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Increased focus on pricing needed in the telco sector in Africa

September 22, 2017 • Opinion, Top Stories

Increased focus on pricing needed in the teleco sector in Africa

Increased focus on pricing needed in the teleco sector in Africa.

Moves to ensure fair competition and to examine pricing in the telecommunications sector is increasing in key mobile phone jurisdictions on the African continent.

The issue of high data costs has recently been under the spotlight in South Africa and that the Competition Commission’s inquiry into the South African data services market is now underway.

The inquiry was launched in August 2017, after a request from the Minister of Economic Development for the competition regulator to investigate the high cost of data in South Africa. This inquiry will coincide with efforts by the Independent Communications Authority of South Africa to address issues related to the high cost of data as well as the existing practice by service providers to automatically expire data after a set period of time (usually 30 days).

The focus of the market inquiry will be on obtaining a clear understanding of the data services value chain and assessing the state of competition at every level of this value chain. This includes assessing whether the market participants hold market power, whether consumers and customers are exploited and whether the current regulatory framework contributes to any structural or behavioural aspects in the market that could impact on competition. The inquiry will also serve to benchmark the cost of data in South Africa against the cost of data in other countries.

On 20 September 2017, the South African Competition Commission called for submissions from interested stakeholders in accordance with the newly published guidelines for participation in the inquiry.  Stakeholders that wish to make submissions have until 1 November 2017.

In Kenya, in May 2017, the Competition Authority of Kenya issued a directive requiring telecommunication companies and financial institutions that provide mobile money services to provide real-time notifications of the cost of transactions to customers (before transactions are completed).  The directive, which apparently responds to consumer complaints, is to be implemented in stages and will affect mobile money services offered through apps, USSD codes and SIM toolkits. The objective of the directive is to provide for consumer protection and fair pricing through a consumer-friendly and transparent system of tariff reporting.

Further, tariffs for voice calls have been the subject of intervention by the Posts and Telecommunications Regulatory Authority of Zimbabwe, who launched a cost analysis to assess the degree to which pricing in the telecommunications industry in Zimbabwe is fair and competitive.

In early July 2017, the Ugandan Communications Commission queried MTN’s recent tariff changes which were made without the regulator’s approval. While not directly a competition-related intervention, the purpose of the UCC’s powers to regulate tariffs is to prevent anti-competitive pricing.

These developments reflect the increasingly active role of telecommunications and competition regulators in regulating fair markets in one of Africa’s significant growth sectors.

By Leana Engelbrecht, Senior Associate in the Competition and Antitrust Practice at Baker McKenzie in Johannesburg, South Africa


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