Graphic: DOROTHY KGOSI
Graphic: DOROTHY KGOSI

Data must fall. Not because regulators and do-gooders say so, but because of "market forces". That mobile data charges "must fall" is as inevitable as rivers running downhill. Unless regulators and activists get involved. If their policies are implemented, grubby little hands will slow the rate at which charges fall, or stop them falling altogether.

The degree of policy bad faith was revealed on Friday when an absurdly brief one month was allowed for comment on the Electronic Communications Amendment Bill before Parliament. Virtually no one knows about it or comprehends how severely it will affect them personally.

Are the data deities behind the bill just silly or driven by perverse interests? To begin with, too many are involved. Their left hand does not know what their other left hand is doing.

Who do you think should regulate telecommunications and mobile charges? Parliament? The Treasury? The Department of Communications? The Department of Telecommunications and Postal Services? The Department of Trade and Industry? The Department of Economic Development? Their portfolio committees? The Consumer Commission? The Competition Commission?

Or the judiciary? The Council for Scientific and Industrial Research? One or more of the role-playing nongovernment organisations? The Independent Communications Authority of SA (Icasa)? Organs of state that use spectrum (radio waves) such as the SABC, the police or the National Intelligence Agency? Or the supposed locus of expertise, the Department of Science and Technology?

Stop thinking about it. All are involved. None have overarching expertise and some have divergent views. The Treasury, for instance, wants to sell spectrum to finance such failed follies as South African Airways. The Department of Communications wants to nationalise spectrum without compensation. Icasa wants to auction spectrum.

The implications for you and the country are serious. We are moving into a world in which virtually everything will be data dependant because virtually every device will connect to a single system. That is not science fiction. It is imminent. You will soon, if delinquent regulators get out of the way, have your health monitored by smart apparel; vital information will go directly to your pharmacy, insurer and doctor; your surgeon, like mine recently, will deploy a robot for cutting edge (so to speak) surgery; you will converse with devices instead of using keyboards and touch screens; your smart phone will wake you as instructed, tell your coffee machine when you want coffee, ensure that your fridge and grocery shelves are stocked and tell your car to calculate the ideal route; home and office windows will close themselves when it rains, baths will never overflow, you will pay for what is in your trolley by walking past a checkpoint; whatever music, news or movie you want will be at your behest wherever you are, and much more.

It is hard to comprehend the importance of rules of the game that will ensure dynamic access to optimally priced technology, innovation and capital. The internet of things, which defines our future, requires omnipresent and constantly updated technology. Daunting privacy implications aside, your existence will cause so much data transmitted via landlines and airwaves that an efficient data system will be as vital to you and your country as an efficient nervous system is to you and your body.

For the system to be remotely efficient, all the ingenuity, capital and creativity of fast-moving liberalised private enterprise will be required. Yet, as if they are Alice in Wonderland, moribund politicians, bureaucrats and activists want to impose a labyrinth of micro-controls and a new doomed-to-fail "open access" monopoly.

"Data must fall" hysteria at surprisingly high levels relies on a feeding frenzy of disinformation regarding local and international data prices, how optimal and competitive prices are established, the nature of competition, why privatisation outperforms nationalisation, how spectrum is or should be allocated and the like.

"Must" in "data must fall" is, of course, ambiguous. It could refer to what happens automatically – what goes up must come down – or to what ought to happen – people must pay debts.

The data cost discourse is bedevilled by three fatal myths: that there are objectively correct prices, officialdom knows what they are, and government monopolies lower prices.

There is no such thing as an objectively "correct" price. "Price theory" teaches that the "price mechanism" is the only efficient way to determine prices. For it to perform its magic, markets must be "contestable". Contestability exists when there are no regulatory barriers to competition. All businesses always compete with all other businesses. The popular misconception is that only identical products compete. All the Competition Commission should do is remove regulatory barriers. Instead it adopts a "compete, but don’t win" approach while ignoring such measures as the new bill.

Data mythology includes the belief that mobile data is cheap elsewhere. According to a false news "four-country" list, we pay R150 per gigabyte compared with R11 in India. Almost everyone has fallen for the lie that our data "expires" or "disappears" prematurely. In truth, the Indian R11 offer was a temporary loss-leader, and we could buy data that lasts a year for R8/Gb.

Regarding "disappearing" data, suppliers do whatever it takes, short of going under, to attract consumers. If consumers really want and are willing to pay higher prices for stuff that does not "expire" — air miles, loyalty credits, insurance etc — suppliers will oblige.

SA started with two licensed network operators mistakenly called "monopolies", Vodacom and MTN. Then Telkom and Cell C were allowed. Two more have been licensed and the government wants to create a nationalised seventh. Since it has an insatiable appetite for unnecessary, inefficient and wasteful state-owned enterprises, it wants a wireless open access network. It wants the other six nationalised into a bureaucratic nightmare. It appeared to be backing off such madness towards a "hybrid" … until the bill appeared.

In the proposed fairy tale a nationalised wireless open access network, a kind of cellphone Eskom, will outperform free enterprise. Surrounding rhetoric promises cheap or free data for marginalised people. But virtually everyone already has a cellphone and buys data. We have more active phones than the entire population. The best way to subsidise indigent people is to give them vouchers with which to buy data.

The communications ministry seems to be unaware of the "price mechanism". It has the spooky belief that if it has details of costs, it will know what prices should be. Not even industry experts with superior expertise are that delusional. They establish prices by trial and error in competitive markets.

We will enjoy imminent 5G technology, tumbling prices and the internet of things only if our government abandons the bill, allocates superfluous spectrum and gets out of the way.

