The report found that 15 years of spectrum withholding harmed consumers, particularly the poor, and that failed digital migration meant that even after the delayed spectrum auction, carriers would be unable to fully use the 700 and 800 MHz “digital dividend” spectrum until 2023. Picture: Motshwari Mofokeng African News Agency (ANA)
The report found that 15 years of spectrum withholding harmed consumers, particularly the poor, and that failed digital migration meant that even after the delayed spectrum auction, carriers would be unable to fully use the 700 and 800 MHz “digital dividend” spectrum until 2023. Picture: Motshwari Mofokeng African News Agency (ANA)

SA regulatory failure deprives consumers of better mobile deals - report

By Dineo Faku Time of article published Apr 14, 2021

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THE FREE Market Foundation’s 2021 Socio Economic Impact Assessment (Seia) and market research released yesterday has found that regulatory failure and outmoded ideology had deprived South African consumers of better mobile coverage and lower prices.

FMF president Leon Louw said the government’s failure to release spectrum had been a stumbling block for socio-economic development.

“Failure to release telecommunications spectrum (radio waves), failed migration from archaic analogue to modern digital technology, misconceptions about competition, and insistence on an untried unproven state-owned ‘Wireless Open Access Network’ (WOAN) means consumers have been deprived of benefits taken for granted elsewhere: faster downloads, lower prices, unlimited data and roll-out of the 5G revolution. 5G is required for the much-anticipated ‘Internet of Things’,” said Louw.

Louw called for a flexible spectrum allocation regime, including that spectrum should be tradeable and shareable among carriers, as well as for the government to conclude its digital migration process.

“South African consumers deserve a better deal. The government has to stop throttling their access to network services,” Louw said.

Louw said in South Africa there were nearly 200 percent or two mobile phones per user, placing the country among the world’s top dozen mobile users in the world despite the government’s bad regulations over the past 15 years.

“It is now time that we move to sound policies, market-related policies,” said Louw, who said that the Competition Commission’s anti-competitive stance had been counter-productive.

“There needs to be a more sophisticated and theoretically legitimate understanding of what competition is and how it functions,” said Louw.

The Independent Communications Authority of South Africa (Icasa) delayed last month’s spectrum auction following Telkom’s court victory to have the process interdicted.

Seia co-author with Louw, Christoph Klein, said the government’s socio-economic goals, including cheaper data and access to quality rural network coverage, had been undermined by its failure to provide a conducive environment for carriers.

“Regulatory paralysis imposed enormous opportunity costs on ordinary citizens. Further developments should be left to freely transacting operators who know what they are doing and have ‘skin in the game’,” said Klein.

Key findings of the Seia include that government failure rather than “market failure” impacts low-income rural consumers in particular through incomplete coverage, higher prices, poorer quality, reduced productivity and impaired educational opportunities.

The report also found that 15 years of spectrum withholding harmed consumers, particularly the poor, and that failed digital migration meant that even after the delayed spectrum auction, carriers would be unable to fully use the 700 and 800 MHz “digital dividend” spectrum until 2023. Meanwhile, consumers will be denied high-quality, low-cost rural services and will pay more for urban infrastructure.

The research also found that the spectrum crunch imposed on MTN and Vodacom, and the recapitalisation ailing of entities revived by Liquid Telecom and Rain, paved the way for a market-driven WOAN, thus rendering the proposed government WOAN superfluous.

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BUSINESS REPORT ONLINE

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