Vodacom on the biggest obstacle to cutting data costs

Vodacom says it will review the provisional findings and recommendations in the Data Services Market Inquiry report published by the Competition Commission.

The operator said it will meet its 14 June deadline for making further submissions and comments on both the recommendations and findings in the provisional report.

The market inquiry follows engagements between the Ministries of Communications, then Telecommunications and Postal Services, and Economic Development regarding South Africa’s communications costs, in particular, the persistently high data prices.

Vodacom said it will also use the latest round of consultations to provide accurate data, which it said, does not seem to have been built into the provisional report.

The operator said it remains committed to its pricing transformation programme to reduce the cost to communicate. It recently announced a significant reduction in out-of-bundle prices by up to 70%, in addition to fully complying with Icasa’s End User and Subscriber Services Charter.

“These initiatives have resulted in a 34% decline in average data prices in the past calendar year and a 57% reduction in average data prices over the past three years,” Vodacom said.

It further noted that in recent years, there has been a significant shift by pre-paid customers to hourly, daily, weekly and fortnightly bundles. Monthly bundles now account for 22% of pre-paid bundle sales compared with 66% in 2015.

Driving down the cost of mobile devices is another important factor in addressing the cost-to-communicate, Vodacom said, noting that it has significantly reduced the price of its 3G and 4G branded devices in the past two years to R279 and R599 respectively.

“Unquestionably, the most significant obstacle to reducing input costs and, by extension, data prices is the fact that no new spectrum has been allocated in South Africa in the last 14 years. Lengthy delays in completing the digital migration and allocating 4G spectrum has curbed the pace at which data prices could have fallen,” Vodacom said.

High demand spectrum – or what is often referred to as the ‘digital dividend’ spectrum – is in the 700-800mHz band and can only be allocated once the digital migration in South Africa is completed, it said.

This spectrum is called the ‘digital dividend’ because it is a highly efficient carrier of 4G signals.

“Having built a 4G network with over 90% population coverage using spectrum other than the ‘digital dividend’ means, for example, that we have had to build significantly more towers at great expense. This increases input costs and was not an efficient method for allocating resources,” Vodacom said.

Read: Icasa reacts to Competition Commission data cost report

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Vodacom on the biggest obstacle to cutting data costs