21 August 2017

The Competition Commission of South Africa

South Africa: Commission Officially Launches Market Inquiry Into Data Services

press release

The process for the Market Inquiry into Data Services has been officially set in motion with the publishing of terms of reference (ToR) in the Government Gazette today.

This publication of the ToR officially sets off the process for the inquiry into the sector to begin. The Commission will call for submissions after 20 business days.

The Commission has initiated the inquiry because it believes there are features in this market that prevent, distort or restrict competition within the sector. Through the inquiry, the Commission aims to determine what may cause or lead to high data prices with a view to ultimately making recommendations that will result in lower prices for data services.

The inquiry has been initiated in response to a request by Economic Development Minister, Mr Ebrahim Patel, who also has expressed concerns over high data costs and highlighted the importance of data affordability.

As per the ToR, the main objectives of the inquiry are to:

• Obtain a clear understanding of the data services value chain, including the interaction and commercial relationship between different levels of the value chain and the relationship with other parts of the ICT sector and the broader economy;
• Assess the state of competition in the market at every stage of the value chain for provision of data services in order to identify areas of market power where customers or consumers may be exploited or excluded by firms and to identify any other structural, behavioural or regulatory factors that may influence competition or pricing;
• Benchmark South African data services pricing against those of other countries; and
• Establish whether data supply quality and coverage is adequate by international standards and the country’s developmental needs.

As per the ToR, the inquiry will assess the following, among others:

• Market structure;
• The general adequacy and impact of the current regulatory regime;
• Strategic behaviour by large fixed and mobile incumbents;
• Costs faced and profits earned by fixed and mobile network operators;
• Current arrangements for sharing of network infrastructure;
• Investment in infrastructure by operators and access to / allocation of spectrum as they relate to data services price and competition concerns; and
• The adequacy of regulation to promote new South African entrants (particularly historically disadvantaged individuals).

The inquiry is due for completion by 31 August 2018 and the Commission will then release its findings and recommendations.

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