Cutting through government red tape

EVERY smartphone user in South Africa is waiting with bated breath for the day when cellphone data bundle costs finally drop, but the question is, will they ever fall?

With competition between network companies over mobile data package offers heating up, researchers believe the price of data will eventually drop.

But strict government red tape is cited as the hurdle in the way of providing cheaper data.

ICT researcher and analyst Arthur Goldstuck, founder of World Wide Worx and editor-in-chief of Gadget.co.za believes the price of data could decrease in the next two to three years.

He said should the network companies not respond to the call for cheaper data, they will be pressured by the regulator to drop the price.

“It is healthy competition, but mobile networks must know exactly what consumers are looking for, while consumers must know what they are signing up for.

“When it comes to cellphone contracts, customers are looking for packages that are more focused on better data deals. This is why people continuously switch between networks that offer better deals,” Goldstuck said.

Legal researcher at the Free Market Foundation and academic programmes director of Students for Liberty in Southern Africa Martin van Staden shares Goldstuck’s views, saying that if the competition between the network companies continues, it will eventually lead to good news for South Africans wanting cheaper data.

“If they continue to compete over pricing and better deals, they will end up pushing the price down,” Van Staden said.

During the State of the Nation Address, President Jacob Zuma called for a decrease in the cost of mobile data.

Van Staden, however, blames strict government regulation policies as the main cause of rising data costs.

He said if the government loosened its hold on regulation policies, the market would be able to compete freely, and data costs would decrease.

He added that strict regulation discourages pricing competition between companies.

“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,” said Van Staden.

He added that among other factors that contribute to the high cost of data are licensing and spectrum fees, which are expensive.

“Service providers are also required to provide discounted data to schools, hospitals, and institutions of higher learning - a cost ultimately borne by paying consumers,” he added.

Jan Vermeulen of MyBroadband pointed out that the government, not service providers, is rightly positioned to lower data prices.

According to Vermeulen, allocating radio frequency spectrum, allowing the rand to strengthen, and reducing red tape would be a recipe for success.

When it comes to cellphone contracts, customers are looking for packages that are more focused on better data deals

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