Free data for all South Africans in radical regulatory intervention

The Competition Commission on Monday unveiled surprisingly broad-ranging, tough and radical interventions in the data services market, including a proposal that mobile operators be forced to give South Africans a free allocation of daily data.

Competition commissioner Tembinkosi Bonakele said all mobile operators must reach an agreement within three months that will provide a monthly “lifeline” package of daily free data “to ensure all citizens have data access on a continual basis”.

Bonakele said the operators have three months to reach an agreement with the commission in this regard and within six months it must be given legislative or regulatory effect.

“The precise level of the lifeline data package and any annual adjustments should be determined in consultation with the industry regulator, Icasa, and the relevant experts,” he said. “We believe it should be sufficient to ensure each citizen’s participation in the online economy and online society. This is a minimum package we are calling for, a minimum package of free data.”

Bonakele said the commission’s “package of recommendations” are designed to provide “immediate relief on prices, especially for low-income consumers”.

Other radical — some might argue populist — interventions that the commission is demanding include:

• That Vodacom and MTN immediately reduce prices in agreement with the commission, with Bonakele arguing this could be between 30% and 50%. “Failure to reach this agreement within two months will lead the commission to consider prosecution for excessive pricing or other exclusionary abuses.
• That Vodacom and MTN must independently reach an agreement with the commission, also within two months, on the reduction of headline prices of all 500MB 30-day prepaid data bundles to reflect same cost per megabyte of 500MB 30-day bundles on post-paid or contract plans. “We are calling for the removal of the price discrimination for those data bundles.”
• That Vodacom and MTN must immediately reach an agreement with the commission to cease practices that may facilitate price discrimination against the poor.
• That all mobile operators must reach an agreement with the commission within three months on a consistent, industry-wide approach to zero-rating content for public benefit organisations and similar entities.
• That all mobile operators must reach agreement with the commission within three months to inform each subscriber on a monthly basis on the effective price of all data consumed by such a customer.
• That Telkom’s wholesale business Openserve must reach an agreement with the commission on substantial price reductions for IPConnect to reduce “excessive pricing concerns that are highlighted in the main report”. IPConnect is the service bought by Internet service providers to access Openserve’s wholesale network made up of ADSL and fibre lines.

“With respect to the above on the level and structure of pricing, should an operator fail to reach the agreed within the specified timeframes, the commission will consider prosecutions in terms of the Competition Act. Most of these are found in the abuse of dominance section of the act,” Bonakele said.

Another demand made be the commission is that there be cost-based access to network facilities and that Icasa must define essential facilities so access to these can be regulated, including the price that is charged for them. This must be done within the next 18 months.

‘Accounting separation’

Also, national roaming agreements must be based on wholesale costs and prices offered by roaming providers to other operators must be lower than their own retail prices, with annual downward revisions. If no such agreement is reached, we will proceed to prosecute (the companies) in respect of excessive pricing or exclusionary conduct,” he said.

Within six months, Vodacom and MTN must reach an agreement for “accounting separation” of their wholesale networks, which will allow for easier regulation, he added.

Legislative changes must include a review of section 67 of the Electronic Communications Act to ensure preconditions for regulatory intervention are proportional to the type of intervention envisaged, Bonakele said. “This section is overly prohibitive of regulatory interventions in that it prescribes requirements before an intervention can be made.”

National government must provide incentives to fibre-to-the-home broadband providers for network roll-out in low-income areas. This may take the form of tax breaks from various government agencies. Government at all levels must also actively promote free Wi-Fi in low-income areas.

At the same time, Icasa must consider models and regulatory changes to allow non-profit community networks to access licensed spectrum not used by mobile operators in rural areas.  — © 2019 NewsCentral Media