Vodacom and MTN question findings of Competition Commission’s report

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Stop your watches because the first statements regarding findings presented by the Competition Commission yesterday have been made.

On Monday, the Competition Commission presented its Data Services Market Inquiry final report in which it found that Vodacom and MTN charge too much for data.

That report follows the publishing of Icasa’s own market inquiry into mobile broadband services in South Africa. While both reports point out that there is ineffective competition in the mobile broadband market, the Icasa report differs in one major factor – the price of data.

“The analysis of mobile data prices has shown 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 on 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,” writes Icasa.

This difference of opinion has struck Vodacom as rather odd according to spokesperson Byron Kennedy.

“While Vodacom is currently reviewing the two documents in greater detail, it is immediately evident that there is a significant difference in opinion between the Competition Commission and Icasa on a number of issues that are critical to data prices in South Africa,” the spokesperson said.

The core of the issue according to Vodacom and MTN is a lack of spectrum.

“Vodacom has consistently stated that delayed spectrum allocation has impacted the rate at which data prices could have fallen. Vodacom has reduced the effective price of data by circa 50% since March 2016,” said Kennedy in a statement.

MTN mirrored these remarks in a statement of its own.

“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. 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,” wrote MTN.

But then MTN’s statement gets, well, concerning. The mobile network operator states that government should release spectrum to players which are already in the market and urgently need it.

While we agree that allowing MTN and Vodacom access to spectrum might bring down the cost of communication for a large portion of South Africans, not every South African uses those networks nor indeed want to.

Essentially MTN has said that competition is bad and should be discouraged until the big players are more comfortable.

“Industry, policy makers and regulators must collaborate to coordinate policy objectives as to how spectrum will be allocated. We agree that costs must continue to fall and competition needs to grow. However, the risk is that by breaking the required spectrum into too small chunks or to create middlemen, operators will lose the ability to deliver networks that are economically viable and efficient – telecoms is a scale business,” chief executive officer for MTN South Africa, Godfrey Motsa said in a statement.

Both Vodacom and MTN have said they will engage with both Icasa and the Competition Commission and Icasa but it appears as if that grip the two firms have on the market is unlikely to waver.

Vodacom and MTN have two months to amend pricing in-line with recommendations made by the Competition Commission.

[Image – CC 0 Pixabay]

Brendyn Lotz

Brendyn Lotz

Brendyn Lotz writes news, reviews, and opinion pieces for Hypertext. His interests include SMEs, innovation on the African continent, cybersecurity, blockchain, games, geek culture and YouTube.