{"id":50339,"date":"2013-12-02T10:20:09","date_gmt":"2013-12-02T08:20:09","guid":{"rendered":"http:\/\/businesstech.co.za\/news\/?p=50339"},"modified":"2013-12-02T10:22:45","modified_gmt":"2013-12-02T08:22:45","slug":"operators-clash-over-secret-sa-mobile-report","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/mobile\/50339\/operators-clash-over-secret-sa-mobile-report\/","title":{"rendered":"Operators clash over “secret” SA mobile report"},"content":{"rendered":"

MyBroadband recently published the results of a mobile pricing report titled \u201cAnalysing the Cost of Mobile Communications<\/strong><\/a>\u201d, which challenged the long-held view that low-end mobile subscribers in South Africa are getting a bad deal.<\/p>\n

More information has now emerged about the report, including why the results could not be released publically.<\/p>\n

The research was commissioned after a discussion between the Department of Communications<\/a> and Vodacom<\/a>, MTN<\/a> and Cell C<\/a>.<\/p>\n

The aim was simple \u2013 to benchmark South Africa\u2019s mobile prices against peer countries which were similar to South Africa.<\/p>\n

The research was done by two independent research firms \u2013 Strategy Analytics and Pygma Consulting.<\/p>\n

The final report was not released publically. The reason: there is a confidentiality agreement that the report would not be distributed without the consent of all the parties involved.<\/p>\n

It is understood that MTN and Vodacom wanted to make the results public, but Cell C objected to this.<\/p>\n

The report, one source said, showed that Cell C\u2019s pricing did not stack up well against MTN and Vodacom\u2019s.<\/p>\n

Despite this confidentiality agreement, MTN South Africa\u2019s former CEO, Karel Pienaar<\/a>, made reference to the report in November 2012 as part of the PPCC public hearings.<\/p>\n

\"Karin<\/a>

Karin Fourie<\/p><\/div>\n

Cell C explains<\/h3>\n

Cell C spokesperson Karin Fourie<\/a> said that the operators could not agree on the contents of the report, and it therefore remained confidential.<\/p>\n

\u201cMTN and Vodacom made changes to the last version of the report, as they did not like the manner in which the results were presented in previous versions,\u201d said Fourie.<\/p>\n

\u201cCell C did not participate in making these changes. As there were several different versions of it, it was agreed that it would not be released.\u201d<\/p>\n

Fourie said that \u201cclearly the report cannot be regarded as independent and so there was no value in it nor was there any value in publicly releasing it\u201d.<\/p>\n

\u201cIn our view the release of a version of the report could only have been done through a breach of the confidentiality undertakings between the operators,\u201d said Fourie.<\/p>\n

Price benchmarking report versus other research<\/h3>\n

The pricing benchmarking report commissioned by the mobile operators challenged similar research which showed that South Africa had high mobile prices when compared with other countries. Mobile pricing reports produced by Research ICT Africa (RIA) were highlighted in discussions.<\/p>\n

According to one source, RIA did not have access to accurate effective mobile rates from the operators, and their estimates are not accurate. (RIA stated in its pricing report that MTN Zone products, which are dynamically priced, were estimated at 70% of retail prices)<\/p>\n

Questions have also been raised about RIA\u2019s basket selection, and the countries against which South Africa was compared.<\/p>\n

Graham de Vries<\/a>, acting Chief Corporate Service Officer at MTN SA, told MyBroadband that the benchmarking report is now outdated as it only considers pricing up to May 2012.<\/p>\n

However, he added that the report commissioned by the mobile operators did have some benefits over other studies.<\/p>\n

\"MTN<\/a>

MTN price benchmarking report presentation<\/p><\/div>\n

The first differentiator<\/strong> was that it sought to compare SA\u2019s performance against peer countries.<\/p>\n

De Vries said that peer review countries should display similar characteristics in terms of economy, geography, technological development, the size and topography of a country and the extent to which people live in rural areas.<\/p>\n

\u201cA price comparison of countries cannot be properly compared simply because they are situated closely geographically \u2013 in the same continent, for example \u2013 as despite being close in terms of geographic proximity, they may still display very different underlying characteristics,\u201d said de Vries.<\/p><\/blockquote>\n

The second differentiator<\/strong> of the report, he said, was the methodology applied.<\/p>\n

\u201cThe consultants defined a set of baskets that reflected usage of \u201ctypical\u201d consumers in the South African market, based on the internationally accepted OECD price benchmarking methodology, but based on South African market data provided by the South African mobile industry,\u201d said de Vries.<\/p>\n

The model was then populated with the pricing information \u2013 up to May 2012 \u2013 of mobile voice and data tariff information available from each operator.<\/p><\/blockquote>\n

Vodacom spokesperson Richard Boorman<\/a> said that the company cannot comment on the mobile pricing report referred to in the previous MyBroadband article.<\/p>\n

Boorman did say that the basis of publicly cited pricing information is questionable given that it does not accurately take into account SA-specific usage baskets or the particular approach to pricing in South Africa.<\/p>\n

