EDITORIAL: Government shares blame for high data costs
It has fallen woefully behind its peers in shifting the country from analogue to digital broadcasting
The government has been quick to blame SA’s mobile operators for the country’s abnormally high data costs but has largely overlooked its own role in keeping prices elevated.
Data prices have long been a bugbear of consumers. Studies have shown that cheap and easy access to the internet promotes innovation and economic growth.
In April, the Competition Commission found that SA’s data prices are high relative to other African countries, particularly when it comes to mobile prepaid data. More notably, it found that MTN and Vodacom charge more in SA than they do in other countries.
That appears to be true, as is the commission’s finding that the pricing structures of mobile data tend to be anti-poor in that low-income earners usually pay more per megabyte — a feature of the market that must be addressed. Rightly so, the commission acknowledged that the lack of spectrum, or radio waves, at mobile operators’ disposal has kept costs higher than they ought to be.
The dearth of spectrum — which operators must counter by building more cell towers than they would otherwise at great cost, which they then pass on to consumers — is undoubtedly the state’s doing.
The government has fallen woefully behind its peers in shifting the country from analogue to digital broadcasting. SA will switch off analogue broadcasting signals only in July 2020, a full five years after an international deadline to do so.
The delay means high-demand spectrum remains tied up when it could be better used in the telecommunications sector. No new spectrum has been allocated in SA for 14 years.
While it recognised that ending the spectrum crunch would lower costs for mobile operators, the commission said, “this will not necessarily result in price decreases unless there is competitive pressure on operators to do so”.
Introducing measures that support smaller players and new entrants appears to be a priority.
But while competition should always be welcomed, the telecommunications game is one of immense scale in which few have the funds needed to build and operate extensive networks.
In many instances, only the two largest players in a market are big enough to be sustainable. In 2018, the number two and three players in the Chinese market were said to be seeking a tie-up so they could fund the roll-out of 5G networks — a costly undertaking. In India, analysts say consolidation could result in just two large players, from three, remaining in a country with about 1.3-billion people.
While there has been talk of a Cell C-Telkom merger for some time, the drive to have more operators rather than fewer suggests that competition authorities will not be too keen on a tie-up between the number three and four players in the country.
Communications minister Stella Ndabeni-Abrahams said in reaction to the commission’s findings that the government had been “left with no choice but to use the legislation at our disposal to address this socioeconomic imperative”.
No mention was made of a previously mooted spectrum auction, which is now running behind schedule.
MTN SA CEO Godfrey Motsa said in late April that of the 21 countries in Africa and the Middle East in which MTN has mobile networks, “only our operations in Afghanistan, South Sudan and Yemen have less spectrum than in SA”.
The R77bn that MTN has spent on its network in SA over the past decade could have been a vastly lower number if more spectrum had been available.
Make no mistake, mobile operators should not be absolved of responsibility for SA’s high data costs. And while progress has been made, fee structures need to become far more transparent.
But instead of introducing new rules and regulations that could hamper investment in the industry, the state should prioritise the allocation of spectrum. Doing so could also provide a much-needed boost to the fiscus.