[19 December 2019] We have set out below a table reflecting the various deadlines for implementation of the recommendations of the Competition Commission’s Final Report on the Data Services Market Inquiry.

Implementation of Competition Commission Data Services Market Inquiry recommendations Date:
Vodacom and MTN must independently reach agreement with the Commission on a substantial and immediate reduction of tariff levels, especially prepaid monthly bundles, within two months. 2 February 2020
Vodacom and MTN must independently reach agreement with the Commission within two months on a reduction in the headline prices of all sub-500MB 30-day prepaid data bundles to reflect the same cost per MB as the 500MB 30-day bundle, or cost-based differences where such cost differences have been quantified, as well as the cessation of partitioning strategies that contribute to anti-poor pricing and/or inferior service outcomes. 2 February 2020
All mobile operators to reach agreement with the Commission within three months to offer all prepaid subscribers a lifeline package of daily free data to ensure all citizens have data access on a continual basis, regardless of income levels. 2 March 2020
This agreement to be given formal legislative or regulatory effect within six months. 2 June 2020
All mobile operators to reach agreement with the Commission within three months on a consistent industry-wide approach to the zero-rating of content from public benefit organisations and educational institutions to ensure broad application. 2 March 2020
ICASA to give formal regulatory status to this agreement through the ICASA End-User and Subscriber Service Charter within six months. 2 June 2020
All mobile operators to reach agreement with the Commission within three months to inform each subscriber, on a monthly basis, of the effective price for all data consumed by the customer. 2 March 2020
ICASA to give formal regulatory status to this agreement in the ICASA End-User and Subscriber Service Charter within six months. 2 June 2020
Telkom Openserve to reach agreement with the Commission on substantial reductions in the price of IP Connect to remove excessive pricing concerns within two months. 2 February 2020

___

[12 December 2019] The Commission has released the full report of its final findings and recommendations in its Inquiry into the Data Services Market.

Data Service Market Inquiry – Final Report

___

[2 December 2019] The Commission has released a summary of its final findings and recommendations in its Inquiry into the Data Services Market.

Data Service Market Inquiry – Summary of Final Findings and Recommendations 2 December 2019

To summarise the summary…

Short-term remedies: the Commission set out the following measures intended to bring immediate relief to consumers:

  • Vodacom and MTN must independently reach agreement with the Commission on:
    • substantial and immediate reductions on tariff levels, especially prepaid monthly bundles, within two months of the release of the report. The preliminary evidence suggests that there is scope for price reductions in the region of 30% to 50%.
    • a reduction in the headline prices of all sub-500MB 30-day prepaid data bundles to reflect the same cost per MB as the 500MB 30-day bundle, or cost-based differences where such cost differences have been quantified.
    • ceasing ongoing partitioning and price discrimination strategies that may facilitate greater exploitation of market power and anti-poor pricing.
  • All mobile operators must reach agreement with the Commission within three months to offer all prepaid subscribers a lifeline package of daily free data to ensure all citizens have data access on a continual basis, regardless of income levels. The size of this lifeline package is to be determined in consultation with industry, ICASA and relevant experts. The agreement must be given formal legislative or regulatory effect within six months (one suggestion is that this be included as an obligation on successful bidders for high-demand spectrum).
  • All mobile operators must reach agreement with the Commission within three months on a consistent industry-wide approach to the zero-rating of content from public benefit organisations (PBOs) and educational institutions to ensure broad application. ICASA has six months to make this a requirement of the End-User and Subscriber Service Charter Regulations, including a prescribed list of PBOs/educational institutions that have applied and been approved for “zero-rating status”.
  • All mobile operators must reach agreement with the Commission within three months to inform each subscriber, on a monthly basis, of the effective price for all data consumed by the customer. ICASA has six months to make this a requirement of the End-User and Subscriber Service Charter Regulations.
  • Telkom Openserve must reach agreement with the Commission on “substantial reductions” in the price of IP Connect to remove excessive pricing concerns within two months.

