SA broadband quality drops but prices remain high
South Africa remains one of the most expensive countries in RIA’s Broadband Price Index. But in the Broadband Value for Money Index, which measures price in relation to quality, South African operators perform better, with investment in high-speed 3G and LTE infrastructure seemingly paying off.
The rapidly increasing number of broadband users and their increasing consumption of data as a result of data focused business growth strategies are already taking its toll on the average overall broadband speed in the country. In order to prevent any further degradation of broadband quality, it is imperative that the high-demand spectrum required for LTE services is urgently assigned to operators.

Download RIA policy Brief August 2014 No 6 Broadband.
Dramatic MTR cuts drives SA's mobile prices down
With the mobile termination rate (MTR) enforced at 20c by the Courts last March the battle for airtime sales has shifted into a full-scale price war significantly improving South Africa's ranking on the Africa Price Transparency Index.

   MTN SA, previously the most resistant to pricing pressure from upstart Cell C, has now taken them head on. After their previous strategy cost them a million subscribers in their last financial year, they have came out in the second quarter of the year with guns blazing.
   Matching and beating Cell C’s lowest price they intensified the sector trend towards bundled and dynamically priced products, identified by RIA's policy brief in the previous quarter.
   MTN SA maintained their Sky Bundles and Cell C its Infinity packages. MTN SA, in their strategy to retain prepaid customers in the lower end of the market, introduced two new daily bundled offers: MTN Sky Daily, MTN Sky Unlimited, MTN to MTN daily.

What’s new in the South African market?
    MTN Sky daily costs R79 per day and provides unlimited calls, 400 SMS and uncapped (20MB) data. In contrast to MTN’s other offerings valid for longer than a day, the data is quite restricted. MTN Sky unlimited MTN to MTN daily costs R25/day for 400 SMSs, 10MB and unlimited on-net calls daily. The MTN Sky MTN to MTN daily package was found to be the cheapest prepaid package on the market at an OECD (2010) basket price of R772 including off-net call rates. Apart from the introduction of new products, MTN SA reduced the prices on its existing Sky bundle packages. However the price reductions were listed as promotional until 31 July 2014.

Price changes after MTR cut
   Despite the significant asymmetry in termination rates now between the incumbent mobile operators (20c) and the later entrants at 44c, Cell C has retained their simple flat rate strategy and did not launch differentiated off-net and on-net prices. Telkom SA’s higher priced off-net calls and lower priced on-net calls, introduced in the third quarter of 2013, took advantage of the 40c asymmetrical termination rates set in March 2013 and have remained the same since then.
    From a benchmarking perspective, a reduction in termination rates brings the South African MTR closer to some of the lowest termination rates on the continent which have resulted in major retail price reductions. The difference in MTR amongst those countries that have introduced MTR cuts is diminuishing as they cluster between 1 and 2 USD cents suggesting that they are getting closer and closer to being cost based. As a result, Ghana and Kenya 2010 OECD baskets are placed second and sixth on the prepaid mobile pricing index (see Table 3 below).

    MTN SA and Cell C customers in particular benefitted from reduced tariffs. MTN SA introduced the R0.79/minute flat rate that is now a permanent voice tariff and also launched a promotional tariff of R0.01 per second.
   Vodacom introduced a similar tariff but the product was not found as a stand-alone tariff in Q2 2014 as it can only be added on to existing subscriptions. Cell C reduced its on-net and off-net tariffs to R0.66 per minute. Conversely, Virgin Mobile (at R0.99) and Telkom SA (at R0.29 on-net and R0.75 off-net, the lowest per-minute charges of an operator) did not respond to the changes in MTRs in the market.

South Africa ranking on voice/sms African index static
    Although there were  significant price reductions in the South African prepaid mobile voice market, the cost of the cheapest South African operator’s (Telkom Mobile) basket price did not change between Q1 2014 and Q2 2014.
    This price is 4.5 times more expensive than the cheapest product in Africa and almost twice as expensive as the cheapest product available from a dominant operator in Africa (Vodafone Egypt has a basket price of USD2.57 and a very innovative build-your-own bundle product; see Table 3 or Figure 1).
    Figure 1 compares the cost in US dollars of the cheapest prepaid mobile product available in South Africa with that available in all of Africa. (The comparison is based on the internationally recognised 2010 OECD 40 calls/60 SMSs basket, between Q4 2010 and Q2 2014).

