A new plan says government intervention can make data 25% cheaper within three years – here’s why that is quite optimistic
- In a new policy document, National Treasury says telecommunications prices can decline by as much as 25% in three years if some proposed interventions are adopted.
- A technology expert, however, believes that kind of price reduction in three years might be overly optimistic.
- Mobile operators have long blamed the lack of spectrum for SA's high data prices.
- For more stories go to www.BusinessInsider.co.za.
South African telecommunications prices can decline by as much as 25% in the next three years if additional radio frequency spectrum is rapidly released, the National Treasury said in a discussion document this week.
But one expert believes that steep a price decline might be overly-optimistic, because telecommunications companies still have to build the relevant infrastructure.
In a policy discussion document released on Tuesday afternoon, the Treasury proposed a host of interventions to reignite the country’s stagnant economy, including the release of spectrum used to connect mobile phones to cellphone base stations.
The release of spectrum, Treasury said, will reduce the cost of doing business and contribute up to 0.6% in economic growth.
“...by year 3 the price of telecommunications would be 25 per cent lower than it would have been without the interventions,” the discussion document reads.
Technology journalist and speaker Toby Shapshak, however, said it will take a number years for data price reductions to trickle down to consumers once spectrum is released.
“Telecommunication companies have to get the infrastructure and processes in place once the spectrum is released to cater to consumer demand and this will initially have a lot of input costs,” Shapshak told Business Insider South Africa.
Shapshak doesn’t see a reason why data prices cannot decline by as much as 25% once spectrum is released, though.
“The treasury has gone into great detail and must have done a lot of research on the economic impact of the release of spectrum, and I am sure if they say it can be done, it can be done.”
First time in 14 years that South Africa would release additional spectrum
Mobile operators have long blamed the lack of spectrum for South Africa's high data prices.
In response to the Treasury’s policy paper, Vodacom said it is important to know when exactly the government will release the spectrum as it has previously repeatedly missed its own deadlines.
Also read: Yes, SA data is more expensive than it needs to be, Vodacom says – and it is all government’s fault
In July, Communications Minister Stella Ndabeni-Abrahams issued a policy directive to the Independent Communications Authority of South Africa (Icasa) to release additional spectrum.
The move would be the first time in 14 years that additional spectrum is released for use.
Icasa told Business Insider South Africa in August that the body is still “applying its mind on the published policy direction” and will only outline the process to release spectrum at a later stage.
Cellphone radio frequency spectrum is also used by other services such as GPS and television broadcasting. In South Africa, spectrum is limited because television broadcasting is still hogging frequencies – because a move from the analogue TV system to digital terrestrial television has been delayed for half a decade.
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