The recent publication of the End-User and Subscriber Service Charter Regulations is the start of a three-pronged process to address concerns around cost to communicate, particularly as regards data services. When the first draft of the regulations was published in August 2017, ICASA made it explicitly clear to all stakeholders that these regulations do not deal with the regulation of data prices. These are primarily consumer protection regulations aimed at promoting transparency and prohibit unfair business rules in the provision of communication services.

The regulations address the following main areas.

1. The regulations protect consumers against bill shock by specifically prohibiting the charging of higher out of bundle rates by licensees without the consumer specifically giving consent to such charges. In essence, the consumer can, by virtue of these regulations continue to receive the benefit of ‘lower’ in-bundle charges at every point whenever their bundle is exhausted by simply choosing not to be charged out of bundle rates and purchasing an additional bundle. The current practice where consumers are automatically charged out of bundle rates has been outlawed. This is significant when one considers that the average ‘in-bundle’ price of a megabyte is less than half that of the average ‘out-of-bundle’ price.
2. Given the inequalities that exist in our country, the requirement that all operators allow for data transfer between consumers on the same network will go a long way to facilitate the inclusion of poor and marginal consumers in the digital economy. As ICASA’s recent research shows, it is consumers who are on contracts (and purchase bigger bundles) who currently enjoy the benefits of low in-bundle rates. In comparison, the smaller bundles are not afforded the same pricing benefits. Therefore, there is immense value in medium to high value consumers being able to purchase a 10 gigabyte bundle at a price ranging between R350 to R500 (enabled by the dynamic, targeted and customized pricing strategies on the different networks) and then having the option and ability to transfer any amount of that data to their student cousin or unemployed brother. This is particularly significant in light of the fact that the same R350 in the hands of either of the siblings will only purchase no more than a 5 gigabyte bundle. 
3. The requirement that consumers be notified at various stages of depletion of their bundles seeks not only to protect them against bill shock, but also to promote the awareness of consumers about the pattern of their data consumption behavior. A consumer who purchases a 1 gigabyte bundle and receives a notification that s/he has exhausted 50% thereof after downloading only three or four 15 MB videos, will over time become more conscious of how much online or data activity they can enjoy with the various bundle sizes.
4. The other most significant intervention emanating from the regulations is the requirement for operators to roll-over data bundles credited to consumers with every recharge (or top up). A lot has been said about the fact that ICASA has backtracked on the requirement that data must not expire until after three years or until it is used up (if that happens before the expiry of three years). This is an issue on which various stakeholders (licensees, civil society organisations, academia, etc.) made representations to ICASA during the consultation process. Civil society organisations put forward very persuasive and cogent rationale as to why this requirement will harm the very marginal and poor consumers ICASA is mandated to protect. Notwithstanding these representations, it is important to emphasize that in the bigger scheme of things the fact that ICASA has not mandated a three-year expiry period for data bundles is inconsequential in light of the view that this requirement is already imposed on operators in terms of section 63 of the Consumer Protection Act, 1998.

Having outlined the rationale and benefit of the regulations, the critical question still remains - how long will it take for data prices to come down and what are ICASA’s next steps in this regard. There is no doubt that the kind of backlash we have received following the announcement of the regulations is a reflection of the understandable frustration by many (probably all) South Africans that data prices must come down.

Pragmatically, there are two key processes that must unfold before prices can come down. These processes are mandatory in terms of the law that applies to the sector and from which ICASA derives its mandate. The first of these processes is already underway. It is a process in terms of which ICASA will identify the relevant ‘priority’ markets that are prone to uncompetitive behavior. The Discussion Document on Priority Markets was published on 16 February 2018 and the consultation process is at an advanced stage. This process will be concluded by June 2018 with the publication of a Findings Document which will list the markets that ICASA will focus on to address the high cost of communication.

The second is a market review (or reviews) in the specific markets identified in terms of the aforementioned Findings Document. This review will commence in the second half of the financial year. Without preempting the process, it goes without saying that the market/s to be prioritized for review will be those deemed critical in the broadband / data services value chain. Through this process, ICASA will assess the competitiveness of the market, determine whether there is any operator with significant market power (i.e. whether there is any operator that is dominant in the market) and impose appropriate procompetitive remedies on such operators (which may include price controls). The market review process is by its very nature detailed, lengthy, technical and extensively consultative. It may take approximately 8 months to complete from date of inception.

Issued by: ICASA COMMUNICATIONS