Regulatory intervention is the only way that data costs will become affordable to the poor.
This is the view of Arthur Goldstuck, a commentator on ICT and mobile communications. He was commenting after the Competition Commission’s release of its data services market inquiry report on Monday.
The report gave MTN and Vodacom – which control about 70% of the country’s mobile industry – two months to reduce mobile data prices or face prosecution.
Vodacom and MTN indicated in their initial reaction that delayed spectrum allocation has affected the rate at which data prices could have fallen.
Goldstuck said while it has been easy for the mobile operators to say they have brought down the cost of data, the price has come down significantly only for the well-off who can afford big data bundles.
“The less you can afford to pay for a bundle, the more you pay per megabyte,” said Goldstuck.
He said while it was normally acceptable for volume purchasers to have lower per-unit costs, with data the price gap was so large that it becomes punitive rather than an incentive to buy more.
“The poorest user who pays as they use data, coming off airtime, is often paying 50 to 100 times per megabyte what the wealthy user is paying, due to being able to afford mega-bundles.
“There has been very little incentive for the major operators to change this scenario, as they are so dominant in the market.”
Goldstuck said the only way operators will fully address this imbalance is through the kind of regulatory intervention that the Competition Commission envisages.
“However, the Competition Commission underestimates the impact of the regulatory sloth that we saw with the licensing of spectrum.”
Goldstuck said the country has been held back for more than a decade by its failure to license spectrum, adding that operators have only been able to roll out 4G/LTE thanks to “refarming” spectrum intended for 3G.
“That is not only expensive, but also inefficient.”
He said the idea that the wholesale open access network (WOAN) will address spectrum needs is laughable, given that the organisations that invested tens of billions of rands in infrastructure for widespread access are having to stand in line behind entities that have yet to be created.
“It is obvious from a point of view of both economic impact and economies of scale that the existing operators need to be prioritised for spectrum allocation, but in a way that opens their infrastructure to others.”
Goldstuck said the operators were being deprioritised, while still having to open their infrastructure to others.
“The Competition Commission needs to give and take, but is only taking,” he added.