May 12, 2017

A national campaign in South Africa, #DataMustFall, is pressuring the government to mandate lower prices for Internet and telecom data. Proponents of the campaign, also known as #DataFalling, argue that access to information is a human right in the same sense as freedom of religion and expression. Data is a resource that must be provided by somebody, however, and Johannesburg-based Atlas Network partner Free Market Foundation (FMF) is educating South Africa through its #DATAfacts initiative about the importance of markets and accurate prices in providing effective and inexpensive access to information.

“There ain’t no such thing as a free lunch — TANSTAAFL,” said Leon Louw, executive director of FMF. “Someone has to pay for the investment in network and roll out. Everyone wants cheap data but we also need roll-out, quality of coverage and the latest technology. In South Africa we also want to include the poor and marginalised especially in rural areas. Mobile network operators (MNOs) are mandated to provide free data to schools and educational institutions. These come at a price.”

In late 2016, the Department of Telecommunications and Postal Services published the National Integrated Information Communications Technology (ICT) White Paper, which called for the nationalization of data and an inevitable expansion of government in the daily lives of South Africans. With the formation of such a government-created monopoly, FMF warns, industry will lack incentive to develop and will dramatically decrease capital investment.

“We argued that more state intervention is not advisable in an economy already reeling under the burden of excessive red tape, regulation and irregular government spending,” explained Gail Day, FMF executive manager. “If implemented in its current form, ICT policy may damage the success story of universal access and use of the Internet and ICT services since 1993.”

Proponents of #DataMustFall suggest that price manipulation or free data will help the poor, arguing that lower classes suffer most from current data prices. This view is short-sighted, though, Louw explains.

“If you force data prices to fall, what will you do to the poor who don’t yet have coverage, or access, or technology?” Louw asks. “If you really worried about the poor, you want coverage and you want the technology to reach the poor. If you force data prices down, you must understand you are going to create a disincentive to investment in infrastructure, technology, and rollout.”

In other words, government intervention can end up hurting the people it was designed to help.

“The poor will be the victims,” Louw warns.

#DataMustFall proponents often point to the cheaper costs of data in India as an example of regulatory success. FMF commentator Xola Ntshinga points out, however, that India and South Africa differ sharply in many ways that can affect the price of data, such as population density, licensing fees, subsidies, and vandalism of infrastructure. Price differentiations are complex and take much further explanation than a vague statistic.

“Essentially everyone agrees that mobile charges are a rip off,” Louw said. “We all want cheap data and free data. We all want cheap and free everything. There’s nothing special about data.”

#DataMustFall activists point to the United Nations resolutions that call for guaranteed freedom of expression and communication. Louw explains, however, that “Nothing in them implies an obligation to provide a means of communication.”

In the end, expansive government regulation of data markets can’t ensure widespread and inexpensive access because it destroys the incentives for creating it in the first place.

“FMF’s work is always consumer-centric,” Day said. “Government’s ICT policy will raise, not lower, prices; will disincentivise investors and innovation. Clearly, mobile network operators will benefit from less intervention. Government should open the industry to more competition via speedy allocation of spectrum.”