\u201cRecent price movements, particularly in data, would likely result in a more favourable comparison for upper-end users,\u201d said Boorman.<\/p>\n

Cell C did not share this view, and backed Research ICT Africa\u2019s research. \u201cCell C has no reason to doubt the results of the internationally acclaimed work of Dr Gillwald and her colleagues,\u201d said Fourie.<\/p>\n

Results between different studies vary depending on the methodologies used, therefore Cell C does not believe that the Strategy Analytics and Pygma Consulting study provides the best view of SA\u2019s mobile prices when compared with other countries.<\/p>\n

Fourie added that Cell C agrees with the Department of Communications and ICASA that South Africa\u2019s low-end pre-paid prices are high when compared to global standards.<\/p>\n

Research ICT Africa was asked for comment on the report, and the fact that it challenges some of RIA\u2019s findings, but the company did not respond by the time of publication.<\/p>\n

\"Richard<\/a>

Richard Boorman<\/p><\/div>\n

Results from the study<\/h3>\n
\n\n\n\n\n\n\n\n\n\n
South African mobile prices benchmarked<\/strong><\/td>\n<\/tr>\n
Basket<\/strong><\/td>\nPre-paid voice, SMS and data<\/strong><\/td>\nPre-paid voice and SMS<\/strong><\/td>\nPost-paid voice, SMS and data<\/strong><\/td>\nPost-paid voice and SMS<\/strong><\/td>\n<\/tr>\n
<\/td>\nLow-income mobile subscribers<\/strong><\/em><\/td>\n<\/td>\n<\/tr>\n
Low-low<\/td>\n65% cheaper<\/td>\n44% cheaper<\/td>\n<\/tr>\n
Low<\/td>\n29% cheaper<\/td>\n11% cheaper<\/td>\n51% cheaper<\/td>\n38% cheaper<\/td>\n<\/tr>\n
Medium<\/td>\n15% cheaper<\/td>\n5% more expensive<\/td>\n29% cheaper<\/td>\n10% more expensive<\/td>\n<\/tr>\n
High<\/td>\n10% cheaper<\/td>\n23% more expensive<\/td>\n9% more expensive<\/td>\n80% more expensive<\/td>\n<\/tr>\n
<\/td>\nHigh-income mobile subscribers<\/strong><\/em><\/td>\n<\/tr>\n<\/tbody>\n<\/table><\/div>\n

De Vries said that as of May 2012, the price benchmarking study demonstrated that prices for low usage in South Africa are favourably positioned among peer countries.<\/p>\n

\u201cAcross the board South Africa was not the most expensive, nor the cheapest and that SA fared very well in the low user baskets, both pre- and post-paid, suggesting that the poorest get a great deal,\u201d said de Vries.<\/p>\n

\u201cIn addition, the study found that in excess of 85% of the South African market base utilise pre-paid tariffs and of this over two-thirds of market is categorised as low spend (the SA consumer spends less than 35 Rand per month).\u201d<\/p>\n

He said that the main observation from the overall results is that South Africa, while not the most favourably priced of the study countries across all usage profiles, is generally low to mid ranking in terms of price.<\/p>\n

\u201cIn particular, lower usage consumers can benefit from the more competitive pricing in South Africa. This is especially encouraging, as a significant proportion of South African users fall into this low-usage category,\u201d said de Vries.<\/p>\n

Cell C\u2019s Fourie disputes MTN\u2019s view, saying that low-end mobile prices are high when compared to global standards.<\/p>\n

\u201cICASA has confirmed that there is market failure in the wholesale call termination market,\u201d said Fourie. \u201cA market as concentrated as this is bound to have ineffective competition.\u201d<\/p>\n

\u201cThis usually indicates that operators with market power such as MTN and Vodacom, are not sufficiently controlled in their pricing practices,\u201d she added.<\/p>\n

Fourie said that ICASA\u2019s draft amended call termination regulations confirm that pro-competitive remedies are still required, and that these should be more aggressive to have an effect on high prices and the cost to communicate.<\/p>\n

This article first appeared on MyBroadband<\/a>.<\/p>\n

More on SA mobile<\/h3>\n

South African mobile prices are cheap: report<\/a><\/strong><\/p>\n

Messaging apps driving SA mobile economy<\/a><\/strong><\/p>\n

SA mobile operators struck by vandalism<\/a><\/strong><\/p>\n

SA mobile web habits revealed<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

More details behind a mobile pricing report have emerged, revealing why the report was not made public, bringing its results into question.<\/p>\n","protected":false},"author":2,"featured_media":50342,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[34],"tags":[42,7110,26,3960,28,1755,27],"class_list":["post-50339","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mobile","tag-cell-c","tag-graham-de-vries","tag-headline","tag-karin-fourie","tag-mtn","tag-richard-boorman","tag-vodacom"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/50339","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\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=50339"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/50339\/revisions"}],"predecessor-version":[{"id":50344,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/50339\/revisions\/50344"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/50342"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=50339"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=50339"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=50339"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}