The Free Market Foundation believes the country must exercise extreme caution when dealing with the subject of data costs. The foundation's Leon Louw belives the main question to be asked is: "Must data really fall? If so, why, by how much and who will benefit?"
This is because data is both a "complicated and complex story," one that needs a clear understanding of the driving forces of the data market, said Louw.
He has challenged, for instance, the phenomenon of high data costs, arguing that data costs in South Africa are not that much higher than in other countries.
"Cross country comparisons are misleading in that countries differ enormously in terms of population, geography and development," he explained.
He made an example of India. "Yes, in India, a small regional provider, for a limited period of time offered a loss-leader special deal at R11 per gig. Comparing this isolated cheapest option to South Africa's most expensive mainstream gig is disingenuous at best."
The organisation is of the belief that government's response, in the form of heavy handed regulation, may not be the best solution. "Any proposal to lower the costs must have a social economic impact assessment," Louw recommended.
There are a number of factors to consider, proposes the foundation, in the data cost subject:
Factors specific to SA include:
- Unreliable electricity (blackouts, loadshedding) meaning base stations must have expensive backup power
- Our high crime rate means network operators experience costly vandalism and theft
- Restrictive spectrum allocation raises prices substantially because duplicate towers must be built or "farmed"
- Our government demands free or sub-economic data for schools, hospitals, clinics, universities and FETs
There ain't no thing as a free lunch
"Someone has to pay for investment in network and roll-out," said Louw. He also added that mobile network operators are also mandated to provide free data to schools and educational institutions. "These come at a price."
Government also has a role to play
Louw is also of the opinion that the the failure to transition from analogue to digital for radio and television has contributed to the current prices of data. "This means a relatively cheap spectrum cannot be utilised by the mobile network operators to increase and improve services."
And while there are calls to make access to data a human right, the foundation argues that while there is a guarantee of freedom of expression and communication, nothing in those rights implies an obligation to provide a means of communication.
"There is indeed scope to reduce data prices -- if government allows free competition and releases more spectrum. Price control is not the answer."