Weak regulation 'drives up SA mobile prices'

2012-04-19 14:39
Cape Town - Weak regulation in South Africa has driven up mobile data pricing, pushing the country down to 30th out of 46 African countries surveyed by Research ICT Africa.

A new policy document by the organisation found that Icasa regulation on the termination price that operators charge to terminate calls on each other's networks has not had the desired effect of significantly reducing prices for consumers.

"The fact of the matter is that we don’t have an as highly competitive market as they have in many other African countries, nor as effective regulation. Instead we have what is essentially a well-entrenched duopoly, which is not regulated in support of late entrants or consumers," said Dr Alison Gillwald, executive director at Research ICT Africa.

She said that regulations in SA that were modelled on those in Europe did not suit the environment.

"The problem is that our laws have just been copied over directly from Europe, where markets are far more mature and have the benefit of strong and varied competition. Much of our legislation is not appropriate for our market, and very onerous on an incapacitated regulator."

Transparent

Kenya, Mauritius, Egypt and Namibia are among the cheapest countries in Africa in terms of mobile pricing. In the latter, dominant operator MTC dramatically reduced its pricing following reductions in interconnection rates, the research found.

According to Gillwald, the number of operators significantly impacts on the pricing and expansion of services.

"Even though most African countries have smaller markets than what we do; some of them have as many as seven players, though four or five seems more optimal in terms of market fragmentation. This means their retail pricing is naturally more competitive to drive demand, which nullifies the need for strict pricing regulations," she said.

Icasa should force operators to be more transparent with pricing, according to Research ICT Africa. The research found that pricing in SA remained virtually unchanged from 2011.

"Although Cell C and 8ta sought to undercut the prices of other operators with lower pricing of their cheapest packages, the average prices remained unchanged," says the paper.

"What we do want from the regulator is some kind transparency of pricing. A published quarterly review of prices perhaps, or some kind of online cost calculator such as the British regulator Ofcom has put on line," said Gillwald.



- Wikus Engelbrecht is a member of the GraphicMail marketing team. He can be reached at wikus@graphicmail.com.
- News24
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