South African mobile networks have been steadily lowering the price of data over the past few years, but the lack of available spectrum has greatly hindered their progress. The allocation of additional spectrum to mobile operators would allow them to reduce the cost to produce mobile data, which they could then pass onto the consumer. All local networks have been pushing for the allocation of high-demand spectrum, but the South African government has been slow to respond.
The laggard pace of the government’s digital terrestrial television migration plan has resulted in a large tranche of spectrum remaining unavailable for years after it was meant to be released.
The Ministry of Communications and Digital Technologies recently stated that it has finalised a policy direction on unassigned high-demand spectrum, which could be a crucial resource for operators in their efforts to lower data prices. This means that the spectrum could be assigned to mobile networks in the near future, possibly enabling their plans to deliver lower data prices to South African consumers.
Cutting data prices in half
Speaking at the 2018 MyBroadband Conference, Vodacom CEO Shameel Joosub stated that if the network received the required spectrum, it could cut mobile data prices in half.
He said that if Vodacom received sufficient additional spectrum, it would rapidly roll out the necessary upgrades to its sites across the country and could reduce data prices by over 50%.
Spectrum lowers the cost to “manufacture” mobile data, as well as allowing Vodacom to better manage its capacity. This could result in the lowering of mobile data prices as Vodacom’s investments become more efficient.
With the allocation of additional spectrum approaching in the near future, MyBroadband asked Vodacom if it still maintains that it could cut mobile data prices in half, provided that it receives the required spectrum.
Vodacom told MyBroadband that it continues to push for the licensing of additional spectrum to help reduce mobile data prices.
“Vodacom recognises the need for affordable data prices and continues to appeal to policymakers and the regulator to license 4G and 5G spectrum to drive down the costs of producing a gigabyte of data,” the mobile operator said.
“A key factor curbing the pace at which data prices could have fallen in South Africa is the fact that there have been lengthy delays in completing the digital migration.”
“Having to build a 4G network using spectrum other than the ‘digital dividend’ means that we have had to needlessly build significantly more towers. Unfortunately, this has increased input costs,” Vodacom said.
When it comes to the effect of spectrum on data prices, there are various factors involved in the allocation process which could in fact have a negative effect on pricing.
“For instance, acquiring spectrum at a price that is significantly higher than its fair value would have an adverse impact on input costs and with it limit the ability to reduce effective data prices,” the operator said.
“Acquiring spectrum with a condition, for example, that requires us to build a network that delivers 4G connectivity to 100% of the population with download speeds above 100mbps would require a staggering investment in the network.”
Vodacom said the investment required would increase input costs and could in fact result in higher rather than lower data prices. Regardless of the effect on mobile data prices, the release of additional spectrum will have a positive effect on network performance and quality as well as coverage.
“Vodacom has implemented a pricing transformation strategy to bring down the prices of its data services, especially for poorer consumers,” the company said. ” Vodacom has reduced effective data prices by 57% in the past three years and remains committed to providing even greater value to customers. To be clear, prices have been coming down. They will come down faster if we get access to the right spectrum at reasonable market-related terms.
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