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Data Services Market Inquiry Final Report Released

December 3, 2019

Department of Trade and Industry

3 December 2019

The Data Services Market Inquiry Final Report has been released.

The Competition Commission initiated the Inquiry in August 2017.

At the time, the Competition Commission declared that the Inquiry will cover all “relevant players in the value chain who contribute to or influence prices of data services in South Africa.”

High data costs was a key determinant in calling for the Inquiry.

The aim of the Inquiry was to “understand what factors or features of the market(s) and value chain may cause or lead to high prices for data services, and to make recommendations that would result in lower prices for data services.”

In a statement following the release of the report, the trade and industry department indicated that key findings of the Inquiry were that the price of data in South Africa was high compared to many other countries and profitability for mobile network operators (MNOs) in South Africa exceeds that of MNOs in similar markets.

Recommendations outlined in the report include:

• a proposed reduction in data-prices charged by the telecoms companies, by a third to half of the current rates;
• reduction on the price differentials on prepaid data that discriminate against low-end, largely poorer users;
• a minimum package of daily free data for prepaid customers;
• reduction in roaming prices and MVNO pricing to below the retail prices charged;
• zero-rating of content for educational and PBO institutions website downloads, to enable access to key information by students and citizens;
• pricing-transparency provisions to enable consumers to see the real difference between the pricing of different telecoms companies;
• alternate infrastructure provision such as wifi, with incentives to speed up their rollout;
• accounting separation between wholesale network and core network and
• legislative amendments to enable the changes required in the market.

According to the trade and industry minister, Ebrahim Patel, the Commission has “found that there is indeed a competition problem in the market for data. The report notes that data prices are higher than they should be, and higher than in many other markets elsewhere in the world. They found that profitability levels are very high, reflecting anti-competitive outcomes and potentially the subject of an excessive pricing investigation. They drew attention to the structure and practices in the market that results in discrimination against lower paid consumers and they found that the roaming markets are not working or are not working as they should.”

The minister also pointed out that low data prices were necessary to grow the economy.

The department announced that the Competition Commission will seek to engage the industry on bringing down data prices over the next two months.

The Commission has also emphasized that “should an operator fail to reach the required agreements with the Commission within the specified timeframes, the Commission will proceed to prosecution under the appropriate sections of the Act. The Commission will also institute ongoing monitoring of pricing levels and profitability into the future until the market becomes more competitive”.

Meanwhile, the department published, in Government Gazette 42861, notification that the Companies and Intellectual Property Commission (CIPC) will be closed to the public on 6 December 2019.

According to the notice, the day will be regarded as dies non for purposes of the stated acts.

CIPC offices will reopen on 9 December 2019.