R6bn in savings thanks to lower data prices, parly hears

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Competition Commissioner Tembinkosi Bonakele. (File, Bloomberg)
Competition Commissioner Tembinkosi Bonakele. (File, Bloomberg)
  • There have been R6 billion in savings linked to reductions in data prices so far, says Competition Commissioner Tembinkosi Bonakele.
  • If data prices are to come down further, there needs to be the release of spectrum but the rollout has been halted due to legal challenges, says Bonakele.
  • During lockdown there has been an increase in online usage, but the issue of data prices is still ongoing. 

If data prices are to be reduced further, then there must be a release of spectrum. But its rollout is being halted by legal challenges, members of Parliament heard on Wednesday.

The Portfolio Committee on Trade and Industry was briefed by the Competition Commissioner Tembinkosi Bonakele, on the watchdog's strategic and annual performance plans for 2021/22.

Bonakele commented on the past work of the commission, such as the data market inquiry. The Commission in December 2019 released its final report, which showed the market was dominated by two firms - Vodacom and MTN. The duopoly had led to excessive data pricing, Fin24 previously reported.

Both MTN and Vodacom subsequently introduced price reductions.

Bonakele said a second round of reductions could be expected this year. He added that there have been R6 billion in savings as a result of reductions so far.

But there is a constraint to further reductions.

"… That is the issue of the release of spectrum. This process is held up in courts. We should have had released spectrum in SA a long time ago," said Bonakele. "It is a real issue to be attended by government and all stakeholders involved. We have got to have spectrum to lower down costs," he emphasised.

The Pretoria High court in March ordered the Independent Communications Regulator of South Africa to halt the release of spectrum, for a case brought by Telkom and e.TV to be heard. The applicants have raised concerns over alleged procedural flaws, Fin24 previously reported.

"We have made our submissions with respect to the process. Part of the conditionalities of releasing spectrum should be an issue of universal access - access by schools, access by healthcare centres as well as dispensation for poorer communities so that we can get everyone connected," said Bonakele.

He said that the Commission's work was not only limited to data prices but is also concerned with access to online content, particularly by public benefit organisations like schools. The Commission is following up with industry, ministries and health and education departments to assess progress.

He said it is difficult to put down a number or a correct price for data, but he anticipates the issue of data prices will continue to be a concern. "It seems to me that we have not reached the end of this concern about prices. I think this concern will continue and we will continue doing our work and monitoring and pushing the prices further down," said Bonakele.

Lockdown impact

Bonakele noted that lockdown had resulted in increased usage of online content. "The entire economy is digitalising and transforming at a high pace," he said.

More food delivery, hotel and flight booking businesses are expected to rely on online platforms, he added.

The commission has launched an Online Intermediation Platforms Inquiry in May. This is one of two market inquiries targeted this year. Bonakele said this would be an inquisitorial process, to understand the competition challenges in the industry.

The Commission wants to look into whether there are abuses of market power.

"There is a general view that service fees differ with small independent restaurants paying up to 30% commission while large chains typically pay significantly less," the Commission's presentation to Parliament read.

This year the Commission also plans to initiate 10 new Covid-19 investigations, including matters referred by the Special Investigating Unit on the Personal Protective Equipment scandal. Bonakele added that the Commission will be keeping watch of vaccine procurement to make sure they are compliant with the Competition Act.

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