‘Wrong’ to blame operators for data prices not falling faster

December 2, 2019 Siyabonga Mtangana

Vodacom and MTN have reacted with surprise to the radical interventions announced by the Competition Commission in South Africa’s data services market, saying a failure by government to allocate spectrum timeously is one of the reasons data prices are higher than they would otherwise be.

“For more than a decade, government and regulators have failed to release the spectrum that the mobile industry has so critically required to bring down the cost to communicate,” MTN South Africa said in a statement on Monday in response to the commission’s wide-ranging interventions.

“To simply lay the blame for data costs at the foot of the operators is wrong. MTN in South Africa has had to compensate for the lack of spectrum by spending over R50-billion in the last five years to build a world-class network for all South Africans, covering over 95% of the population with 4G coverage, without any 4G spectrum having been allocated,” it said.

“A comparison across the continent is helpful in illustrating this point. Nigeria is often cited as an example of a developing country with lower data costs than South Africa. In South Africa, MTN has just 38MHz of spectrum. MTN Nigeria has almost triple that, with 110MHz,” the company said.

“To counter this suffocating lack of spectrum, MTN South Africa has had to get innovative with the little spectrum it has, resulting in significant ‘re-farming’ (reallocation) of spectrum to allow it to keep enhancing its 3G and 4G coverage to connect the unconnected. But the R50-billion MTN has invested in its infrastructure in the past five years is simply unsustainable. The spectrum crunch has resulted in MTN South Africa having to invest up to more than double per subscriber than what is seen, on average, with other fixed and mobile operators.”

‘Evident’

Vodacom, meanwhile, said that although it is still reviewing the commission’s report, it is “immediately evident that there is a significant difference in opinion between the Competition Commission and communications regulator Icasa on a number of issues that are critical to data prices in South Africa”.

“In particular, Icasa concludes from its analysis of international mobile data prices that ‘South Africa’s prices are neither extremely high nor very low in relation to other African countries or compared to countries which are more similar to South Africa in terms of their size and level of development. When put in further context with data speeds and LTE coverage, it is clear that customers in South Africa are benefiting from a much higher quality of access than those in other African countries,” Vodacom said. “On the other hand, the Competition Commission states that ‘South Africa currently performs poorly relative to other countries with prices generally on the more expensive end’.”

Vodacom said another area where there is a significant difference in opinion pertains to the impact of the endless delays in allocating available spectrum, the company said.

“Icasa says there are ‘a number of reasons why spectrum assignment is critical to achieving cheap, high-quality mobile broadband’, whereas the Competition Commission has downplayed the role of spectrum in reducing data prices.