Internet service providers have done a commendable job of bringing down the cost of fixed-line broadband in South Africa. Although the actual connection fees to Telkom remain high (thanks to Telkom’s monopoly over the “last mile” into homes), the price of uncapped and large-cap data across those lines is much more affordable than it used to be.
This begs the question: can the same model be applied in mobile with similar beneficial results? After all, the majority of South Africans rely on the mobile networks for access, so could unleashing market forces help slash prices?
The Internet Service Providers’ Association (Ispa), which represents most of the country’s ISPs, thinks that not only that it can be done, but that it should be – and that regulatory intervention is needed to get us there.
In recent weeks, the association has repeated calls for communications regulator Icasa to force the country’s mobile operators — Vodacom, MTN, Cell C and Telkom Mobile — to open their data networks on a wholesale basis to ISPs, which would then be able to compete with each other to provide the best prices and services to end users.
“Ispa argues that the absence of a wholesale mobile data offering constitutes a lost business opportunity for mobile operators and an obstacle to deepening broadband penetration,” the association said in a recent statement.
Uncapped ADSL or large, capped ADSL accounts have become the standard in the fixed-line broadband market because of competition between ISPs. There’s no reason this shouldn’t happen in mobile, too, it argued.
“We believe that Icasa should take the necessary action to enable a simple resale model for mobile data to stimulate the same sort of consumer-friendly competition,” said Ispa chairman Graham Beneke. “It seems like regulatory pressure is necessary to spur the introduction of the necessary wholesale product to create this new market.”
The relationship between MTN and Afrihost could point the way to how such a regulatory framework might work, the association said.
For the past 18 months, Afrihost, an innovative ISP that traditionally focused on the ADSL and Web server hosting markets, has resold MTN’s mobile data at prices well below what the mobile operator itself charges, suggesting a generous wholesale discount has been offered to stimulate market demand. (MTN recently acquired a controlling 50% stake in Afrihost for R408m.)
When such a genuine wholesale offering is made, consumers receive immediate price benefits, Ispa said.
About five years ago, MWeb, led by then-CEO Rudi Jansen, shook up the ADSL market, introducing the country’s first uncapped products and changing the way those South Africans lucky enough to afford fixed-line broadband used the Internet. Today, many of us don’t think twice about streaming video online for hours on end. Those restricted to using mobile data only are not as fortunate.
But could uncapped mobile data even be an option? Already Telkom Mobile claims to offer unlimited voice and data on its Completely Unlimited plan, but it’s pricey, Telkom’s coverage is not as good as its rivals’ and there’s a fair-use cap of 10GB, after which the connection is throttled. Vodacom, MTN and Cell C offer (expensive) unlimited voice deals, but they haven’t extended these to data.
Even if Icasa creates a clear model by which mobile operators were required to open their data networks to resellers, it’s unlikely there would be a proliferation of uncapped options unless the operators are given access to much more radio frequency spectrum. Telkom is able to offer a (kind of) unlimited data option only because its network is empty. The other operators do not have that luxury.
Indeed, mobile may never be well suited to delivering the high-bandwidth applications like video on demand that fixed-line users have come to expect. Spectrum is just too limited and the demand for other applications just too great.
That doesn’t mean Icasa should shy away from exploring Ispa’s proposal. The wholesale model has worked well in fixed lines, and its feasibility should be explored in the mobile, too.
And, when government finally gets around to finalising its policy on licensing new spectrum, it should consider making at least some of it available on the condition it’s used on an open-access basis, meaning everyone has fair and equal access to it to provide services to consumers.
- Duncan McLeod is editor of TechCentral. Find him on Twitter
- This column was first published in the Sunday Times