The Commission made it clear that failure to reach agreement in the time period prescribed will lead to prosecution under the appropriate sections of the Act. It also noted that it was working closely with ICASA and making submissions to its processes on high-demand spectrum and mobile broadband services. This cooperation incorporates:

  • the licensing of the WOAN: to ensure a commercially viable consortium secures the license, to ensure it has cost-orientated access to facilities and national roaming, to provide a spectrum fee holiday, and to build in appropriate regulatory oversight which includes at a minimum non-discrimination, but potentially more if an existing operator is licensed.
  • the licensing of the remaining spectrum: to ensure imposition of spectrum caps on the two largest operators, to ensure wholesale open access at cost-orientated prices to their facilities, to ensure social obligations including a lifeline data package to all South Africans, and to ensure any cost reductions are passed through to price reductions.

Medium-term interventions to promote price-based mobile competition: the Commission recommended the following:

  • Legislative changes must be made to facilitate cost-based access to facilities, including pricing standards for different types of facilities, e.g. cost plus a fair return for essential facilities vs. a less stringent standard for non-essential facilities.
  • ICASA to use its powers in the Electronic Communications Act to define essential facilities and to have the required legislation in place within 18 months.
  • Vodacom and MTN must reach agreement with the Commission within six months to ensure that their national roaming agreements with other networks are priced, at a minimum, at wholesale rates which reflect a reasonable discount on their own effective retail rates as measured by the average revenue per GB, with provision for annual downward revisions to reflect reductions in their own effective retail rates over time. If no such agreement is reached, the Commission will proceed to prosecution in respect of excessive pricing and/or exclusionary conduct. Minimum pricing standards for national roaming should be incorporated into the amendments to legislation with powers for ICASA to regulate roaming agreements.
  • All mobile operators must reach agreement with the Commission to ensure that the wholesale rate reflects a discount on the prevailing effective retail rate. If no such agreement is reached, the Commission will consider prosecution. Ultimately the minimum pricing standards for MVNOs and wholesale access should be incorporated into the amendments to legislation with powers for ICASA to regulate such agreements.
  • Vodacom and MTN must reach agreement with the Commission to institute accounting separation for their wholesale network infrastructure, including the radio access network (RAN) and core network within the next year. In addition, the Commission also recommends that ICASA re-institutes the regulatory accounting reporting requirements for Vodacom, MTN and Telkom Openserve within the next six months.
  • DTPS start the process of policy and legislative reforms to incorporate the legislative changes identified above, support the ongoing regulatory function of ICASA as well as the rapid rollout of infrastructure.
  • An amendment to the ECA should be fast-tracked over the next twelve months and the Commission recommends that the amendments include the following changes:
    • Amendments to section 67 of the ECA to ensure that the preconditions for regulatory action are proportionate to the type of regulatory action and that ICASA can regulate on the basis of findings by the Commission, other relevant regulators or courts.
    • Provision for regulation of national roaming and MVNO agreements by ICASA.
    • Introduction of principles for access and price regulation for the leasing of facilities.
    • Implement the rapid infrastructure deployment strategy, which should also incorporate appropriate restrictions on municipal charges and conditions for granting such wayleaves.
  • To promote the development of alternative infrastructure to provide data services in lower income areas and smaller secondary cities and towns, the Commission recommended that:
    • National government consider providing investment incentives to FTTH providers for network rollout in low-income areas.
    • Government generally promote free public Wi-Fi in low-income areas.
    • ICASA consider models and regulatory changes to allow at least non-profit community networks, and possibly small commercial enterprises to access licensed spectrum not used by mobile operators in rural areas.
    • A single government department or agency be designated as responsible for driving these initiatives across the different departments and levels of government.

