Data will only fall when govt stops trying to strangle telecoms – expert

South African radio personality Tbo Touch sparked a firestorm late last year when he kicked off his #DataMustFall campaign on social media. He bemoaned the high cost of data on South Africa’s big mobile networks and his campaign even caught the attention of parliamentarians who decided to hold a special hearing on the matter. But when Touch decided to partner with MTN in a deal that zero-rated data for his own online radio show, the campaign started to lose steam. Since the #DataMustFall movement grabbed and then lost South Africa’s attention, more controversy has started to bubble beneath the surface of the country’s mobile network space as the department of telecommunications and postal services late last year announced a policy white paper that calls for a single wireless network. Government expects existing networks to hand back their radio spectrum to this single network. (Spectrum is the wireless resource that underlies mobile internet services.) Government’s call for a single private-public partnered network – upon which traditional networks such as MTN and Vodacom are expected ‘rent’ and ‘share’ spectrum – has been dubbed by several experts as a form of ‘nationalisation’ that will see networks losing billions of rands in investment. BizNews understands that big South African network operators have already sent a submission to government to tweak the policy white paper and make it more business friendly. But as Martin van Staden of the Free Market Foundation outlines below, government needs to take a step back and allow the industry to open up more so that data prices can finally fall in a more competitive environment. After all, it’s because of industry-led efforts that South Africa – in a timespan of just over 20 years – managed to notch up over 100% mobile phone usage among the country’s approximately 50 million strong population. If the industry is given more free room to innovate and greater access to spectrum (rather than less), the democratisation of data could then finally begin in earnest. – Stuart Lowman.

By Martin van Staden*

President Jacob Zuma’s announcement in his State of the Nation Address – directed to “the youth,” no less – that government has prioritised the lowering of data prices, should immediately have raised our scepticism about the viability of his claim.

After the thorough debunking of the #DataMustFall campaign, mainly because of the questionable statistics used, his statement can only be based on the assumption that government has a magic wand that will render data prices lower. The President, no doubt, was referring, implicitly, to some kind of regulation or price control already contained in the new Department of Telecommunications and Postal Services telecommunications policy.

The drop-down menu of an Android phone, focusing on the mobile data option.

Jan Vermeulen at MyBroadband has pointed out that government – not service providers – is best placed to lower data prices. According to Vermeulen, allocating radio frequency spectrum, allowing the rand to strengthen, and reducing red tape, would be the recipe for success. I largely agree, but I do not think “better regulation,” as Vermeulen calls it, is the right way to describe it. This is an environment that demands little to no meddling by government.

It is crucial that the telecommunications department immediately abandon the onerous provisions in the new policy that make the acquisition of a licence more difficult for service providers, and, potentially, establish a new monopoly in the sector in the form of a (single) Wireless Open Access Network (WOAN). In the latter, government threatens to expropriate spectrum already allocated to private service providers for the WOAN to use. Government says this would be in the interest of ‘sharing.’

Spectrum are the radio frequencies – a finite resource – that mobile operators use to provide services to consumers, often referred to as “the lifeblood of the industry.” The more high-demand spectrum a service provider has, the higher the capacity and better the quality of the service it provides. The Independent Communications Authority’s (ICASA) recent postponement of its much-awaited auction of spectrum, was cause for further consternation throughout the industry.

Making it more difficult for mobile network providers to do business will not lower prices, even if the government engages in price control. Prices will rise as service providers attempt to compensate for the new regulatory burden, and, where the Electronic Communications Act empowers the government to enforce price control, the quality of service will decline. Investment in our ICT industry will grind to a halt.

The telecoms industry is the most viable vehicle for substantive socio-economic transformation in South Africa, a fact often overlooked. With a 98% mobile penetration rate across the country and a virtual-100% penetration rate in poor urban communities, what has been achieved in terms of technological empowerment is one of South Africa’s greatest success stories.

The licensing regime in South Africa is already highly burdensome. Licensing and spectrum fees are expensive, besides which, service providers are required to provide discounted data to schools, hospitals, and institutions of higher learning – a cost ultimately borne by paying consumers.

Not only the direct cost of government regulation leads to higher prices. When we had load shedding, for example, service providers had to acquire and maintain diesel generators and back-up batteries. South Africa’s prospects for sustainable electricity generation remain bleak.

Independent Communications Authority of South Africa

If government shelves the new telecoms policy, allows ICASA to allocate spectrum, and significantly reduces the regulatory burden, South Africa’s premiere substantive transformative industry can continue to provide pocket-sized means for life-changing empowerment. Any substantive regulation, as intended in the telecoms policy, should be put to the test of a Socio Economic Impact Assessment (SEIA) to determine whether or not any unintended consequences of the policy will harm the industry, and also be subjected to intense public consultation in good faith.

In the case of the telecoms policy, neither an impact assessment nor public consultation was done appropriately. South Africa is going to be beleaguered by a regulatory regime, the consequences of which are completely unpredictable (other than the truism that the consequences will be unintended), that neither the industry nor the people will fully understand.

The question for government is whether the most important goal we should strive for is the wellbeing of South Africans or the furtherance of a particular ideology. Two separate goals that are mutually exclusive.

  • Martin van Staden is Legal Researcher at the Free Market Foundation and Academic Programs Director of Students For Liberty in Southern Africa.