Alleged collusion and price fixing by Mtn and Vodacom

31 03 2010

 

South Africans  may be having a high cellphone penetration but that does not  instantly translate to mean that communication  is accessible to the ordinary citizen.

A young Grahamstown resident browsing a cellphone

According to a brief  survey conducted by the Chair of Media and information society at Rhodes University school of journalism  in about 100  Grahamstown homes and residents in Joza township in the end of 2009, it was discovered that although  a lot of people have access to mobile handsets, they seriously cannot afford airtime, receive bad service and technical quality sound. This also impacts negatively in their lives.

Almost 85% of the survey respondents said they use a free 10 letter word customisation call ‘please call me’ offererd by the mobile service providers or dial and drop for someone to call back. Other than that, their  cellphones work as a clock, a receiver handset with minimal or no outgoing calls at all.

Plz call me

Sebenzile Sankobe , a local resident and member of the Unemployed People’s Movement said,

 ”the inability to comunicate ‘like a disease that will disable you to reach a certain point in life because once you miss some opportunities in life they will never come back at least for as long as you live”.

A picture taken in one of the oldest township, Fingo Village ( pic: Irhini report)

 

This survey focused on the social impact of high communication costs and was conducted through survey of 81 residents in 1,5 days coupled with a focus group with members of the Unemployed people’s movement.

Some residents were suprised to be asked for a suggesting to curb the high cost of communications as some of them thought ‘communication cost cant be changed because it was “‘the law’”.

What also transpired  out of the presentation to the South African parliament portfolio committee on communications presentations was that all other telecommunication companies present  were in favor or airtime price drop except Mtn and Vodacom.

This day long presentation also highlighted a fact that Telkom, a government parastatal that was supposed or expected to rollout fixed line telephones  has not delivered on its mandate. Icasa the national regulator therefore has not done a good job of helping and monitoring  Telkom achieve its objective.

This shortfall resulted in a duopoly and exclusive control of the market by Vodacom and Mtn. Vodacom and Mtn are two of the biggest cellphone operators in South Africa which have expanded beyond the African continent.

There was an allegation of a possible collusion between Mtn and Vodacom as their price plan and tarriff system was similar in a very suspicious fashion. In addition to the alleged collusion by two big operators.

 At at the local  level Spaza owners, who are small enterprises in poor communities charge an extra markup price of between R1-R2 for any airtime vouchers.

According to Prof Jane Duncan, Chair of Media and Information Society at Rhodes University, the 2009 SA development indicators highlight the fact that SA dropped from 49 in 1995 to 55 in 2008 out of 140 countries.

The report also notes that other countries are advancing faster than SA on the four pillars of the knowlegde based economy, including ICT infrastructure.

  This led Duncan to the conclusion that, “Bringing down communications costs is a national imperative.”


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