Why are they so silly? To begin with, there are too many potential data deities. Their left hand does not know what their other left hand (sic) is doing. Who, if anyone, do you think should regulate data charges? Parliament? The Treasury? The Department of Communications? The Department of Telecommunications and Postal Services? The Department of Trade and Industry? The Department of Economic Development? Their respective portfolio committees? The Consumer Commission? The Competition Commission?

Or the judiciary? The Council for Scientific and Industrial Research (CSIR)? One or more of the role-playing nongovernment organisations? The Independent Communications Authority of SA (Icasa)? Organs of state that use spectrum (radio waves) such as the SABC, Broadcasting Corporation, the police or the National Intelligence Agency? Or the Department of Science and Technology, which ought to have the best understanding of how things work?

Stop thinking about which it should be. It is all of them. None has comprehensive expertise and they have divergent views. The Treasury, for instance, wants to sell spectrum to finance such failed follies as South African Airways. The communications department wants to nationalise spectrum without compensation. Icasa wants to auction spectrum to the highest bidder.

The implications for you and the country are serious. We are moving into a world in which virtually everything will be mobile data-dependent because virtually every device will interact with every other device. That is not taken from a science fiction movie. It is imminent.

You will soon, if delusional regulators get out of the way, have your health monitored by smart apparel. Vital information will go directly to your pharmacy, insurer and doctor. Your surgeon, like mine recently, will deploy a robot to do the cutting in cutting-edge surgery.

You will converse with devices instead of using keyboards and touch screens. Your smart phone will wake you as instructed, tell your coffee machine when you want coffee, ensure that your fridge and grocery shelves are stocked and tell your car to calculate the ideal route. Home and office windows will close themselves when it rains, baths will never overflow, you will pay for what is in your trolley by walking past the till, and whatever music, news or movie you want will be at your disposal wherever you are.

It is hard to comprehend the full implications, or the need for rules of the game that ensure dynamic access to optimally priced capital, innovation and technology. Omnipresent data is "the internet of things". Daunting privacy implications aside, your existence will cause so much data to be generated, stored and transmitted on landlines and through airwaves that an efficient data system will be as vital to you and your country as an efficient nervous system is to you and your body.

For the system to be remotely efficient, all the ingenuity, capital and creativity of fast-moving liberalised private enterprise will be required. Yet moribund politicians and bureaucrats want to fabricate micro-controls and run state monopolies as if they are Alice in Wonderland.

"Data must fall" hysteria at surprisingly high levels relies on a feeding frenzy of disinformation about core issues: what data prices are locally and internationally, which factors determine prices, how to ensure optimal prices, how to promote competition, why privatisation outperforms nationalisation, how spectrum is or should be allocated and the like.

"Must" in "data must fall" is, of course, ambiguous. It could refer to what happens automatically — night must follow day — or what ought to be compelled — people must settle debts.

The data cost discourse is bedeviled bedevilled by two fatal flaws:, the myth that there are objectively correct prices and the myth that officialdom knows how to determine them. There is no such thing as, and no way of knowing, "correct" prices. "Price theory" teaches that there is one way, and only one way, of determining prices rationally. The Competition Commission should know this, but does not. For the "price mechanism" to perform its magic all we need is for markets to be "contestable".

It does not matter how many competitors there are. There might be none. What matters is whether there is freedom of entry so that people who over-charge attract competitors. There are always countless would-be competitors, ranging from large conglomerates to dynamic small businesses. All businesses compete with all other business. The mistaken myopic view of competition is that only identical products and services compete. Even then, all the Competition Commission should ask itself is whether there are regulatory barriers. Instead, it ignores them and adopts a "compete but don’t win" approach.

Myths include the notion that data is cheaper elsewhere. A widely circulated "four-country meme" was taken seriously by the government. It suggested we pay R150 per megabyte gigabyte, compared with R11 in India. The Indian R11 deal was a localised loss-leader. Conversely, I bought over-the-counter data here that lasts a year at R8/GbMb.

People who should know better complain about "disappearing" data that expires monthly. In the real world, suppliers do whatever it takes, short of going under, to attract consumers. If consumers want what does not "expire" — such as air miles or retail loyalty credits — suppliers will oblige. At appropriately higher prices.

Initially, we had two authorised mobile network operators, which some incorrectly called "monopolies", Vodacom and MTN. Then Telkom and Cell-C were let in. Two more have been licensed and the government wants to create a nationalised seventh. Since it has an insatiable appetite for unnecessary, inefficient and wasteful state-owned enterprises, it wants a wireless open access network (Woan). It wants the other six nationalised into a bureaucratic nightmare. Mercifully, it is backing away from manifest madness towards a "hybrid" compromise.

The white paper is a fairy tale where a nationalised wireless open access networkWoan, a kind of cellphone Eskom, outperforms private enterprise. The supposed objective, if not corruption, is cheap or free data for the poor. Yet virtually everyone, whether rich or poor, already has a cellphone and buys data. In this country there are more active phones than the entire population. The best way to subsidise the poor is to give indigent people vouchers with which to buy private data.

The communications ministry has no idea how the "price mechanism" works. It wants mobile network cost details in the spooky belief that it can calculate what data should cost. consumers. The networks, with vastlyvastly superior expertise, have no idea. At best, they know overall shared costs —– so they wing it. They test the market by making creative offerings and seeing what happens.

We will enjoy 5G technology, falling prices and the internet of things only if our government allocates wasted spectrum and gets out of the way.

Louw is executive director of the Free Market Foundation.

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