    On the Cheapest Prepaid Mobile Voice Product Available in the Country sub-index, South Africa shifted down one position to 9th in the second quarter of 2014 from eighth position in the first quarter of 2014 (Figure 1). This is not a significant difference and it is explained by the depreciated value of the Rand.

    On the price of the dominant player in the market sub-index (which affects most people) South Africa ranks 11th which is significantly up from the previous quarter, when it ranked 18th (Figure 2). The improvement of South African position is the result of a full-scale price war which led to the introduction of the 1c per second promotional tariff by MTN.
    In brief, the gaps between best performing African countries on the two rankings and South Africa is narrowing, suggesting that South African prices are moving in the right direction. The detailed rankings for all countries for Q2 2014 is displayed in Table 3 below. 

    Figure 3 below compares the cost of the cheapest prepaid mobile products for each mobile operator in South Africa according to the OECD 40 calls/60 SMS basket.
   Despite the introduction of new tariffs from Cell C and MTN SA, Telkom still has the cheapest product in the market. Its price of the Sim SONKE product remains only R0.29 per minute for on-net calls and R0.75 per minute for off-net calls (including calls to fixed lines). MTN SA is now the second cheapest operator following the introduction of the R0.01 per second tariff, offering a flat rate set at R0.60 per minute. As this is a promotional product valid until 31 August 2014, this is included in the index until the promotion expires. The significant gap between the cheapest product from dominant operator (MTN SA) and the cheapest product in the country (Telkom Mobile) suggests considerable pricing pressure on dominant operators.
    In Q2 2014, Cell C introduced the R0.66 permanent flat tariff across all networks. Vodacom SA maintained its R0.02 per second call rate, making it the most expensive network provider of prepaid mobile voice services in the South African market.
    However, quarterly financial results for Vodacom SA’s Q1 of the 2014 financial year revealed that in order to reduce churn rates, Vodacom SA has embarked on a “price transformation strategy” which cuts the overall effective voice price per minute by 25.3% to R0.68. This reduction has been accompanied by an increase in outgoing calls of 26.1%, thereby offsetting any losses resulting from the price reduction.

    The MTR cut did not result in across-the-board price reductions. Subsequent jostling in the prepaid market took place mainly in the midfield. MTN SA’s pricing strategies were directed at retaining voice customers and regaining customers lost to Cell C aggressive pricing, while capturing new ones in the data market. While Telkom Mobile is still the cheapest mobile voice operator, MTN SA is now the second cheapest operator before Cell C.
    Nevertheless, South Africa’s performance on the Prepaid Mobile Price Transparency Index based on the OECD’s baskets did not change and the country remains relatively expensive compared to other African markets.
Fall from grace: protectionism and monopolies push Cameroon down broadband index
Poor policy decisions in Cameroon have impeded the growth of affordable, real broadband services that are taking off in many of the continent’s leading economies. Although the introduction of bundled products by Orange Cameroon has significantly reduced the price for mobile prepaid services, the country lags behind its African peers in the deployment of 3G services due to protectionist policies and weak regulatory environment. ADSL services are offered at exorbitant prices and at virtually narrowband speeds, way below the levels reached
by the other African countries analysed in the Research ICT Africa Broadband Value for Money Index.

Download the RIA Policy Brief Cameroon No 4 June 2014.
Mozambique: Better broadband performance with more competition
The entry of the new operator Movitel into the market in 2012 has shaken up the duopoly mobile and fixed monopoly markets that delivered poor services primarily in the major cities at high prices. Assisted by the reduction in the mobile termination rates in 2012, the market has become far more competitive with mCel and Vodacom Mozambique pressured into reducing their mobile prepaid voice tariffs. On the other hand, the fixed-line market dominated by the state-owned company TDM has been unable to increase the number of subscribers. In spite of significant investments having been made to upgrade the copper-based infrastructure and to connect the country to undersea cables, retail ADSL prices still remain high in comparison to other African countries.

