The South Africa Competition commission has ordered telcos to cut data prices by 30-50% or face prosecution. The order has come after years of outcry from citizens and analysts over excessive data prices.
As a result, the announcement saw share prices of MTN and Vodacom fall by 8.4% and 7.8% respectively. The competition Commissioner Tembinkosi Bonakele accused Telcos of “bias against the poor”, citing that data prices in SA were more expensive than other economies.
“We believe on the basis of evidence that there is scope for reduction of prices between 30% and 50%. The failure of reduction within two months will lead to prosecution for excessive pricing,” said Bonakele.
Additionally, the commission also recommends that mobile operators should offer prepaid subscribers a lifeline package. The package would provide free data daily, ensuring internet access to all citizens regardless of their income.
“The Commission is of the view that it should be sufficient to ensure each citizen’s participation in the online economy and society,” read the report.
South Africa’s high data costs have been the talk of parliamentarians and citizens alike. In March, 1 GB of data costs $7.05, as compared to $3 in Kenya and $2 in Nigeria. According to Bonakele, MTN and Vodacom’s dominance in the market overshadows other plays, enabling the duopoly to set uncompetitive prices.
In response to the recommendations, operators blamed the government for poor spectrum allocation, which fueled the high prices.
Telcos have 2 months to implement the price cuts, and six months to offer the lifeline package.