.

The inquiry would assess the state of competition in the market for the provision of data services and make recommendations to the government about how the market could be made "more competitive and inclusive", how data prices could be reduced and how SA’s position as a low-data cost economy could be secured.

The commission will also make recommendations to the sector regulator on the competitive effects of the regulatory framework and any need for it to be amended.

The fourth industrial revolution would rely on inexpensive and seamless connectivity at competitive prices, Patel said.


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