Download the RIA Policy Brief Mozambique No 5 June 2014.
Shift from just­‐voice services: African markets gearing for internet
Voice and SMS revenues have been eroded by the increasing use of IP-based services such as instant messaging and voice over IP (VoIP). African operators have reacted to this change in the telecommunications market by providing bundling voice, SMS and data services. In South Africa, only MTN and Cell C have introduced prepaid bundled services. Such bundles however are not cheap. With the new mobile termination rate glide path only effective from the end of March 2014, and the implementation delayed by a legal challenge from operators, the effects of the enforcement of the new termination rates are not evident in the market yet. Even so, with increasingly small margins from voice mobile operators have already turned their focus towards data where pricing appears more competitive and is based on bundles.

Download the RIA policy brief No 2 April 2014.
Is broadband data worth the money?
While expansion of mobile networks across the continent continues to be constrained by the failure to assign high demand broadband spectrum, operators are devising ways around this by recycling their spectrum in order to offer high-speed and quality broadband bundles. The range of 4G services now becoming available creates another divide between countries’ ICT sectors, their regulators and their operators. The development of innovative bundles and pricing strategies is helping to facilitate the move away from traditional voice services and towards higher data consumption, as well as demanding price basket adjustments. Other developments can also be seen in the creation of more time-based bundles as well as the appearance of the first data-only provider in Africa - Smile.

Download RIA policy Brief June 2014 No 3 Broadband
SA’s Mobile Termination Rate (MTR) Debate and Africa 2012 Index
South Africa’s mobile termination rate (MTR) reductions of March 2011 and March 2012 have not, contrary to claims made by operators, hurt the industry or led to higher retail prices, lower investments or retrenchments. End-user prices have come down to some extent, but South Africa continues to be among the most expensive countries in Africa for prepaid mobile usage, and South Africa's MTRs are still far above the cost of an efficient operator.

Read Research ICT Africa's policy brief on South Africa's mobile termination rates. It includes also the Africa 2012 Index.
SA mobile prepaid prices plateau
Mobile termination rate (MTR) reductions by the South African regulator in March 2013 impacted positively on prepaid mobile retail prices in the second quarter of last year. But by the last quarter of 2013, prepaid voice mobile prices had stabilised in South Africa with no further reductions in prices of the dominant operators: MTN and Vodacom. The absence of further responsiveness to pricing pressure from smaller operators, who reduced their prices dramatically during 2013, means South Africa’s dominant operator prices remain expensive compared to other African countries.

Download the RIA Policy Brief South Africa No. 1 February 2014 .
How do mobile and fixed broadband stack up in SA?
Further, unlike in more developed nations, where fixed is the predominant form of broadband access in South Africa, mobile broadband is predominant - it is also, unlike in those markets, both cheaper and faster than fixed.   However, wireless is inherently less stable than fixed broadband technologies such as XDSL and fibre and the implications of not having ubiquitous, reliable always on high-speed connectivity for the economy and global competitiveness are serious.

Read Research ICT Africa's policy brief on broadband pricing in South Africa.

For a detailed description about the methodology applied for measuring broadband performance, download the policy paper draft for comments on investigating broadband performance in South Africa 2013.

A description of the broadband baskets methodology is available in the policy paper on the future of broadband in Africa.

New mobile pricing portal
Research ICT Africa has developed a new mobile pricing portal with data on pre-paid mobile pricing products collected quaretly from all African operators in all African countries, since January 2011.
The mobile pricing portal aims at increasing price trasparency in the African continent, in order to support users to make informed decisions when select a mobile operators and to compare prices across operators. 
It is also a useful instrument for mobile operators since they can compare prices at a country level and across countries. It helps at monitoring regulatory interventions and the effect of those - such as interconnection rates cut and new operators in national markets - on pricing.

