Data prices must drop or government will review its cellphone contracts – Minister

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Data prices must drop or government will review its cellphone contracts – Minister

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Telecommunications minister Siyabonga Cwele has stated that unless mobile network operators drop data prices, the government will review its contracts with them.

According to a report in the Sunday Times, Cwele said network operators were “blackmailing” the government by stating that job losses would take place if data prices were drastically cut.

“If they don’t cooperate the government is the biggest procurer of goods and services – we will have to relook at our own contracts with some of these companies,” he said in the report.

The statement comes at a time when mobile network operators have begged Cwele and the government for additional radio frequency spectrum to be licensed to them.

The operators have essentially guaranteed lower data prices and better rural coverage if they are given more spectrum.

Instead of allowing operators to access more spectrum, however, Cwele and his department want to allocate available spectrum to a wholesale open access network which the government has planned – a move criticised heavily by the industry.

Telkom also recently stated that it will suffer massive job losses if new ICASA call termination rates are implemented.

Data prices

The report further stated that Cwele said a lack of cooperation from the mobile operators regarding data price reductions “may force the government to demand that they disclose their cost and profit structure”.

Cwele also asked: “Why do SA companies charge up to eight-times more than what they charge other African countries?”

He claimed that the mobile operators have not answered this question.

Vodacom said in the report the allegation that cellphone companies were blackmailing the government was “spurious and baseless”.

Vodacom added that an ICASA report had shown South African prices were below the average price of all the SADC prices across the categories tested, and Vodacom had reduced the effective price of data by 42% in the past three years.

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