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MTN, Vodacom ordered to reduce data prices or face the full might of the law

VODACOM AND MTN must immediately reduce prices by agreement with the commission, orders the Competition Commission.

MTN, Vodacom ordered to reduce data prices or face the full might of the law

The biggest cellphone providers can no longer monopolise the industry, therefore must reduce their data prices within the space of two months or face prosecution.

Remember the DataMustFall campaign that was also led by renowned DJ and radio presenter T-Bo Touch, it seems chickens are finally coming home for roasting.

In its findings, the Competition Commissioner Thembinkosi Bonakele said Vodacom and MTN would have to reduce their prices by between 30% and 50%.

“Vodacom and MTN must immediately reduce prices by agreement with the commission and I have indicated before, we believe on the basis of evidence that there is scope for price reductions in the region of 30% to 50%,” Bonakele said.

All mobile phone operators may be compelled over the next three months to start offering free and daily data to prepaid customers “to ensure all citizens have data access on a continual basis”.

According CC’s findings, data prices in SA are high and that the biggest cellphone providers, MTN and Vodacom, have failed to explain why, after it was made public.

Currently, a pre-paid monthly 1 gigabyte of data costs around R150, which according to the commission, is high and discriminates against the poor. On a two-year contract, which is a market for the middle classes, the cost is lower.

Access to websites of educational institutions and “public benefit organisations” will also be free, according to the Commission.

“A failure to reach this agreement within two months will then lead the commission to considering going ahead with prosecution for excessive pricing or other exclusionary abuse before the Tribunal,” says Commissioner Bonakele.

“We find that price-based competition is inadequate. The challenger networks of Cell C and Telkom Mobile are unable to effectively constrain the two first-movers and that Vodacom has substantial market power, with MTN to a lesser degree,” reads the report.

“There was a consensus in the submissions to the commission on this point, with the obvious exception of Vodacom and MTN themselves, who continued to maintain that the market was competitive.”

Has data fallen- shall await?

Byron Kennedy-Vodacom spokesperson said they reduced the effective price of data by circa 50% since March 2016. With regard to the Competition Commission report, we will engage with the commissioner and comment further in due course.”

Jacqui O’Sullivan-MTN spokesperson says government had failed to release the spectrum that the mobile industry needs to reduce costs.

“To simply lay the blame for data costs at the foot of the operators is wrong. MTN in SA has had to compensate for the lack of spectrum by spending over R50bn 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,” she said.

The Commission has also ordered Cell C and Telkom Mobile to engage on its data prices respectively.

At time of publishing the office of minister of communication and postal services Stella Ndabeni- Abrahams failed to respond.

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