The portal is online at the following link.
Myth buster on reasons for SA high prepaid mobile pricing
The reactions of various interest groups to a yearlong study by RIA into pre-paid mobile prices across the continent, and South Africa’s relatively poor showing in it, are perhaps not surprising. They nevertheless prompt clarification and hopefully further debate - before the issue of the high price of communications in South is again swept under the carpet. Research ICT Africa Executive Director, Alison Gillwald responds.  

Africa Prepaid Mobile Price Index 2012: South Africa
Among 46 African countries studied, South Africa ranks poorly for prepaid mobile telephony affordability. Ranked 30th out of 46 African states, South Africa is now far behind countries where the regulator, unlike in South Africa, has enabled competition by enforcing cost-based mobile termination rates. The resulting competition has in many cases driven down prices for consumers. Not long ago, South Africa and Namibia shared the same mobile termination rates and had similar end-user prices. Today, Namibia enjoys amongst the cheapest mobile prepaid prices in Africa, as a result of the slashing of its termination rates close to cost, which pressured the incumbents towards cost-based pricing, thereby increasing demand and remaining highly profitable.

Download the policy brief

Download Research ICT Africa's answers to the following technical questions from the media:

1. Why did you focus only on prepaid?
2. Do you expect prices to decline further next year when MTRs drop to 40c?
3. Could you send through the January 2012 OECD Lower User Baske costs in USD table that includes PPP factor?
2011 Africa Fair Mobile Index: Dynamic changes
The Fair Mobile Index aims at communicating the real value of mobile voice services and at comparing differences in mobile voice services value across the African continent.
It allows for the comparison of mobile services tariffs in all African countries in relation to the value of a widely used commodity with which citizens are likely to be familiar such as cooking oil, sugar or tea. The following report is based on all pre-paid tariffs publicly available (from operators’ websites) from all operators of each country on the continent in April, May and June 2011. 

Download the second quarterly report.

Fair Mobile
The cost of communication varies across the continent. Fair competition is the key to bringing prices to affordable levels while proving efficient incentives to invest.
The Fair Mobile Index tracks price developments for mobile telecommunication across the African continent. The purpose is to establish price transparency for consumers, allow for the benchmarking of affordability across countries and to provide tools to assess the impact of policies and regulatory interventions.

Download the first quarterly report.

Cameroonian government revokes Viettel’s 3G monopoly
In its edition of September 26 2014, The Cameroonian newspaper Le Quotidien de l’Economie, reported that Viettel’s request for an extension of its exclusivity on the provision of 3G services until 2016 has been turned down by the Cameroonian Government. The Agence de régulation des télécommunications (ART) has reportedly authorised MTN Cameroon and Orange Cameroon to offer 3G services from 2015, indicating that Viettel’s application to extend its monopoly was rejected.

Granted in 2012, the monopoly over 3G infrastructure and services was put in place to allow the new player to catch up with its competitors in the broadband market, Viettel failed to deploy the 3G infrastructure and asked the Presidency for an extension of its monopoly until 2016. The regulated monopoly over 3G services had created a regulatory barrier for the development of fast and affordable broadband services in the country by the incumbent operators. For consumers, the widespread use of 3G to all operators can only be beneficial. The quality of services will evolve and prices will certainly decline due to a competitive market. In Central Africa, Cameroon will join the group of countries such as Chad and Gabon where 3G is already effective.

Fear over the extended monopoly over 3G infrastructures and services was raised in the June 2014 policy brief on broadband prices and performance in Cameroon by Research ICT Africa. It brought to the Cameroonian Presidency’s attention that the growth of affordable and real broadband services were impeded by poor policy decisions in the country. RIA found out that in comparison to most African countries, Cameroon lagged behind in the deployment of 3G services due to protectionist policies, which granted Viettel a monopoly over 3G infrastructure and services and prevented the two other operators MTN Cameroon and Orange Cameroon from providing efficient mobile broadband services. RIA research established that the policy outcome of the regulated monopoly over 3G services was not only high prices of mobile data but also the lowest throughput on the African continent, which did not go beyond 2.5G speeds. RIA policy brief recommended to the Agence de régulation des télécommunications (ART) the need to license the two incumbent mobile operators to provide 3G services in order to remedy this outcome.