The Internet Service Providers’ Association (Ispa) has urged the Competition Commission to force South Africa’s mobile network operators to open their networks on a wholesale basis to ISPs to foster innovation and drive down mobile data prices for end users.

In a presentation to the commission’s market inquiry into data services in Pretoria on Wednesday, Ispa regulatory adviser Dominic Cull said a similar model to the one introduced in the fixed-line market should be applied in mobile, whereby consumers can choose whichever ISP they want to get access to mobile infrastructure.

Cull said fixed-line consumers on Telkom’s network — and on those on rival fixed-line fibre networks — can choose from between 40 and 50 ISPs, and do not have to buy services directly from the infrastructure provider. A similar model should be introduced in mobile, he argued, where currently service providers are “vertically integrated”. Currently, if someone wants to use Vodacom’s network for data services, for example, they must engage directly with the company, with no option of choosing another ISP.

We believe that ultimately these interventions will stimulate competition in the downstream market

In the fixed-line market, where Telkom has functionally separated its wholesale networks division Openserve from the retail business, ISPs are free to compete with Telkom in providing Internet access to end users.

Cull said Ispa wants the commission to intervene in the wholesale market for mobile data through pro-competitive measures that impose obligations on dominant mobile operators to offer wholesale open-access to ISPs. This will allow ISPs to compete aggressively with one another for mobile data services, much like they do today in the fixed-line market, driving down prices in the process, he said.

At the same time, the commission should impose functional separation of “vertically integrated incumbents to underpin those wholesale open-access obligations”. Such a move would be in line with the policy direction taken by government in the Electronic Communications Amendment Bill, he argued.

‘Really good thing’

“We believe that ultimately these interventions will stimulate competition in the downstream market. We have seen what competition in the downstream market has done in the fixed space,” Cull said.

He said that Telkom, which reached a settlement agreement with the Competition Commission in 2013 that forced it to separate its wholesale division from the rest of the business, had been “a really good thing” for the company. “They can see the benefit of doing so, including the broader benefit for the country.”

In his presentation, Cull said there has been “clear failure” in the market for wholesale mobile data services. He cautioned that the mobile operators — which are due to present to the commission on Thursday — will emphasise the complexity of the subject matter. But it’s important, he said, that the commission has a “clear, simply narrative”.

Effective competition in the mobile market is critical given that for the clear majority of South Africans this is the only means they have for connecting to the Internet. “We are a mobile country and we will remain a mobile country,” he said. Pressing Ispa’s message for intervention in the wholesale market, Cull said: “The incumbents only change behaviour when forced to do so by commercial considerations or through regulation.” — © 2018 NewsCentral Media