Competition Commission says data prices are too high, threatens prosecution

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The Competition Commission has found that mobile data prices in South Africa are too high and reflect “a bias against the poor.”

Commissioner Tembinkosi Bonakele revealed the findings while presenting the Commission’s report on the data services market on Monday.

The report singled out Vodacom and MTN for their high data prices, especially in the prepaid option.

‘Reduce prices or face prosecution’

Bonakele said the prices are higher than in many other markets in the world, adding, “We think there is scope to reduce these prices in the region of 30-50%.

“We have decided we will give the industry two months to act on these recommendations, failing which we will consider a prosecution for excessive pricing.”

Vodacom and MTN’s clear competitive advantage over smaller service providers such as Telkom and Cell C constitute a “concentration and duopoly,” he added.

“We have noted that we have seen recent price reductions, but we do recommend that Vodacom and MTN must meet an agreement with the Commission on an immediate and substantial reduction in prices, especially of prepaid bundles,” Bonakele said.

‘Data prices matter in economy’

Minister of Trade and Industry Ebrahim Patel and his Telecommunications counterpart Stella Ndabeni-Abrahams also attended the report’s launch.

In his remarks, Patel said the report was commissioned following his consultation with Ndabeni-Abrahams.

He said data prices and data service access matter greatly in the economy, “Data costs are critical to the performance, not just of the digital economy, but of the entire economy.”

Patel added that if the South African economy is to grow at a higher rate, data prices need to be at their lowest possible level.

He said, “In the policy reflections within government, we have spoken, not only about growth, but also that brings in young people, that brings in black South Africans and empowers the rural population.

“When data service prices discriminate against the poor and those with low income, then they go against public policy which is about economic inclusion.”

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