Who will win the battle?

2009-11-02 08:42

Will the ridiculously high cost of using a cellphone in South Africa come down or are MTN, Vodacom and Cell C just too big and powerful to be budged?

There's a fascinating ding dong battle going on right now with the Minister of Communication telling the Independent Communications Authority to get off their arses and do something. Icasa immediately met with MTN and Vodacom in effort to talk them into reducing their costs and from what I can gather the two cell phone giants told Icasa to get stuffed.

Now, the new improved, tough talking, Parliamentary Portfolio Committee on Communications has asked Icasa for its authority to fire all of its councillors should it miss its own March 2010 deadline for finalising the process of regulating mobile interconnection rates.

So, will March 2010 see Icasa get tough with Vodacom, MTN and Cell C or take a chance on parliament not firing them?

But, there's another aspect to this business of cellphone charges and probably the main reason that South Africa is one of the most expensive countries in the world to use a cellphone.

And that is the consumer. You see, when it comes to anything that has a high price tag in this country - cellphones, cars, internet connectivity - I could probably name a hundred more - it's the consumer that simply allows this to happen.

In spite of bitching like crazy about cellphone prices, South Africans still continue to buy pay as you go packages and contracts as though there is no tomorrow.

And when the consumer keeps buying stuff at high prices, who can blame people like Vodacom, Cell C and MTN for just continuing to tear the ring our of the market?

After all, it's a free market economy and there is no law that prevents a company from charging what it likes for a product or service. And what companies do when people continue to snap up their goods and services in spite of high prices? Well they just keep jacking them up. Nothing wrong with that. Nothing illegal or even immoral.

The only time the question of immorality arises is when someone spends money on airtime instead of food for the kids.

The consumer is going to have to play a big role in all this. It is very unhealthy in any economy for government to intervene except where there is a monopoly or price collusion.

I reckon that if you want to see prices come down then you as a consumer will have to play your part by cutting down on cellphone usage and all those frenetic an unnecessary SMSes.

Because without that, Vodacom, MTN and CellC will quite justifiably and within their rights cut some prices but hike others to keep hauling in the profits. It's what you would do if you ran Vodacom and it's what I would do. It's called business.

We'll get given a break on one hand and pay through the nose somewhere else.

I am not convinced that threats from Icasa or government are going to do anything but force the big cell giants into rearranging their furniture.

Nothing will change with regard to high prices in this country until our apathetic, lazy and spoilt consumers start taking action instead of always leaving it to someone else.

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