Portfolio Committee on Telecommunications and Postal Services Cost to Communicate Programme 26 February 2019
Presentation Outline Ite Item Topic ic 1 Overview of ICASA’s Mandate 2 Cost to Communicate Programme and achievements to date 3. Factors that affect data costs 4. Tariff Analysis Report – Current Communications Tariffs 5. Measures to reduce the cost to communicate 5.1 Call Termination Market Review 5.2 End-user and Subscriber Charter Regulations 5.3 Priority Markets Study 5.4 Market Reviews (Mobile Services Market Review – Data Inquiry) 6. Other Policy/ Regulatory Measures 6.1 Licensing High Demand Spectrum 6.2 Competition Commission Inquiry on Data Services 7 Conclusions 2
Organisational Mandate and Goals ICASA is established pursuant to section 192 of the Constitution and in terms of the ICASA Act of 2000; and mandated to regulate electronic communications, broadcasting and postal sectors in the public interest ICASA’s mandate is derived from: Investment in Independent ⁻ The Constitution, 1996 Promote Improve and access to and credible Competition Common National ⁻ ICASA Act, 2000 stakeholder and broadband Identity and Social regulator consumer ⁻ EC Act, 2005 Promote infrastructure Cohesion experience competition and Adherence to ⁻ Broadcasting Act, 1999 Increase television regulatory Facilitate reduce costs of Monitoring of ⁻ Postal Services Act, 1998 broadcasting electronic principles of investment in quality of services, platforms from three ⁻ ECT Act, 2002 communications, transparency, broadband to seven Digital and improve accountability, infrastructure electronic Terrestrial Television stakeholder communications independence, Multiplexers and Increase access to engagement from develop a regulatory integrity and networks, postal broadband 10% to 80% by framework by 2020 and broadcasting predictability in spectrum from 2020 services by 2019/20 the public interest 566MHz to 958MHz by 2020 3
Cost to Communicate Programme Recent Data Market Developments Mobile Market Amendment to the Priority Market Review of the 2014 Review End User Subscriber Study ❑ MTN: Adjusted its out-of-bundle (OOB) data rate Call Terminate Rates Charter effective from the 17th January 2019 Addresses data Identifies 3 In progress expiry and out-of- Markets for Reduced Call ⁻ The new OOB rate is R0.29 for customers who are bundle business Termination Rates intervention by rules non-bundle users, and R0.49 for customers who ICASA use data bundles. 1 ) Mobile ❑ Cell C: Data Plans services ⁻ replaced 500MB (which was R99) with 750MB 2) Wholesale fixed access (priced at R100). This is 250MB (50%) increase in data for an additional 1% (R1) increase in price. 3) Upstream infrastructure markets ❑ Rain: Launched a data-only service Complementary Measures: ⁻ charges R0.05/MB, which is R50 for 1GB • ⁻ no contract package, sim and delivery cost of Bi-annual tariff analysis • R120 Licensing of High-Demand Spectrum • Annual State on the ICT Report ⁻ no out-of-bundle (OOB) rates • Competition Commission Data Market Inquiry • Consumer activism and moral suasion 4
Factors that drive data cost Strategic Outcome Oriented Goals (SOOGs) of ICASA There are a variety of factors that drive or Radio Frequency Topography SOOG 1 Rights of way Spectrum (geographic influence the cost (way leaves) availability factors) and prices of data Protect services. The Promote Consumers inquiry by the efficient use SOOG 2 * of spectrum Competition Promote and consumer rights Commission, as Market player numbering Access to network Promote * Market behavior infrastructure well as a detailed N Ensure universal Competition Structure resources (facilities (abuse / anti- Promote the service and market review by * leasing/sharing) * Remove competitive??) access SOOG 3 Digital Agenda Establish bottlenecks to ICASA (both innovative competition * underway) will approaches to Facilitate nation- * Ensure technology wide broadband South African determine the usage penetration by retail prices of exact factors. 2020 * Support ICT services fairly Economic conditions: SOOG 4 the rapid uptake reflect costs * Technological However, ‘sub - optimal’ policy of the new ICT Promote the energy costs, access to * Ensure Factors & regulatory preliminary technologies development of effective (and cost of) capital, (rapid changes) public, framework HDI/BEE research indicates etc. community and participation in commercial that such factors the sector would include : broadcasting 5 services in the context of digital
