FREE MARKET FOUNDATION MEDIA RELEASE
1 November 2016
Data must fall. Why? Data costs are too expensive in South Africa. Are they? Data is a human right. Is it? The mobile operators are greedy monopolistic capitalists who collude and exploit consumers. Really? Only the rich can access cheaper data. Fact? Market failure and lack of competition are to blame. Are they? Government needs to crack down on the sector through regulation. Should it? The proposed ICT white paper is in SA’s interests. Truly? Electromagnetic spectrum belongs to the government who can decide how, when and where to allocate it. Does it? Should it? Private companies should be forced to allow competitors to use their assets at cost. Should they?
These are some of the unquestioned memes floating about. Consider this: two businessmen whose new business venture relies on cheap data have pulled off an amazing coup. They launched and dominate the debate so successfully that public opinion and government policy are being formed without regard for the facts behind the hype and the danger of unintended consequences. Even normally sober minded people have been sold on the data hysteria.
The knee-jerk endorsement of the #datamustfall frenzy led the Free Market Foundation (FMF) to interrogate the premise on which the campaign is based, ask fundamental questions and disseminate the truth in the face of a situation akin to the emperor’s new clothes. Our preliminary findings raise the question: is this a deliberate campaign of disinformation?
The speed and ease with which the spurious ‘5 country’ comparison captured media and public opinion is astounding. There was and still is no context, explanation or balance, just a bald assertion about the supposed cost of 1GB of data. In truth, there are many different ways of buying 1GB in SA and elsewhere. A single price comparison is misleading, disingenuous and invites questions around motive.
Also in the mobile sector, the long awaited and much anticipated ICT policy white paper proposes a new Wireless Open Access Network (WOAN) model that has failed to deliver promised benefits elsewhere. It amounts to the nationalisation of private assets that would further erode property rights, which are already severely compromised in South Africa.
If enacted this policy would transform billions of private infrastructure investment into a sterile “cost-based” asset. It would undermine a key economic engine of growth, innovation and investment. It would destroy network competition and promote collusive monopoly.
FMF executive director Leon Louw said, “Mobile operators are not charities but private companies. Why are expectations of network providers different from food or clothing retailers? Yet again, people need to be reminded of TANSTAAFL – There Ain’t No Such Thing As A Free Lunch. Unlike other countries, SA network operators are required to provide a huge and growing contribution to society in terms of ‘free’ data access especially in education and for the poor. It is economics 101 that this cost has to be borne by consumers through higher prices, employees with fewer jobs, the fiscus with reduced taxes, and the economy with lower growth. What the cost of “free” or “cheap” provision is and who should bear it is the question everyone should ask.”
The FMF cautions against distortions created by state intervention. South Africa needs an honest transparent debate based on facts and rigorous analysis before the heavy hand of government is evoked.
The FMF has a 41-year history of promoting public interest truth in the face of misguided opinion. We continue that legacy regarding #datamustfall and ICT policy. That is why we exist and what our members and critics expect.