There is a flip side to every development effort. That is true in the case of telecom also. Large multinational companies that have scripted a development model in entire Africa include two telecom majors – Vodacom and MTN. Till recently, they were held with high esteem and respect and many considered them as harbingers of much needed social change. That discourse is taking a negative spin now.
Recently, as latest as last week, South Africa’s Competition Commission, an independent watchdog of business competitiveness alleged that data costs in South Africa were so exorbitant that they were hindering economic growth. In its significant observation, the commission found that the high data prices of MTN and Vodacom, affected mostly the poor. The report found that high tariff is denying the access of the poor subscribers to make greater use of data services, which in turn restricts the benefits of the digital economy to this category of consumers. These two were the first networks in South Africa and had the first mover advantage. They are taking full advantage of the position, the regulator pointed out.
Calling for more a stricter regulatory framework for controlling the arbitrary pricing, the regulator said it would look for more serious steps against it. Those buying small bundles of data pay more than people who can afford to buy larger packages of gigabytes, or monthly subscriptions as part of their budget. Post -paid data prices—monthly packages that wealthier consumers can afford—compare favorably with international prices. South Africa is ranked 17th, of a sample of 25 other African markets, in the case of expenses on pre-paid data. These players may challenge the findings of the regulator at appropriate forum since it has already led to their share prices going south.
