{"id":30428,"date":"2013-01-24T13:10:07","date_gmt":"2013-01-24T11:10:07","guid":{"rendered":"http:\/\/businesstech.co.za\/news\/?p=30428"},"modified":"2013-01-24T15:14:32","modified_gmt":"2013-01-24T13:14:32","slug":"world-bank-takes-swipe-at-sa-mobile-prices","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/mobile\/30428\/world-bank-takes-swipe-at-sa-mobile-prices\/","title":{"rendered":"World Bank takes swipe at SA mobile prices"},"content":{"rendered":"

A study conducted by the World Bank<\/a> says that, despite a cut in interconnect rates and ample access to international bandwidth, South Africa’s mobile prices are still uncompetitive.<\/p>\n

In its South Africa BoP (Base of Pyramid) Study – which looks at mobile penetration and use of mobile applications in the base South African population – the World Bank has noted that high mobile pricing in the country is stifling competition in the sector and stunting development in the mobile apps space.<\/p>\n

According to the study, mobile pricing is an indicator of the effectiveness of the market structure and regulation of the sector, and also provides the best indicator of the competitiveness of a market.<\/p>\n

“With high prices across services, South Africa\u2019s poor showing in a year-long prepaid mobile pricing study in 46 African countries during 2011\u20132012 is a reflection of its lack of competitiveness. South Africa ranked 30th,” the study said.<\/p>\n

High prices across all of the South African mobile operators are a result of interconnection charges, the World Bank said.<\/p>\n

In March 2012, the latest round of interconnect rate cuts kicked in, taking peak mobile termination rates (MTR) down from R0.73, to R0.56 per minute; and off-peak mobile termination rates down from R0.65, to R0.52 per minute.<\/p>\n

However, the World Bank describes these imposed rates as “modest reductions”, saying further that the resulting savings have generally not been passed on to end users.<\/p>\n

“Two later market entrants – Cell C<\/a> and 8ta<\/a> – have attempted to introduce cheaper mobile prepaid products, but these products have not forced down prices,” the World Bank said.<\/p>\n

“This is because the relatively small reductions in termination rates has not given new entrants the margin to really undercut dominant players in the market and attract those subscribers to their networks.”<\/p>\n

“As long as termination rates remain significantly above the costs of an efficient operator, termination rate reductions are unlikely to lead to positive [pricing] outcomes.”<\/p>\n

Data is no exception<\/h3>\n

Interconnect reductions are not the only place where savings have been kept from end users, according to the World Bank’s findings.<\/p>\n

Since the monopoly held by the SAT3<\/a> undersea cable ended in 2009 when Seacom came into the market (followed by EASSy<\/a> in 2010, and WACS in 2011), international bandwidth is “no longer the major constraint on usage of data services”, the World Bank said.<\/p>\n

“While this has had a positive effect on international wholesale prices, the benefits were not passed on entirely to end-users,” it said.<\/p>\n

According to the World Bank’s research, encumbent operators Vodacom<\/a> and MTN<\/a> jointly take up 80% of the South African mobile market share – with Vodacom dominating overall with over 51%.<\/p>\n

MTN currently holds close to 33% of market share, while Cell C and 8ta command 14% and almost 2% of the SA market, respectively.<\/p>\n

Despite holding the biggest portions of mobile subscribers in the country, both MTN and Vodacom carry some of the highest data fees, the study found.<\/p>\n

\"Market<\/a>

SA Mobile market share<\/p><\/div>\n

“Vodacom and MTN do not compete on price,” the World Bank said, “their data packages are still relatively expensive compared to the small operators.”<\/p>\n

Looking at in- and out-of-bundle data prices, the World Bank report found that MTN and Vodacom carry data fees that are often three to four times greater than those of 8ta and Cell C.<\/p>\n

\"in<\/a>

SA in-bundle rates<\/p><\/div>\n

\"out<\/a>

SA out-of-bundle rates<\/p><\/div>\n

“These prices increase the input cost of experimentation in the mobile apps space. Further, the high cost of access for would-be users constrains the ability of innovations to scale once they come to market.”<\/p>\n

More on the South African mobile landscape
\n<\/strong><\/h3>\n

Mobile voice the next price war \u2013 analyst<\/strong><\/a><\/p>\n

MTN and Vodacom continue record surge<\/strong><\/a><\/p>\n

SMS revenue decline to continue: Vodacom<\/strong><\/a><\/p>\n

Cell C: \u201clet the fight begin\u201d<\/strong><\/a><\/p>\n

Cell C marches on in mobile data war<\/strong><\/a><\/p>\n

MTN surges to record high<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

A study conducted by the World Bank says that, despite a cut in interconnect rates and ample access to international bandwidth, South Africa’s mobile prices are still uncompetitive.<\/p>\n","protected":false},"author":14,"featured_media":8070,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[34],"tags":[407,42,26,5052,5051,28,27,4423],"class_list":["post-30428","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mobile","tag-8ta","tag-cell-c","tag-headline","tag-interconnect","tag-mobile-data","tag-mtn","tag-vodacom","tag-world-bank"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/30428","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/14"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=30428"}],"version-history":[{"count":8,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/30428\/revisions"}],"predecessor-version":[{"id":30512,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/30428\/revisions\/30512"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/8070"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=30428"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=30428"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=30428"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}