The Competition Commission said on Monday afternoon that major telecoms companies must reduce the price of data, particularly for prepaid customers, or face prosecution.
The commission has concluded an inquiry into cellular data in the country, where prices are among the highest in the world. Its final report has found that data prices are far too high in South Africa.
The market is dominated by Vodacom and MTN, which were both ordered to reduce their data costs by between 30% and 50% within the next two months.
“The preliminary evidence suggests that there is scope for price reductions in the region of 30% to 50%,” states the report.
“Vodacom and MTN must independently reach agreement with the Commission within two months on a reduction in the headline prices of all sub-500MB 30-day prepaid data bundles to reflect the same cost per MB as the 500MB 30-day bundle, or cost-based differences where such cost differences have been quantified, as well as the cessation of partitioning strategies that contribute to anti-poor pricing and/or inferior service outcomes,” it further states.
“Given their collective market position, adjustments to their prices should impact on market-wide pricing.”
The commission also feels that “access to affordable data is of paramount importance for economic and social inclusion”.
“The full implementation of the package of remedies is also essential to provide the necessary building blocks for South Africa to participate fully in the Fourth Industrial Revolution and take advantage of the opportunities that revolution presents.”
All mobile operators must in future also offer South Africans on prepaid packages “a lifeline package of daily free data” to “ensure all citizens have data access on a continual basis, regardless of income levels”.
The agreement must be given formal legislative or regulatory effect within six months and the amount of free data will be determined in consultation with the industry. There will also be an industry-wide zero-rating on data used for public benefit organisations and education.
Competition commissioner Tembinkosi Bonakele said that “appropriate regulation is reasonable”.
The commission has received the support of Trade and Industry Minister Ebrahim Patel who said “we have a competition problem in the market and prices are higher than they should be compared to elsewhere in the world”.
(Compiled by Charles Cilliers)