Competition Commission and Vodacom reach data price agreement

13 Mar 2020

The Competition Commission has reached a significant agreement with Vodacom to reduce the costs of data and promote digital inclusion.

The agreement was announced at a media briefing with Vodacom in Johannesburg.

Competition Commissioner, Tembinkosi Bonakele, emphasized that the agreement is subject to confirmation by the Competition Tribunal.

It was also made clear that certain specific details of the agreement are confidential to protect competition in the market.

In a statement, the Commission confirmed that Vodacom has agreed to a multi-year substantial reduction of monthly data bundles across the board.

“Effective from 01 April 2020 price will come down by over 30% across all channels. For an example, the key 1GB monthly data bundle will drop from R149 per 1 Gigabyte to no more than R99 (including VAT). This represents a 34% price decrease.”

Other key features of the agreement include making available all current zero-rated services on one platform with increased focus on consumers in poorer communities via “ConnectU”, extending current zero-rating to essential state and emergency specified sites to be phased in within two months from 1 April, improving customer awareness of the personalized price promotions, displaying the cents/MB for all data bundles offered in relevant channels and enabling prepaid consumers to access detailed information on their historic purchases and what their data was used on.

The agreement flows from the Data Services Market Inquiry Final Report released in December 2019.

The Competition Commission initiated the Inquiry in August 2017.

At the time, the Competition Commission declared that the Inquiry will cover all “relevant players in the value chain who contribute to or influence prices of data services in South Africa.”

High data costs was a key determinant in calling for the Inquiry.

The aim of the Inquiry was to “understand what factors or features of the market(s) and value chain may cause or lead to high prices for data services, and to make recommendations that would result in lower prices for data services.”

In a statement following the release of the report, the trade and industry department indicated that key findings of the Inquiry were that the price of data in South Africa was high compared to many other countries and profitability for mobile network operators (MNOs) in South Africa exceeds that of MNOs in similar markets.

Recommendations outlined in the report include:

• a proposed reduction in data-prices charged by the telecoms companies, by a third to half of the current rates;
• reduction on the price differentials on prepaid data that discriminate against low-end, largely poorer users;
• a minimum package of daily free data for prepaid customers;
• reduction in roaming prices and MVNO pricing to below the retail prices charged;
• zero-rating of content for educational and PBO institutions website downloads, to enable access to key information by students and citizens;
• pricing-transparency provisions to enable consumers to see the real difference between the pricing of different telecoms companies;
• alternate infrastructure provision such as wifi, with incentives to speed up their rollout;
• accounting separation between wholesale network and core network and
• legislative amendments to enable the changes required in the market.

The department announced at the time that the Competition Commission will seek to engage the industry on bringing down data prices over the next two months.

Meanwhile, in another statement, the communications department has welcomed the agreement.

It described the announcement as occurring at an “opportune time as ICASA is currently undertaking two critical regulatory processes that have a bearing on the pricing of data services in the medium term i.e. the licensing of the International Mobile Telephony (IMT), also known as high demand spectrum as well as an inquiry into mobile broadband service markets”.

The department confirmed that the spectrum auction will take place by no later than the end of 2020 and the licensing of the Wireless Open Access Network will be concluded in 2021.

The Draft Regulations on Mobile Broadband Services Market will be released by July 2020 for public consultation and completed by the end of the financial year.

See also:

• Data Services Market Inquiry Final Report released
• The new Memorandum of Agreement between Competition Commission and ICASA explained

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)