Media release: Has the ill-informed high cost of data lobby influenced SA’s critical ICT Policy?

12 December 2016
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Consumers want faster data at lower prices, yesterday. This is the sentiment behind the #DataMustFall movement, which is agitating for lower mobile and fixed-line data prices. But is this complaint valid and even if it were, would more government regulation be an appropriate response? No, on both counts, argues renowned writer and commentator Ivo Vegter in a recent talk given at the Free Market Foundation (FMF) in Johannesburg. It appears that the vested interest data must fall lobby has grossly misrepresented the facts.

According to Vegter, Government interference, failed policy, bad regulation, and poor implementation have created a market in which apparently a few mobile network operators hold dominant positions and charge frustrated consumers high prices for data. The speed and intensity with which the data must fall campaign spread headline comparisons widely across social media showing South Africa to have exorbitant data charges, left many in the industry reeling and consumers outraged.

The FMF is concerned that the misinformed push towards lower data prices appears to have been an influential factor in the recent Information and Communication Technology (ICT) Policy White Paper, which intends a radical shake up of the ICT industry and has far-reaching implications for mobile network operators. Has it played a disproportionate and inappropriate part in formulating policy? Has the DTPS been too quick to accept the whims of a social media campaign and is it using negative public sentiment to drive through more bad policy?

Vegter raised the question of whether data is really so much more expensive than elsewhere in the world and concludes it is a complex and difficult question. Voice and data products are difficult to compare across different operators and countries. The widely circulated gang of four meme that took social and mainstream media by storm is blatant misinformation. It used the lower cost of 1 GB – R11 - in India offered as a limited special by a small operator and compared it with a standard out of bundle price in South Africa – R149. Bizarrely, the Parliamentary Communications Committee states that special pricing used by operators cannot be included in the calculations of the cost to communicate in South Africa yet this is a standard marketing tool used all over the world and has a significant impact on the average price of data.

On a pure price basis, South Africa compares fairly well with other countries, Vegter maintains. “At the high end of the mobile market, South Africans pay about R30 per gigabyte from Telkom, and R50 per gigabyte from mobile operators. That’s less than Australians and Americans pay, according to research conducted by MyBroadband. New Zealanders pay about two and a half times as much as we do. India comes in slightly cheaper at R26.30, while the UK is much cheaper at only R8.38 per gigabyte.”

“At the lower end of the market, India remains a little cheaper, but Australians, Britons, and Americans all pay about twice as much as South Africans do, with New Zealanders paying almost four times as much.”

Again, contrary to prevailing misinformation, adjusting for income levels, South Africans spend on average about 2.3% of their income on ICT, according to the latest figures from 2014 compiled by the International Telecommunications Union in its 2015 Measuring the Information Society Report.

Out of 170 countries, South Africa ranks about mid-way at 80th, in terms of communication cost as a share of income, behind Brazil and China, on a par with Chile, Hungary, and Mexico, and well ahead of India.

Vegter said that a pure price comparison is complicated by many factors including the rand/dollar rate in which almost all telecommunications equipment, including handsets, is priced and the long distances between South Africa and the rest of the world, where most of the internet is located. “We are dependent on a handful of undersea cables that span long distances, mostly to the northern hemisphere. Other factors are the size and geographical spread of South Africa and population density, which makes Internet infrastructure relatively more expensive, per capita”.

That South Africa’s prices are extraordinarily high, is far from clear.

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