The Competition Commission has launched a market inquiry into data services, a move that could result in a big shake-up in the way mobile operators charge for and structure their data plans.
The inquiry comes as pressure mounts on operators over high out-of-bundle data charges and aggressive expiry of data bundles. Communications regulator Icasa last week revealed draft regulations meant to address data expiry.
On Friday, the Competition Commission published the terms of reference for its inquiry in the Government Gazette. The commission will call for submissions after 20 business days, it said.
“The commission has initiated the inquiry because it believes there are features in this market that prevent, distort or restrict competition within the sector,” it said in a statement. “Through the inquiry, the commission aims to determine what may cause or lead to high data prices with a view to ultimately making recommendations that will result in lower prices for data services.”
It said in initiated the inquiry in response to a request from economic development minister Ebrahim Patel.
The main objectives of the inquiry are to:
- Obtain a clear understanding of the data services value chain, including the interaction and commercial relationship between different levels of the value chain and the relationship with other parts of the ICT sector and the broader economy;
- Assess the state of competition in the market at every stage of the value chain for provision of data services in order to identify areas of market power where consumers may be exploited or excluded by firms and to identify any other structural, behavioural or regulatory factors that may influence competition or pricing;
- Benchmark South African data services pricing against those of other countries; and
- Establish whether data supply quality and coverage is adequate by international standards and the country’s developmental needs.
Market structure
The inquiry will assess
- The market structure
- The general adequacy and impact of the current regulatory regime;
- Strategic behaviour by large fixed and mobile incumbents;
- Costs faced and profits earned by fixed and mobile network operators;
- Current arrangements for sharing of network infrastructure;
- Investment in infrastructure by operators and access to and allocation of spectrum as they relate to data services price and competition concerns; and
- The adequacy of regulation to promote new South African entrants (particularly historically disadvantaged individuals).
The commission said it will complete the inquiry by 31 August 2018, after which it will release its findings and recommendations.
Earlier on Friday, the Internet Service Providers’ Association (Ispa), an industry body that represents many of South Africa’s ISPs, said regulatory intervention is needed to force operators to open their networks to resellers.
That this hasn’t happened is indicative of “market failure” and as such “needs to be addressed to reduce the cost to communicate, poor service levels and a lack of innovation”, said the association’s regulatory adviser, Dominic Cull.
“Consumers should be free to choose who they buy Internet access or data from, and this is in line with government policy,” Cull said.
Ispa wants operators to be forced to open their networks to third-party ISPs in the same way that fixed-line providers such as Telkom’s Openserve, Vumatel, Dark Fibre Africa, Liquid Telecom and Frogfoot Networks do today. – © 2017 NewsCentral Media