___

[2 May 2019] We have obtained the full 288-page report:

Data Services Inquiry Provisional Report

___

[27 April 2019] ICASA has published a media release welcoming the provisional findings and recommendations by the Competition Commission following the data services market inquiry:

ICASA Media Release

___

[24 April 2019] The Competition Commission has released a provisional report on its inquiry into the data services market.

Competition Commission Data Services Market Inquiry – Summary of Provisional Findings and Recommendations April 2019

Interested parties have until 14 June 2019 to make submissions on the provisional findings and recommendations, which include the following:

  • the Commission undertook its own exercise of benchmarking local mobile data prices internationally and concluded that local prices – particularly in the prepaid market – are relatively high.
  • pricing structures are “anti-poor” and lack transparency
  • a lack of spectrum and cost-based facilities access is driving up costs
  • price-based competition in mobile markets can be improved materially,

___

[29 March 2019] The Competition Commission has announced a further extension to the finalisation of this Inquiry, with the final report now due by 31 December 2019 and an interim report to be delivered by 30 April 2019. The Commission will invite public submissions on the interim report.

Amended Terms of Reference for the Data Services Market Inquiry

__

[26 March 2019] See below for transcripts of the public hearings in respect of the Competition Commission’s Data Services Market Inquiry, held in October 2018:

___

[19 October 2018] Please see below for presentations made at the public hearings:

Alliance for Affordable Internet
Amandla Mobi
DG Murray Trust
Media Monitoring Africa
Internet Service Providers Association
Right2Know
Research ICT Africa
Broadband Infraco
Cell C
ECN
Kuziva Muzondo
MTN
Telkom / BRG
Vodacom (Letter)
Vodacom (Submission)

___

[5 October 2018] The Commission has issued a media release relating to concentration of market power in the South African Product Markets, referring to a working paper on this topic released earlier this year. The results of the Commission’s investigation – based on an analysis of merger reports since 2009 – are fascinating for the “information communication technologies” product market, which is identified as being the most concentrated product market by a substantial margin.

The extent of market concentration in South Africa’s product markets CC Working Paper

CC MR Market Concentration in product markets 5 October 2018

__

[15 September 2018] The Commission will hold public hearings on the Inquiry from 17-19 October 2018 at its offices in Pretoria.

Those wishing to participate must:

  • confirm this to datainquiry@compcom.co.za by no later than 21 September 2018,
  • send a written submission to the same address by no later than 11 October 2018.

Data Services Market Inquiry – Notice regarding public hearings

Submissions should focus on the following:

  • Are data prices in South Africa (whether mobile, fixed or other) higher than they ought to be?
  • To the extent that data prices in South Africa are higher than they ought to be, what are the factors that drive these outcomes?
  • How can these factors be effectively remedied?
  • What is the impact of data prices and access to data more broadly on lower-income customers, rural customers, small businesses and the unemployed? How important are affordable data prices for these customers?

Previous submissions (November 2017) to the Commission can be found below:

__

[3 September 2018] The Commission has published a notice to the effect it requires until 31 March 2019 to complete its analysis of evidence gathered and further consultations with stakeholders. It also indicated that it is now planning to hold public hearings, which is interesting.

Competition Act – Data Services Market Inquiry – Amendments to Terms of Reference

___

[23 September 2017] The Competition Commission has issued a call for submissions from the public to assist it with its inquiry into data prices in South Africa. The objective of the market inquiry is to determine what factors or features of the market(s) and the 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.

Call for Submissions: Data Services Market Inquiry

The closing date for submissions is 1 November 2017. These should be emailed to datainquiry@compcom.co.za.

Submissions must be accompanied by a signed DSI-1 Form – “Registration Form for Written Submission” – and should follow the requirements set out in the Data Services Market Inquiry Guidelines and the Terms of Reference for the Inquiry.

The Commission has provided a list of questions to be responded to, but stressed that interested parties can make submissions on any matter relevant to the cost to communicate in South Africa, whether from a consumer, business or government perspective.