Tariff Analysis Report It Item Top opic 1. Benchmark Cost to Communicate 2. Voice Price Trends (Standard Voice Plans) 2 Data Price Trends 6
International Benchmarks - Data Prices SADC Prices for 500MB Prepaid Data Bundle in USD • Botswana has the most expensive 500MB prepaid data bundles as compared to other countries in SADC, with its lowest, average and highest price at $26.95. • Mozambique has the lo lowest 500MB MB prepaid data bundles in the SADC region, with an average of $0.83. • Botswana’s hig ighest 500 500MB MB prepaid data bundle is therefore more expensive than SA’s data bundle by 241.1%. Source: Operators Website (Converted on: 10 July 2018)
International Benchmarks - Data Prices SADC Prices for 1GB Prepaid Data Bundle in USD • SA does not have the lowest priced 1GB data bundles, however, it comes in 3rd place in SADC in terms of the 37,53 cheapest 1GB data bundle offered in the country ($7.43). 30,03 30 • The lowest priced 1GB data bundle in SADC is offered in 23,5 22,71 the DRC ($1.29) 17,69 • 14,02 SA’s most expen ensive 1GB GB data bundle (priced at at 12,79 11,07 $11 11.07 07) is is: 7,74 7,53 4,87 4,5 1,98 ⁻ hig igher than that of the DRC ($1.29), Lesotho ($7.53), 1,29 Malawi ($4.87), Mauritius ($7.74), Mozambique and Tanzania ($4.50); but • lower than that of Angola ($22.71), Botswana lo ($12.79), Namibia ($17.69), Seychelles ($23.50), Cheapest Average Highest Swaziland ($30.03), Zambia ($14.02) and Zimbabwe ($30.00). Source: Operators Website (Converted on: 10 July 2018)
Voice Price Trends (Standard Plans) ❑ Flat Rate: 5-Year trend analysis for Vodacom, MTN and Cell C Vodacom prices for its flat rate tariff has remained unchanged R1,50 at R1.20 since 2013 and only changed to R1.23 in 2018 due to the national VAT increase. R1,40 R1,20 R1,30 ❑ On 3 October 2018, Vodacom filed a new flat rate tariff plan R1,23 R1,20 which charges R0.79 per minute (billed in seconds) anytime Price per Minute across all networks. R1,10 R1,00 R0,99 ❑ This new R0.79 prepaid plan by Vodacom is R0.44 or 35.8% R0,90 cheaper than what customers would pay on the Anytime per second plan. R0,80 R0,79 R0,70 ❑ Cell ll C’s price remains unchanged at R0.66 throughout the five R0,66 R0,60 (5) year period for its flat rate voice tariff plan. R0,66 R0,50 2013 2014 2015 2016 2017 2018 ❑ MTN reduced its Anytime second flat rate tariff plan by 34.2% Year from R1.20 to R0.79 in 2014, it then increased it to R0.99 in Source: ICASA Tariff Database, as published in the 2018/19 FY Q2 Bi-Annual 2018. Tariff Analysis Report Vodacom Anytime per second On/Off Net MTN Anytime Second On/Off Net Cell C 66c ❑ Tel elkom Mo Mobi bile le does not have a flat-rate tariff plan.
Data Price Trends Vodacom, MTN, Cell C and Telkom Mobile’s 1GB data bundle price trends for the 5 -year period: 2013-2018 ❑ In 2018, Vodacom, MTN and Cell C are charging the same R300 price of R149 for a 1GB data bundle. R279 R250 ❑ Telkom Mobile is charging the lowest price at R100 amongst the four MNOs, as per the graph above. Price of a 1GB data bundle R200 However, the cheapest 1GB data bundle in the market R180 R180 currently is offered by Rain at R50. R160 R160 R149 R155 R149 R150 R149 R149 ❑ Vodacom increased its 1GB data bundle by 87.2% in 2014 R99 from R149 to R279. It then decreased it by 46.6% back to R100 R100 R149 in 2015 and has remained constant to date. R50 ❑ MTN and Cell C prices have remained relatively stable throughout the 5-year period. R- 2013 2014 2015 2016 2017 2018 Vodacom MTN Cell C Telkom Mobile Source: ICASA Tariff Database, as published in the 2018/19 FY Q2 Bi-Annual Tariff Analysis Report
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