The Data Service Market Inquiry – which will commence on 18 September 2017 – comes after a request from the Minister of Economic Development, acting in response to concerns relating to high data costs in South Africa and recognising the importance of data affordability for the South African economy and consumers.
The Commission further “has reason to believe that there are features of the sector that prevent, distort or restrict competition within the sector, and/or to achieve the purposes of the Act”.
The Terms of Reference spell out the purpose, objectives, scope of the inquiry.
The purpose of the inquiry is to understand what factors or features of the market(s) and value chain may cause or lead to high prices for data services, and to make recommendations that would result in lower prices for data services.
The main objectives of the inquiry are to:
- Obtain a clear understanding of the data services value chain, including the interaction and commercial relationships between different levels of the value chain, and the relationship with other parts of the ICT sector and the broader economy.
- Assess the state of competition in the market at every stage of the value chain for provision of data services in order to identify areas of market power where customers or consumers may be exploited or excluded by firms and to identify any other structural, behavioural or regulatory factors that may influence competition or pricing. The assessment would include but not be limited to:
- Market structure;
- The general adequacy and impact of the current regulatory regime;
- Strategic behaviour by large fixed and mobile incumbents;
- Costs faced and profits earned by fixed and mobile network operators;
- Current arrangements for sharing of network infrastructure;
- Investment in infrastructure by operators and access to, and allocation of, spectrum as they relate to data services price and competition concerns; and
- The adequacy of regulation to promote new South African entrants (particularly historically disadvantaged individuals), including but not limited to matters such as dynamic spectrum access and local loop unbundling.
- Benchmark South African data services pricing against those of other countries.
- Establish whether data supply quality and coverage is adequate by international standards and the country’s developmental needs.
The outcome of the market inquiry will be report including a set of recommendations:
- to government on how the market could be made more competitive and inclusive and how data prices can be brought down to secure South Africa’s position as a low-data-cost economy.
- to the sector regulator on the competitive impact of the regulatory framework, and any need for amendments thereto.
The Competition Commission believes the inquiry is likely to be completed by 31 August 2018.