Business Maverick

Opinionista

Data prices must fall, and mobile networks must stop obfuscating and obstructing

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Koketso Moeti has a long background in civic activism and has over the years worked at the intersection of governance, communication and citizen action. In 2022, she was announced as a Mulago Foundation Rainer Arnhold Fellow. She is also an inaugural Collective Action in Tech Fellow; an Atlantic Fellow for Racial Equity; inaugural Obama Foundation Fellow and an Aspen New Voices senior Fellow. Follow her on Twitter at @Kmoeti

Load shedding should not be used as an excuse for charging people more for basic services.

Charles Molapisi, the CEO of mobile network giant MTN South Africa, reportedly assured shareholders in early June that MTN would grow revenue by continuing to implement inflationary price hikes. The reason for this increase, he said, was load shedding. 

This move will be to the detriment of consumers and should be avoided.

South Africa’s electricity crisis is very real. According to the CSIR’s power generation statistics, 2022 was the country’s most intensive load shedding year yet. December 2022 was the highest load shedding month ever and, on its own, had more load shedding than in any other previous year.

But this should not be an excuse for charging people more for basic services or a time to gain from a crisis, something we have seen other big businesses regularly do. Like in 2020, when businesses used the pandemic as an opportunity to cash in by hiking the prices of essential goods — including food.

In light of this, if MTN truly is doing the best it can, it’s important the company is transparent with regulators and consumers by quantifying the impact of load shedding on its operations.  

In 2020, both Vodacom and MTN reduced their data prices. This came after the Competition Commission published the final report of its Data Services Market Inquiry. The inquiry was initiated in 2017 at the request of the then minister of economic development, (now minister of trade and industry) after public outcry over the high cost of data in South Africa.

It was at this inquiry where instead of explaining the price discrimination faced by low-income consumers, the then MTN CEO, Godfrey Motsa, concerned himself with moralising about how people spend their money: “We want them to buy more internet. I wish people were buying more money [sic] on the internet than on alcohol and tobacco.” 

Consistent with amandla.mobi’s submission to the inquiry, the commission found the big networks’ pricing structure to be anti-poor and lacking transparency. “Lower-income consumers who purchased smaller data bundles were faced with inexplicably higher costs per megabyte (MB) relative to the consumers who purchased much larger data bundles,” it said.

The commission also made recommendations prioritising immediate relief for consumers on data pricing. One of the major recommendations was for Vodacom and MTN to drop data prices by 30% to 50% or face prosecution, with the two networks subsequently entering into agreements to reduce data prices in 2020.

Now, if MTN does indeed increase its prices, backtracking from its reduction in 2020, this would not only be to the detriment of consumers but would also undermine the network’s agreement with the Competition Commission to slash data prices. This is unacceptable.

One argument that mobile operators have made for years is that high data costs are the result of delays by the communications authority in licensing additional spectrum. This is a claim MTN continued to make even on the day the Competition Commission’s report was released in 2019, to which MTN responded by claiming that the “greatest hurdle to data pricing reduction remains spectrum”.

Without a doubt, spectrum constraint has been a barrier to coverage expansion and allowing for more effective competition. But as I have previously argued, it cannot be assumed that the licensing of spectrum will lead to lower data costs, especially for consumers living on average or below average incomes.

In March 2022, the communications authority concluded the first spectrum auction process, with another set to take place next year. MTN was a qualified bidder in this process and successfully bid. So, the planned price increases take place after the licensing of spectrum, further exposing the claim that additional spectrum will lead to price decreases to be untrue.

Yes, excessive load shedding is a crisis for many businesses — particularly small ones. But it cannot be ignored that this crisis has also had a negative impact on consumers — especially low-income consumers. An unjustified price increase will add to the burden. Given how operators in the past have failed to provide sound justification for the existing price differentials between prices on bundles purchased by low-income consumers versus more well-off ones, this should be of particular concern.

While the Data Services Market Inquiry did not solve all the problems in the telecoms sector, which it was never meant to do, it was an important step in the right direction. It is a step that has provided some relief for millions of consumers and should be safeguarded against those whose only interest is profit. DM

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Comments - Please in order to comment.

  • Lothar Böttcher says:

    Ask yourself: Who benefits?
    Also read “Starlink coming soon to all southern African countries, except SA” by Tim Cohen in DM.

  • Hermann Funk says:

    Our government is in cahoots with big business and couldn’t give a s….. about its citizens. Starlink is just one example of their lack of interest in increasing competition.

  • Jamie Meyer says:

    It’s a concerted effort collectively by all the network carriers to exploit the consumer. South Arica is the only country in the world that charges for “data”, nowhere else does it. The concept of “data” doesn’t really exist anywhere else, it’s a red herring. With the government having shares in a lot of the networks it’s easy to see who benefits from this scam that wilfully exploits consumer rights.

  • Renée Van der Merwe says:

    Not only are the excessive data costs an issue, for the past two or three months we have had virtually no signal in the area where we live. However, as soon as we move to another location, the signal is much stronger. We live in a complex where the gate is controlled by our cell phones: imagine the inconvenience when one has to get into one’s car and drive to the gate a couple of times a day to let visitors in and out. Various complaints to MTN have fallen on deaf ears – not that one gets a chance to speak into human ears – an endless roundabout of re-routing calls to MTN gets one nowhere. Nor are any concessions made regarding our monthly payments for services not rendered. When my contract is up,
    I will be moving to another service provider – hope springs eternal…

    • William Stucke says:

      Please don’t take another contract with anyone, Renée. Go Prepaid. As long as they have you on a contract, they can milk you dry. And no, that’s not a “free” phone that you get every 2 years. It’s a phone that you’ve already paid for.

  • Andrew R says:

    Vodacom and MTN operate with impunity, consumers be damned.

    A year or 18 months ago, Vodacom sold my parents an LTE contract, despite there not being adequate coverage in their town. They could cancel the contract, but of course the cancel would only cost the remaining balance of the contract. So they get all the income, despitr not providing any services.

    My parents went back to a Telkom DSL line, I took over the LTE contract (after cancelling my own fiber line).

    Now I have an uncapped LTE line that get throttled from 10MB to 2MB when I hit 400GB of use.

    Quite disgusting,!

  • William Kelly says:

    Flawed on so many levels I genuinely don’t know where to begin. This is just nonsense, from start to finish, and the one or two points I do agree on are lost in the morass of manufactured outrage I am afraid.

  • Rory Short says:

    As for most people, I guess, because of it’s ready availability, a smart phone has become like another limb and an essential one at that. That cell phones have become an essential part of modern life is great for their suppliers but along with that goes the responsibility for ensuring the continuity of the service at a price which consumers can afford.

  • Marc Ve says:

    Be careful what you wish for. Without enough profit they won’t invest in the network. Cheap but awful doesn’t help us. Govt should be asked to pay for the load shedding costs, after all it’s entirely their fault.

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