Submissions should be as detailed as possible and any views or opinions expressed should be substantiated, as far as possible, by examples and evidence or studies conducted by the stakeholders.

Guideline questions:

Data prices and services in South Africa

  1. Current market research suggests that data prices in South Africa are significantly higher than many other countries, both in Africa and internationally. In light of the recent research, the following questions pertain to prices for data services in South Africa:
    • In your view, how do data prices in South Africa compare to other countries?
    • For which specific data markets, products or services (whether for data services alone or a product that includes additional services) are prices high in South Africa? Please substantiate your response.
    • In your view, what are the main causes for the higher prices for data services in South Africa? In your answer you could refer to probable causes such as cost issues, competition issues or regulatory issues. Please elaborate and provide any available evidence.
    • With regards to data services and related products used in South Africa, please list all services that you currently use as an end-consumer and/or as a business or other such entity. Please provide details on the following:
      • The exact products/services used;
      • Whether you use these as a private consumer or business/organisation (or both where appropriate);
      • The name of the service provider/s; and
      • The pricing and contractual arrangements involved.

The data services value chain

  1. Describe the entire value chain for the provision of data services. Include the following in your description:
    • The different levels of the value chain and the activities thereof;
    • A list of all stakeholders active in each of the levels of the value chain (to the best of your knowledge);
    • The nature of commercial relationships between the different levels of the value chain; and How each level of the value chain identified above is linked to other parts of the Information and Communication Technology sector, and the economy more broadly.

The state of competition in the provision of data services

  1. How do existing firms conduct themselves in the markets for the provision of data services, whether with respect to other firms (competitors or potential entrants) or with respect to their customers?
  2. Are there firms that operate as monopolies at any level of the value chain for the provision of data services? Are there firms which have market power in any data market, service or product? Elaborate and provide examples.
  3. Across the value chain for data services, are there any firms that engage in any conduct that could be seen as unfair or anti-competitive? Please elaborate and provide examples.

Telecommunications regulation and spectrum allocation

  1. There are a variety of regulations, legislation, and regulatory bodies – including the Independent Communications Authority of South Africa (“ICASA”), the Department Of Telecommunications and Postal Services (“DTPS”), and the Department of Communications (“DOC”) – that inform the functioning of the telecommunications sector in South Africa. In light of this, please answer the following questions:
    • How does the current regulatory environment in the telecommunications sector impact (i) the ability of existing firms to charge high prices for data, (ii) the level of competition, and (iii) the potential for entry?
    • Provide your understanding and view of the roles of ICASA, DTPS, DOC and any other relevant body in the sector with respect to prices for data services in South Africa.
    • Provide your view of any recent regulatory changes and proposed amendments to the Electronic Communications Act – such as those focusing on rapid rollout of infrastructure and sharing of network infrastructure – to the extent that they relate to prices for data services and products.

 Spectrum 

  1. As the demand for data in South Africa escalates, the allocation of, and access to, spectrum in South Africa has become a key issue in the sector and for data services in particular. With regards to spectrum, please answer the following questions:
    • How do issues of spectrum access and allocation affect competition and the potential for new entry?
    • How do you view the role of spectrum in the mobile market and how do you think spectrum affects costs and pricing of data services?

Adequacy of data supply quality and coverage

  1. Please address the following questions:
    • In your view, is data supply quality and coverage in South Africa adequate by international standards and the country’s development needs? Please elaborate.
    • How are businesses and consumers in low-income, under-developed, or rural areas affected by South Africa’s data services challenges?

Further submissions

Kindly provide submissions on any other issues not referred to in the Terms of Reference that you view as relevant to the price of data services in South Africa. Please detail these issues and provide verifiable evidence in support of your submission.

__

[18 August 2017] The Competition Commission has given notice of its intention to initiate an inquiry into the data services market through the publication in the Government Gazette of the terms of reference of the inquiry.

Competition Act: Terms of Reference: Data Services Market Inquiry 18 August 2017   

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.